Missing in action: ELDs’ impact on rates

Updated May 28, 2017

Barton Logistics analysts Diane McHaney and Criss Wilson predicted a year ago that rates would increase dramatically prior to December 2017 as more carriers came into compliance with the electronic logging device mandate.

Pricing would be much higher, they surmised, as ELDs took capacity away from owner-operators and small fleets by lowering their utilization. Other analysts also predicted ELDs would strip industry capacity, spurring a rate boost while the market adjusted to the new normal.

McHaney and Wilson, however, now see those predictions as wrong, as least through mid-May, seven months before the Dec. 18 deadline.

“We have learned that quite the opposite of that is happening,” McHaney says. As more carriers implement ELDs, the rates actually are less volatile, she says.

Wilson agrees. “There is nothing that leads us to believe there is any volatility in the market right now.”

A report from trucking investment firm Stifel also reached a similar conclusion, though qualifying it with the effects of soft and strong markets.

“Will the ELD mandate cause a capacity crunch soon? We don’t think so. Reality vs. hype,” says Stifel’s report, issued by economists David Ross and Bruce Chan. Once ELDs strap industry capacity, though, an economic upswing could prompt solid rate gains, they said.

“We agree that full implementation and enforcement of ELDs should require more drivers and more trucks to move the same amount of freight, all else equal,” they said. “Our summary view is that the real squeeze will be felt in the next upturn.”

The Business Manual for Owner-Operators
Overdrive editors and ATBS present the industry’s best manual for prospective and committed owner-operators. You’ll find exceptional depth on many issues in the 2022 edition of Partners in Business.
Download
Partners in Business Issue Cover