Study: Shippers should find efficiencies to deal with productivity loss

| January 22, 2014

hours truck stopIn the interest of maintaining good relationships with customers, a recent study of the hours of service rule change suggests that shippers should not pass any increased costs onto customers, but should instead look for ways to increase efficiency. 

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The study, done by the Global Supply Chain Institute at the University of Tennessee in Knoxville, recommends shipperss can, in lieu of raising rates, work with their carriers to extend lead time for some customers, increase customer delivery windows, improve shipment consolidation and increase the use of drop and hook freight.

The study says it’s “obvious that the loss of productivity cannot be absorbed by the carriers. Shippers will have to improve their operations in order to minimize the HOS Rule change impact.”

UT’s study included survey responses from 417 shippers, mostly in manufacturing, and 58 percent of them said passing on costs to their customers was the most viable strategy for coping with the costs of complying with the new rules.

About 47 percent of them said they anticipated a rate increase due to the new regulations. The researchers behind the study were more declarative: “It is our belief that the latter group is in denial about what’s going to happen. Rate increases will be coming,” the study reads. “It’s just a matter of how much.” 

Survey responses from the University of Tennessee study show that nearly a quarter of all fleets expect a productivity hit of at least 5 percent, and more than half expect it to be greater than 3 percent.

Survey responses from the University of Tennessee study show that nearly a quarter of all fleets expect a productivity hit of at least 5 percent, and more than half expect it to be greater than 3 percent.

The same group plans to study the subject more in the middle of this year, it says, but in the December-released conclusions, the researchers said the new rules could “fatigue carrier relationships with customers” by causing shipments to take longer. It could also congest roadways due to a potential increase in trucks on the road designed to mitigate the productivity hit caused by the July 1 hours rule change. 

In a separate survey, however, 70 percent of shippers said they would not consider shifting their freight to intermodal, although use of rail could reduce transit time of freight.

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In other findings, the study concluded simply more of the same as far as hours research is concerned — restriction in productivity of drivers, particularly long-haul drivers, and higher costs for carriers and shippers.

The researchers also pointed to a compounding effect of trucking regulations (particularly, the Federal Motor Carrier Safety Administration’s Compliance, Safety, Accountability program) and an aging driver population as factors that could worsen the so-called driver shortage — again increasing costs for carriers and shippers. 

Studies done by the American Transportation Research Institute and the Owner-Operator Independent Drivers Association since the July 1 rule change also point to similar findings — a decrease in driver productivity has resulted in lower miles and therefore lower pay for operators.

The study was conducted in October, and another study is planned for June. 

Overturning the hours rule has been a hot topic for the American Trucking Associations and for members of Congress: ATA said in December overturning the rule change was a top priority for its 2014 agenda, and both the Senate and the House have introduced versions of a bill that would at least temporarily halt the hours rule and allow drivers to operate under pre-July 1 rules.

FMCSA Administrator Anne Ferro, however, said in a hearing before Congress in November that the agency “absolutely” would not overturn the hours of service rule change.

  • leo caap

    we should raise rates!!!! it is long overdue.

  • Bruce at 1600 Watch

    I doubt Ms. Anne Ferro could recognize a truck and identify it’s function, if she actually ever saw one from her overpaid DC throne. Improve efficiency usually translates to “take it out of the driver’s hide”. Great plan.

  • Franchesca

    Most trucks don’t get paid what they are worth on most loads. There is the rare instance that you are able to ‘negotiate’ a fair rate. Rates have needed to be raised for over 10 years. HoS should make it easier to do that.

  • roge160

    One more time we are to take the loss Bend over lady’s and gentlemen

  • guest

    MORE Rules are on the way….RATES will go UP asTruckers leave the industry for something more RATIONAL and Profitable..or simply retire….Laying Down for the beloved Customer is not an option….Purchasing a bunch of Trailers for increased Drop and Hook you say??? Sure have Santa Claus drop off a bunch of them……..the Reality is RATES and Driver Pay will INCREASE….New Mandate for E-LOGS is POSTED by FMCSA January 29 2014………Speed Limiters is next……Logically Rates will Increase…talk about increased “efficiency” is rediculous .

  • Jimmy the Greek

    Raise them so high that the shippers start crying to the government to leave us the hell alone ! I hope i live to see the day when america ends up like Somalia no government !

  • Jimmy the Greek

    the big fleets well just put wetbacks in the trucks !

