Recent trucking regulations such as the ELD mandate, speed limiters, and greenhouse emission standards have left many drivers and fleets shaking their heads in frustration. It’s understandable — it’s natural to feel frustrated when the government decides how independent hardworking people are to operate their business.
But while some shake their heads at these regulations, others are readying themselves now to capitalize on the impending freight rate boom. Fleets prepared to operate legally under the new regulatory environment, particularly the 2017 ELD mandate, stand to work less and make more than their competitors.
Why Freight Rates Will Spike
Industry analysts believe the ELD mandate will be the primary driver for increases in shipping prices. Part of their reasoning is due to concerns that many fleets won’t comply with the ELD rule, which means there will be fewer trucks on the road. In fact, according to analyst comments made during the 2016 FTR Conference, the capacity restriction could be anywhere between 3-10%. When you couple that with existing driver shortage problems, rates are very likely to increase next year — at least 5-7% according to the analyst comments.
Many drivers and fleets have stated they will leave the trucking industry or retire when the ELD rule is enforced, which creates a tremendous opportunity for those who stay and are equipped to operate legally under the ELD mandate. Fleets well prepared to operate legally and efficiently with ELDs come December 2017 may be in short supply, which means these carriers will be able to charge higher rates than ever before.
Concerns Over ELD Vendor Supply Constraints
While many believe the ELD rule will cause drivers to find new lines of work, others see an even greater threat — what if there aren’t enough ELDs for everyone?
Trucking is the number one job in America and there are over 3.5 million drivers subject to the ELD rule. Large carriers have already adopted ELDs and are straining the remaining supply from ELD vendors. According to a recent survey, 81% of large fleets with more than 250 trucks have already achieved complete ELD implementation. For years large carriers using ELDs have had to compete with fleets who don’t, but that will change. Through natural market competition some expect larger carriers to attempt to squeeze the small fleets out by purchasing ELDs well ahead of the mandate and diminishing the total supply.
ELD Prices Are at Historic Lows, For Now
To combat the anticipated surge in demand, ELD vendors are motivated to supply the industry now to reduce the expected operational strain they’ll face right before ELD mandate enforcement. For example, at KeepTruckin we’re offering our lowest ELD price ever currently.
As ELD demand rapidly increases closer to the 2017 deadline though, ELD vendors may be tempted to raise prices. Small and midsize fleets who adopt ELDs now can not only take advantage of great ELD prices, but they can also get used to operating vehicles with ELDs. Then when the freight rates go up next year, these fleets stand to gain more financially than their competitors who are late to adopt.
What To Do Next?
The perfect time to adopt an ELD solution is right now. With growing future demand, ELD prices may increase next year. Plus, by complying now, your fleet will be in a better position to compete against unprepared carriers and capitalize on the pending freight rate boom.