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Wednesday, May 29, 2024

New HOS rules creating driver shortage and rate hikes, study shows


Trucking companies will need to “hire more drivers to accomplish the same amount of work” as they deal with the impacts of HoS changes introduced last summer, according to a study conducted by The Global Supply Chain Institute of the University of Tennessee’s [UT] College of Business Administration.

As reported by Fleet Owner, the authors of the study expect to see evidence of a driver shortage in 2014 as a result.

In turn, shippers can certainly expect to see increased rates from carriers hit by the driver shortage and high turnover, but how much remains to be seen.

“Because drivers have less hours to accomplish the same amount of work, excess capacity is demanded, which lowers productivity and ultimately leads to higher costs for both the carrier and shipper,” wrote authors Dr. Mary C. Holcomb, UT associate professor of Supply Chain Management, and Dean Vavalides logistics analyst for Pilot Flying J.

The survey data indicates that the type of transportation principally affected by the rule changes has been long-haul moves (40.5%) while the impact to dedicated (23%), short-haul (18.9%) and one-way (17.6%) moves has been much less.

Nearly half (47%) of shippers surveyed anticipate an increase in carrier rates. Only 10.6% do not think this will happen. “It is our belief that the latter group is in denial about what’s going to happen,” the authors state. “Rate increases [by carriers] will be coming. It’s just a matter of how much.” More than half of shippers (57.7%) expect to pass the transportation rate increases through to their customers – something the authors note could be “unrealistic” in the current economy.

“It is obvious that the loss of productivity cannot be absorbed by the carriers. Shippers will have to improve their operations in order to minimize the HOS rule change impact.”

Approximately 54% of the carrier companies surveyed anticipated making changes to their distribution operations in response to changes in the HOS rule.

About 27% anticipate they will incur less than a 1% productivity loss due to HoS while almost half expect to suffer between a 1% to a 4% loss.

The authors found that the number-one reaction carriers planned to deal with the impacts of HoS was to extend the lead time for some customers. “This is clearly the primary plan as the second through fourth initiatives — Increasing delivery windows for some customers; Improving shipment consolidation; and Increasing the use of drop and hook – rank lower in priority.”

A “a sizeable majority” (65.7%) are also currently working with their “core/strategic carriers” to help them continually improve the efficiency of their transportation operations. Yet “only 51.1% believe that these efforts will mitigate the impact of the HOS rule change.”

And all this as trucking is “already experiencing hiring pressure due to an aging driver workforce and the impact of the Compliance, Safety and Accountability (CSA) regulation that arrived in 2010.

“Taken together, the effect [of these regulations] will be an increased shortage of drivers available to transport shipments in 2014 and beyond,” the authors contend.