Big HOS changes will alter relationships

Dec. 1, 2003
LIFE will change perhaps dramatically for trucking companies and their customers. The compliance date for the new driver hours-of-service (HOS) regulation

LIFE will change — perhaps dramatically — for trucking companies and their customers. The compliance date for the new driver hours-of-service (HOS) regulation is just around the corner on January 4, 2004.

The potential impact of new rules on truck transportation could be profound. Business will not continue as usual. The rules will change the shipper-carrier relationship, because the supply-demand ratio will be altered.

Since deregulation of the trucking industry occurred in 1980, shippers have been in the driver seat in terms of setting rates and dictating performance requirements. Overcapacity in the carrier ranks meant it was a buyer's market, and shippers were able to obtain tank truck carriage at bargain basement prices.

The new hours-of-service rules give carriers a chance to take back some of the economic control. Without rate increases and other changes to offset HOS-related productivity losses, carriers won't be able to find enough drivers, and shippers' loads will be delayed. Those carriers that seize the opportunity will survive. Others will be swept into the dustbin of history.

Trucking companies actually have little option in making HOS-related adjustments in the way they operate and price their services. The new HOS rules are expected to cut fleet productivity by as much as 30%. Operating costs are projected to rise as fleets boost driver wages and add equipment to compensate for the productivity losses.

Schneider National is one fleet that has moved ahead aggressively on boosting driver wages. Company drivers operating solo are getting an average increase of $1,500 to $2,500 more each year. Team drivers will get $3,500 to $4,500 more. Owner-operator annual compensation is being raised by $2,500 to $3,500 for solo drivers and $3,500 to $4,500 for teams. Drivers also will benefit from accessorial, or non-driving, pay increases.

Without those pay increases, Schneider National managers believe it will be difficult, if not impossible, to retain drivers after the new hours-of-service take effect. In addition, it will be hard to attract the new drivers who will be needed just to make up for the lost driving time in the new HOS rule. The key reason is that the flexible HOS-system that had been in place since 1939 is no more.

In its place is a more rigid system in which total on-duty time is shortened from 15 hours to 14. The new 14-hour cycle cannot be extended with breaks, as could be done in the past. Once a driver starts his day, he has just 14 hours to do all of his driving and other duties.

In addition to having one hour less in total for each duty cycle, drivers can't stop the clock for activities such as waiting for a customer facility to open, loading, unloading, and meals. All of these are logged as on-duty time and will result in a major loss of productivity for drivers and the fleets.

Once a driver goes off-duty (whether or not the 14-hour duty cycle has been completed), he can't return to duty for at least 10 consecutive hours. There are no exceptions.

According to National Tank Truck Carriers (NTTC), the HOS changes mean drivers will average about 55 miles less for each shift at a minimum. That will be a costly reduction over the course of a year for drivers who are paid by the mile.

Like it or not, shippers must help cover the cost of those lost miles. Shippers also need to help out in other ways. They can work with carriers to develop plans aimed at preserving driving hours.

Put simply, minutes saved in waiting, loading, unloading, and sampling mean more driving time, according to NTTC. Shippers and carriers should explore time-saving alternatives such as pre-loading, expanded loading and unloading hours, peddle drivers, and driver relays.

The HOS changes are an industry-wide issue that needs an industry-wide effort. Shippers need to help find ways to minimize productivity losses, and they need to help cover the cost of the lost productivity. If they don't, they may find that the carriers don't need their business.

About the Author

Charles Wilson

Charles E. Wilson has spent 20 years covering the tank truck, tank container, and storage terminal industries throughout North, South, and Central America. He has been editor of Bulk Transporter since 1989. Prior to that, Wilson was managing editor of Bulk Transporter and Refrigerated Transporter and associate editor of Trailer/Body Builders. Before joining the three publications in Houston TX, he wrote for various food industry trade publications in other parts of the country. Wilson has a bachelor's degree in journalism from the University of Kansas and served three years in the U.S. Army.