Ch-ch-ch-ch-Changes
(Turn and face the strain)
Ch-ch-Changes
Don't tell them to grow up and out of it
Ch-ch-ch-ch-Changes
(Turn and face the strain)
Ch-ch-Changes
Where's your shame
You've left us up to our necks in it
Time may change me
But you can't trace time."

David Bowie

The trucking industry and its customers are on the precipice of change, the likes of which have not been seen since deregulation in 1980. Upcoming regulations are about to change common industry practices on many fronts. Like deregulation, these changes will challenge the business models of many companies. Those nimble enough to adapt and have the sense of timing, which is so necessary to success, should work through these changes and come out a better and more disciplined company. Those who don't may find themselves as obsolete as the Polaroid camera.

Audits

2010 promises to be the year of regulatory onslaught. Some of these changes have already been implemented. Last year, the FMCSA changed their audit standards. They now audit logs to satellite positioning reports and require satellite positioning reports to be retained for six months. The FMCSA also markedly increased fines for non-compliance. Currently, standard practice is that when the FMCSA conducts an audit of a motor carrier, they go straight for these records. A typical audit results in a carrier failing, leading to onerous fines and being placed in a deep hole in regards to their safety rating. To get themselves out from under, the carrier then agrees to install and implement paperless logs throughout their fleet.

Drivers

As we emerge from an unprecedented 42 month recession in trucking, the problem has been that shippers are dominant, leaving carriers to compete for freight at below-cost rates and problems being pushed down to the driver. In July of 2010, the FMCSA plans to implement CSA 2010 to replace the current Safestat system. The direct result will have drivers being held accountable for roadside violations (whether placed out of service or issued citations) and more carriers being audited. The standards for a carrier's fitness ratings will change as well, with ratings adjusted monthly instead of after each audit. Since drivers will be held accountable, they will have increased incentive to push back when a carrier or shipper tries to make them do something that will result in a violation of safety regulations.

In tandem with CSA 2010, the FMCSA is currently working on a new Hours of Service and EOBR regulation. FMCSA has been under pressure from Congress to shorten the on-duty hours for drivers and mandate the use of EOBR's. It's been estimated that between 175,000 and 200,000 drivers will lose their CDL's due to CSA 2010, with many more being fined. Many will retire rather than make the move to paperless logs. The owner operator has been decimated by the recession. In spite of this, FMCSA is in the process of looking at ways to tighten driver medical standards. I expect the prolonged driver shortage temporarily alleviated by the recession will return with a vengeance later this year, resulting in a rapid increase in driver pay as carriers compete for a limited resource.

More Questions Than Answers

With many trucking companies pre-occupied with day-to-day survival, it would be prudent for you to do some strategic planning and ask your team the following questions:

1. Considering a driver's day ends 14 hours after his wheel turns in the morning, how many miles (actual, not computer based) can a driver legally drive each day? Drivers are human, not machine; remember to take into account the many factors eat into their time: dock time, time driving to pick-up, loading and unloading, stops, pre-trip inspections, post-trip inspections, overweight issues, time spent at the scales, speed limits, congestion, fueling, food, breaks, etc.
2. Does the shipper allow drop and hook, or must the driver spend time live loading and unloading? Do you have enough trailers for drop and hook? Can the driver spend the night at the pick-up or drop facilities, or are they starting their day 30 miles away at a nearby truck stop.
3. How much revenue does your company need per day to cover costs to be left with a reasonable profit? How much revenue does your driver need per day to do the same?
4. How many of their legal hours are your drivers utilizing each day? Each week? Efficiency reports from paperless logs are showing me a frightening low percentage.

If you start with a clean chalkboard and put aside your pre-conceived notions, you might be surprised to find that your business model, length of haul, customer base, driver pay and rates are all about to undergo a dramatic change. Many of you will ignore this...but before you do, ask yourself this - "When was the last time you took a Polaroid picture?"