President Donald Trump's executive order last week demanding English language proficiency (ELP) from all truck drivers and a review of non-domiciled CDLs could sideline thousands of drivers and lift rates, according to industry experts.
The order gave the Federal Motor Carrier Safety Administration 60 days to write guidance for how inspectors should enforce English language proficiency as an out-of-service (OOS) violation. The Commercial Vehicle Safety Alliance, despite longstanding questions about enforcing the reg, went right along and voted to return English language violations to the OOS criteria the same week.
Will enforcing ELP meaningfully impact trucking capacity, and therefore rates? That will depend on what guidance FMCSA comes up with and how it actually gets enforced, but a strict interpretation of the rules could see thousands sidelined. Impacts will depend, too, on just where shut-down drivers work.
[Related: Could Trump's English language proficiency mandate sideline 100,000 drivers?]
In 2014, the last full year ELP constituted an OOS violation, there were more than 100,000 recorded violations, yet only around 3,900 of those were OOS violations, according to a recent FTR analysis. ELP violations fell in recent years, with only about 7,500 a year recorded in the last two years associated with about 13,000 unique VINs over the same period. FTR also found Laredo, Texas-based carriers accounted for nearly 13% of violations and that Texas-based carriers in total accounted for 16%.
FTR's Avery Vise wrote that if only the 13,000 trucks hit with ELP violations in the last two years came off the road, it "might be a minor hassle but not overly burdensome on freight fluidity."
But if inspectors and FMCSA really put the hammer down on ELP, rates might move. "If FMCSA’s mandate now is to both make ELP a universal OOS violation and eliminate the availability of tools to make compliance easier, perhaps we will see violations swell to levels close to what we saw in the early 2010s," hitting around 80,000 to 100,000 drivers annually. That's "more than just a hassle," Vise wrote. "It certainly could prove to be a significant operational challenge for trucking."
DAT Chief of Analytics Ken Adamo said the ELP mandate impact might mirror the last three-letter trucking mandate, the ELD mandate, when it rolled out in late 2017 during President Trump's first term.
"Overall, the changes to the ELP enforcement and change in designation to out-of-service have the potential to be highly impactful to freight markets," said Adamo. "The way that I've been thinking about this is to compare the impact to what we saw during the ELD rollout in 2017/2018."
Adamo said the ELD mandate rollout saw an estimated 6%-10% of capacity, in the form of trucks and their operators as well as hours, leaving the market.
"The impact on rates was substantial with rates climbing to 25% year-over-year increases during the height of that market crunch," said Adamo.
Eventually, "the bumps evened out," he added, and by the end of 2019, rates calmed back down. "It took the better part of 18-24 months for things to truly normalize," he said.
Adamo said he thought 5%-10% of capacity leaving the market made sense for a strictly-enforced ELP mandate, and that could certainly impact rates. "The market is obviously soft right now, so it's a little tricky to predict with any precision what a reduction in 5%-10% of capacity would have," he added, "but I can say with confidence that it would put the overall capacity pool below the long-term, pre-COVID trend and almost certainly drive rates upwards." He puts the baseline estimate for rates increases at 10%-15%, with higher gains possible depending on other external factors.
Even with all the uncertainty around enforcement, and allowing that it might be "inconsistent on a state-by-state basis" and "cause confusion in the market," Adamo said he's confident "this will affect rates upwards regardless of whether true enforcement is reached nationally."
[Related: 'Labor dumping' and trucking: Are foreign CDL drivers bringing down rates?]
For established owner-operators hopeful for rates improvement, however, much will depend on where and for whom non-English-speaking drivers who are shut down work. If truck drivers without ELP mostly work at big fleets, the drop might be expected to impact the contract market. (Overdrive has reviewed H-2B visa documentation for temporary non-farm workers from the Department of Labor and hasn't found any of the biggest, household-name fleets as big sponsors for non-citizen heavy truck drivers -- though ELP challenges shouldn't be assumed exclusive to that group.)
DAT Principal Analyst Dean Croke provided some context for how trucking capacity impacts spot rates. "A one percentage point change in capacity can have a huge impact on spot rates," he said, noting that the spot market represents only about 15% of the total market. A small 2% reduction in overall carrier capacity, for instance, can represent a much bigger reduction in spot market capacity, often on the order of 13%-14%.
"We're going to put your vehicle out of service if you have a driver that doesn't speak English," Department of Transportation Secretary Sean Duffy said in a recent interview with the David Webb Show. "It's a real penalty which means you're going to have companies look at who they're hiring and make sure their drivers proficiently can speak the language."
