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Shark Tank's Kevin O'Leary says if he were 25 today, he'd chase these two booming opportunities in the world of AI

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Even as Elon Musk calls philanthropy ‘very hard,’ everyday Americans gave a record $617 billion—despite feeling the squeeze over the cost of living

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The stock market is about to suffer a 'snapback' and will lose much of this year's gains as 'speculation is hitting extreme levels,' BofA warns
RetailShipping

A Trucker Shortage Is Already Making Stuff More Expensive. A New Rule Is About to Make It Worse

By
Bloomberg
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and
Wilder Davies
Wilder Davies
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By
Bloomberg
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and
Wilder Davies
Wilder Davies
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April 2, 2018, 2:19 PM ET
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A U.S. trucking shortage that has pushed up freight costs for everything from cereal to toothbrushes is about to get worse.

On Sunday, police nationwide began enforcing rules requiring most big rigs to use electronic logging devices to record driver hours. While truckers have long been barred from driving more than 11 hours a day, the new ELDs prevent them from fudging their times on paper logs. That means more trucks are likely to be parked when drivers hit their limits.

“You’re going to be at least tightening the screws a little bit on an already tight market place,” said Jason Seidl, an analyst at Cowen & Co. “If you’re a shipper, it’s not something that’s going to be perceived as friendly.”

The ELD rules add another choke point for freight prices, which are already pinching earnings at companies from Cheerios maker General Mills Inc. to retailer Ross Stores Inc. A driver shortage, surging demand and rough weather already have pushed spot rates up 28 percent this year through March 23 compared with a year earlier, according to data compiled by Bloomberg.

Even longer-term contract rates, which are more stable than short-term spot prices, are expected to rise 12 percent this year, according to consulting group FTR Transportation Intelligence. That would be the highest increase in more than a decade. Contract prices rose just 3.9 percent last year.

The ELD rules divided big trucking companies and independent owner-operators. Most large trucking companies adopted ELDs years ago to ensure that they complied with limits on hours and to eliminate the hassle of driver paperwork.

But smaller and independent drivers resisted the change. The American Trucking Associations supported the regulations, saying they made highways safer, while the Owner-Operator Independent Drivers Association railed against the requirement as another regulatory burden.

Rest Stop

The ELD rules went into effect in December, two years after the final rules were published, though enforcement didn’t begin until April 1 for most trucks. The devices log driver hours, which have to be turned over to regulators and can be checked by authorities during routine inspections or traffic stops. After 11 hours on the road, a driver must rest for 10 hours.

A no-frills gadget costs less than $100, while ones that communicate wirelessly with a dispatcher incur airtime charges of about $50 a month. Roughly 70 percent of truckers who have begun using ELDs said they earned less money and 65 percent said they were forced to drive fewer miles, according to a February survey mostly of owner-operators by DAT, which matches truckers with customers.

Analysts have estimated that the regulations will reduce trucking capacity between 2 percent and 5 percent by making it harder for drivers to cheat and squeeze in extra miles to reach a destination.

The disruption even has spread to railroads, especially in drayage, the service of hauling seaborne shipping containers from ports to rail yards.

“Drivers making longer drays are now sometimes unable to complete those moves, and drivers making shorter drays are now sometimes unable to make as many trips per day as they could before ELD implementation,” said Amy Casas, a spokeswoman for the BNSF Railway unit of Berkshire Hathaway Inc.

Independent owner-operator Paul Sansoucy, 75, said he had planned to drive for another three years but sold his refrigerated truck in September. The ELD requirement is less about safety than large companies trying to squash competition, argued Sansoucy, who said he was accident-free in five decades behind the wheel.

“I don’t need anybody from Washington telling me when I need to rest, when I need to pick up, when I need to drive, when I need to stop,” he said. “That just doesn’t work for this cowboy.”

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