Much has been aired about the loss in productivity that was predicted for more than a year prior to the electronic logging device mandate taking effect Dec. 18. What wasn’t so much anticipated was that the ELD rule would take effect in the early stages of a hot freight market.
One result of that timing is that the aggressive rate hikes are making up for the lost productivity, said Todd Amen, president and CEO of financial services provider ATBS. He spoke March 16 at his company’s annual benchmarking webinar, attended mostly by executives of the firm’s fleet clients.
“If rates are up 30 to 40 percent, it more than offsets my ability to run miles,” Amen said. He didn’t address how much ELD use is restricting productivity through tighter reins on hours of service, but most fleet experiences and industry estimates have pegged that in single-digit percentages.
He cited recent months’ trend of Truckstop.com’s Market Demand Index, which measures the ratio of available loads to available trucks. Historically, “When we’re above 12, things are really good for truckers,” he said. The index rose to 51 this Monday. “There’s a huge amount of freight looking to be moved and there’s just not enough trucks to haul it,” he said.
DAT’s spot market data shows that since late March of last year, dry van rates rose 41 percent, or 67 cents per mile, to $2.30 in January, this year’s strongest month so far, Amen said.
A chart showed that in most years since 2009, the gap has grown between spot market rates and the lower rates offered to owner-operators by fleets. By December, the differential was 79 cents. “That meant that I could run for the average fleet for $1.35 or $1.40, or I could go run in the spot market for close to $2.10, $2.20 a mile,” he said.
One counterintuitive aspect of the strong market is that owner-operators, able to command strong rates as leased operators or on the open market, will start cutting back on miles, predicted Amen, who said he’d seen that happen in prior up markets.
“When drivers start making more money, what they really want is time off,” he said. “They want to spend Saturday watching their kid play football or they want to spend a day outside of the truck.”Amen also issued his annual predictions: