Opinion: Deal Early With Hours Rule Changes

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B>By George Grossardt

I>Vice President of Alliance Services

chneider Logistics

The changes to the hours-of-service regulations are here and motor carriers are feeling the impact to varying degrees. How carriers deal with these changes early in the process will be critical. Considerations for driver training, computer system changes and operational changes should have been made well in advance of the implementation of the new rules so that service to customers is not interrupted.

Several carriers, including Schneider National, have been vocal about the hours changes and the impacts they are likely to have on the transportation industry. Some carriers have not been as vocal, but many do not have the same resources as other transportation companies — specifically in the areas of engineering and analysis — to assess the impact of the changes on their respective operations.

Because the majority of truckload carriers tend to be regional providers, they are potentially less likely to be affected by the rule changes. Many carriers also are less vocal about the changing regulations because they are focused on the day-to-day operational issues associated with running a successful business. These include costs of capital, insurance, fuel, and personnel and driver recruitment.

Risk cost — insurance — continues to be a significant factor for transportation companies. Many carriers have increased their deductibles to offset the rising price of insurance. As a result, many of these companies are one accident away from bankruptcy.

The increased cost of new engines mandated under the EPA factors into the economic picture as well. These new engines have an unknown maintenance cost track record and poorer fuel economy. And, finally, an issue for all carriers is driver recruiting.

Many trucking companies are struggling to recruit drivers, and at an average of $5,000 a hire, the cost to grow their driver bases is significant. With all these factors impacting carriers simultaneously and the changing HOS rules that took affect Jan. 4, pure economics would suggest a situation the industry has not seen since deregulation.

Customer freight characteristics will have the single greatest impact on the carrier community as they adjust to new rules. Any freight that causes delays will hinder overall driver productivity. Metro-area driving, delays in loading or unloading, multiple stop-offs and border crossings are the elements that most carriers already are talking about with shippers as significant cost-drivers in their operations.

Many trucking companies have data that are useful in helping the shipping community identify opportunities to remove waste from their operations, which will help mitigate any cost increases from the changes to the HOS regulations.

Additionally, some carriers can use and have used their engineering expertise to take modeling and predictions one step further when analyzing the impact of the hours ruling. Companies such as Schneider Logistics have provided their engineering expertise to carriers and customers to aid them in the process of adapting to the new rules.

Armed with data, this type of analysis provides the recipient a chance to make a better business decision concerning how to lessen the potential negative impact of the hours changes.

Finally, many carriers had record profits last year. This will make discussions concerning price increases much more difficult, especially when many customers have not had the same level of financial success. By no means does this imply that the HOS changes will not have an impact on a carrier’s cost position. However, as business professionals and managers, we have a responsibility to understand our own position in the context of the broader business community.

Discussions with shippers should focus on efficiency improvements both can control. This will help make the negotiating process less confrontational and focus discussion on achieving a mutually acceptable result.

The following are suggested best practices for all carriers to help them deal with and mitigate the potential effects of the new rule changes:

Discussions with your customers should have already started. Ensure they are aware of and understand the implications of the Jan. 4 changes.

Provide customers with tips for reducing non-driving time and expediting driver work in shipping and receiving locations.

Educate drivers and internal associates on the rule changes and how they will be impacted.

Ensure systems and operations have been updated to achieve compliance with the new rules.

Share best practices to help mitigate the impact of HOS rule changes.

Additional information about the new HOS rules and industry best practices can be found at www.schneider.com/hos.html or at www.fmcsa.dot.gov.

Schneider Logistics ranks No. 4 on the Transport Topics Logistics 50 list of third-party logistics providers. It is owned by Schneider National of Green Bay, Wis., the nation’s largest truckload carrier.

This story appeared in the Jan. 12 print edition of Transport Topics. Subscribe today.