  • Mike Smith

    The title should be ALL O/O must raise rates accordingly plus some. I have to stop my truck 35 miles from home on a run because of this horse crap 1/2 hr. rule. That means I have to sleep in my truck for 10 hours instead of sleeping at home. Then I have to drive home anyway to get more work AND THEN MY CLOCK STARTS AGAIN, before I even have a chance to get home to arrange another load; and the deterioration of the weak continues. I’m raising my rate.

    This PILE ON of laws/rules, are drain us. It’s like we’er under attack. Under attack by our own government using us to pay for their new communist programs. All these things & others are the things that lead to revolutionary war.

  • John Lenhardt

    the public wanted it the the public should pay for it

  • Subzero

    Oh yes same old same old. Who is the “Global Supply Chain Institute (GSCI)?” And why should they have a say in how we run, price and do business? Buy a trucking company GSCI and do what ever you want. Hell haul it for free I don’t care! I belong to the “Higher Wages for Drivers and Support Staff Institute.” And I believe everyone in the trucking industry needs a pay increase TODAY. Wages have been frozen across the board in this business for at least 5 years, and nobody cares about anything but rates for shippers?

  • PattyCakes

    ….. she’s just too funny … it has to be true, you can’t make it up no matter how creative you are !

    I’m willing to bet the Paid-in-Full Mortgage on my farm that everyone at ‘ Global Supply Chain Institute University of Tennessee in Knoxville ‘ recieves more in compensation per year than ANY truck driver and likely also received a raise this year.

    I’ll bet the same gang of thugs has their signature on CARB Regulations …. FMCSA + DOT regs …. AAA membership and advisors and plenty more … all of which cost the trucker time + money.

    You want me / us to become more efficient ….. ‘yep, and the folks in hell want ice water too !

    Here ya’ go, I got your efficiency, right here …

  • Matt

    I think this study needs a study to figure out what brain dead person put it together. Of course carriers are going to raise rates to offset increased costs. The conclusions of this study are like telling the oil companies not to raise fuel prices at the pump when crude prices go up but to increase their efficiency instead. All this garbage in the name of safety. Where is the study showing how much safer we are now with the new rules? Maybe spend some time on that and figure out all the E-logs, change in the restart and 30 minute break did was force drivers to push on when they didn’t want to be driving, drive tired, and generally screw up the whole program. I seriously doubt there were ANY safety benefits.

  • A.Driver

    So,,the people who would pay the increased rate ; caused by more “guv’ment’ regulation ..that they asked for…don’t wanna be charged for them…huh??
    That’s like a welfare recipient asking for more free stuff…
    It is called ‘plunder’ and as long as WE the drivers/carriers allow it, they will charge us, to bring them, their stuff!!

  • Steve

    Are you kidding me? Have you noticed the prices of everything going up? They are passing on higher costs, whether we do or not. Realize when shippers/brokers tell you I move this for X everyday, he’s not telling the truth, for if he were, he’d be ordering the truck from them. I tell them to try to name their own price at walmart for the price they charge for a gallon of milk, how’d that work out for you?

    Want to add $ to your bottom line? Know the market, and post your truck, then let them call you. Know what your real cost per mile is, add a fair profit, and don’t waiver. They will call you back! They can’t move the load without a truck.

    On my last load I was offered $550 for a 200 mile load in an area where loads far outweigh trucks, within one hour I had secured $800 for the same miles. They will tell you they are giving you all the money they “have in the load”, and they’re still making $300 on the load. I’ve seen the shipper paid rates. Many brokers are targeting 30% commission in each load. Don’t give up information that you want to go somewhere, but listen for info from them that they need to move the load. Read “Negotiate This”by Herb Cohan.

  • Kurt Keilhofer

    Perhaps a group of truckers should tell the University that they should NOT increase tuition, as their customs are tired of increases everytime costs go up or government funding is decreased. Instead the University should focus on becoming more efficient, etc……

  • steve4447

    My Trucker Rant!!

    It’s sad that Drivers just never seem to be concerned about getting paid for the work that they do and the hours that they put in….

    Drivers are honest hardworking folks who just can’t seem to be able to help themselves when it comes to giving away their time and workfor free….Nobody else in America expects to WORK FOR FREE….Everybody else expects to get get paid…

    If Drivers would dust insist on getting paid for their time and ALL OF THE WORK THAT THEY DO…The Hours of Service Problem Would JustGo Away….

    Every Time You Work and don’t Get Paid for It….Somebody Else is Getting Paid For Your Work Without Doing The Work…..It IS A ZERO SUM GAME!…Think about it The price of fuel has gone up from 15 or 17 cents a gallon to 3 and 4 Dollars a gallon…Somebody had to absorb the increases….The price of trucks and their registration and insurance has gone up and somebody had to absorb it…

    Why should Drivers be the ones that don’t get paid just someone else can make more money?…

    Just as long as you will work for less than me or even free…Why should anyone pay me any more???…That’s just not good business….Drivers should have long ago stopped giving it away…..People tend to value thing based on what they pay for them….Under the current system the only way to waste a driver’s time is not to use it….It’s FREE..And So is Using his truck as free warehouse space that you can charge your customers for…And so on….You know far better than I do what you are giving away every day…..STOP GIVING IT AWAY….Stop loading and unloading for free….Stop waiting for free…Stop checking and maintaining your
    truck for free…For God’s Sake…Any Job Worth Doing Is Worth Getting Paid for!..

    Unless and until Drivers stop giving it away the companies the shippers and receivers will never stop taking it…Why In The Hell Should They….Most of the Drivers that figured it out either became Brokers or Dispatchers or Trucking Company Owners or just left the
    job…

    If you just do the math…Add up the hours….Most of you are lucky to be getting minim wage…The job is worth more than picking up trash and butts in the parking lot of a fast food joint…Stop whining about not being allowed to work 20 hours a day 7 days a week

    ….And Start Demanding To Be PAID For Your Work…

  • steve4447

    An iron clad rule of business….If you can’t do it and make money ..You can’t do it….

  • Paul

    I am an OTR with a Masters of Business Administration (MBA) and when I presented several ways for the company, I currently drive for, on how to increase profits by thousands of dollars simply by restructuring operations they looked at me like I had just lost my mind. Do companies really want to make change or just complain about the rule changes and how they will effect their operations?

  • ironage

    They just don’t want any comments from “The Peanut Gallery” ….aka the drivers.

  • ironage

    Sometimes i get the impression that they are TRYING to run every single driver out of the industry.

  • wing

    Anne Ferro took a two day ride in an OOIDA truck with a stretch sleeper. You didn’t know this? Now qualified to sit at her desk AND tell you how to drive one, although she reportedly has never driven one.
    The improved efficiency comes from telematics that tell you when to turn right or left, therefore you don’t need to pre-plan your trip…more time available on the EOBR! If they watch when you stop to go to the restroom, they can tell you no…more efficient into a bottle…… then put a camera in the sleeper(it’s being tested by NTSB at a Virginia University know for transportation studies, on 500 trucks) so the dispatcher knows when to wake you…..when to tell you to go to sleep., etc.

    The true efficiency would be to properly train drivers, including making sure you remove or mitigate the 100% churn-over rate….and paying for top notch drivers to do the job. Treat the drivers properly that do do the job right and change the Fair Labor Standards Act of 1938 to read that drivers are ‘skilled labor’ and at a minimum, are paid hourly wages for hourly work.
    Always thought it ironic that OTR drivers were paid mileage yet were required to fill out a logbook for hours worked. Won’t change with EOBR’s, etc.!

  • wing

    Steve, it’s only called a rant because drivers know we will not band together and stop this nonsense.
    Tried to talk my nephew out of this industry from the get go..with a three page email “rant”.

    He wanted to see the country from the seat of a truck. So, goes to work for CRST as a trainee with
    a trainer who had 8 years experience from the ’80s.
    They were running an average of 2000 miles a week, total, as a team. This from the dispatchers.
    So..they were also being paid 11 cents a mile on those 2000 miles a week. 211.00 dollars a week apiece. My wife and I saw the pay stubs. We laughed but the urge was to cry….

  • wing

    check it…universities where the experts don’t know the industry from the ground up…as owner/ops and drivers.

  • guest

    They probably looked at you with thar mouths a hanging open?? They are not Programmed to believe amere truck driver has enuff brains to have an MBA…..they were astonished that you could have such a credential and be talkin their business “lingo”. Like on Planet Of The Apes…….when the lady Ape Scientist discovered the “human” (bright eyes) could SPEAK!!!! They were in SHOCK that a mere truck driver was educated!!

  • Bruce at 1600 Watch

    I was as able to earn $750 to $1,000 a week as a company OTR driver back in ’75 & ’76 fairly easily. Not so easy today. What does that tell us about trucking as we travel past 1975 by 39 years?

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