A report released in April showed that the overall economic activity in the United States dropped slightly in the first quarter of 2018, as the consumer spending post-holiday season eased. This estimate is the first of three, with the second set to be released around the end of May. Despite the economic growth dropping, analyst expected it to be much worse. It is common for the economy to drop some after the holiday season at the end of the previous year, and 2018 was no exception. The gross domestic product increased at an annual rate of 2.3 percent, which is down from the 2.9 percent annual rate in the first quarter of 2017, but still not as bad as it has been in the past.
This is one of the lowest percentages in economic improvement since 2013, which has a lot to do with a decrease in consumer spending. The measure of total output of goods and services was pulled down by a mere 1.1 percent raise in commercial spending, which is the largest sector of the American economy. Comparatively, consumer spending was at a 4 percent increase at the end of the final quarter of 2017.
It can be difficult to understand what all this means. Even though this percentage of growth is higher than expected, even with such a low standard, the economy cannot be supported with such low numbers. Analysts expect the numbers to pick back up later on in the year, but over time, they are slowly dropping which is mildly concerning looking forward. For now, though, most experts say that there is little reason to be concerned.
For the trucking industry, low consumer spending can mean a cut to industry-wide revenue, but most reports say that is not likely to happen. Regardless of material consumer spending, the industry will always be needed to transport everyday necessities like food, clothing, and livestock. With the recent shortage of drivers, it is even less likely that we will see an increase in layoffs.
It comes as no surprise that long wait times mean a loss of revenue, but how much money are truckers losing annually? Detention time is loosely defined as the minutes, or sometimes hours, that truckers are forced to wait beyond the anticipated time that they need to load or unload their trailers. The unspoken rule in the industry is anything over two hours is considered detention time, which is incredibly inaccurate, and robs drivers of pay. Some estimates put annual loss per trucker at around $1,500 per year, which adds up to over $1 billion per year industry-wide, and makes up about 3-4% of their average income. These numbers come from the audit by Department of Transportation’s Office of Inspector General. According to this report, the estimated loss of for-hire carriers is around $302 million. Although DOT estimates losses in the billions, the actual amount could possibly be even higher. However, because the amount of data that they have is so limited, they could not know for certain. With the new ELD mandate, detention time may be easier to track. But, most electronic systems do not distinguish between detention time and actual loading and unloading tasks.
This report points to a much larger issue with the industry, and long-standing labor problems– drivers are not paid for their detention time, and they do not have the power to control it. Long wait times mean a loss of revenue for everyone involved, and indicated inefficiency. Not only are long wait times wasteful and irritating, they can cause safety problems. Unexpected wait times at ports and weigh stations can also increase probability of getting into an accident. Detention time cuts into available waking hours, which can lead to fatigue. Even a fifteen minute increase in detention time can increase the chances of getting into an accident by six percent.
Last week, the City of Los Angeles filed three lawsuits against some of the largest port trucking companies in the nation: CMI Transportation, K&R Transportation and California Cartage Transportation Express. All three companies are owned by a New Jersey logistics firm, NFI Industries. The lawsuits were filed after a scathing USA Today report on the abuse surrounding the industry. The litigation demands that the companies halt the systematic exploitation of their contract workers and seeks restitution of the money and property that the companies attained as a result of their practices. The companies also face civil penalties up to $2,500 for each infraction
The companies are accused of misclassifying hundreds of workers as independent contractors instead of employees, although the three companies exert almost complete control over the schedule of the drivers. They do this to avoid federal and state laws that require companies to pay employees minimum wage and offer benefits.
This forces the drivers to absorb thousands of dollars in costs while taking home only pennies. In some cases, the drivers make nothing in pay and owe the company money at the end of the pay period. These law suits are the culmination of several long-running disputes between drivers and the trucking companies. Over 1,000 California port truckers have filed labor complaints in civil courts since 2008, and since then, the labor commissioner’s office has awarded over $46 million to port tuckers. Since the beginning of USA Today’s investigation, drivers for these companies have filed three more class-action lawsuits and established 23 more cases with the Labor Commission.
City Attorney Mike Feuer called their practices “disgraceful” and vowed to continue the city’s investigation into unfair labor practices in the ports. One councilman said that port trucking in California is the modern-day equivalent of the exploitative sharecropping industry in the late 1800s. Senators are calling it “brazen disregard.” As a result of the USA Today articles and the lawsuits filed by L.A., goods manufactures, shippers, and six major retailers so far, have launched internal audits of their supply chain. Two of those retailers have discontinued their partnerships with their trucking companies.
2017 has been a big year for the trucking industry, and included a lot of changes. The year started off with a presidential issuance of a regulatory freeze, which stifled a few minor regulations that were in the works under the previous administration. The order also placed the FMCSA’s speed limiter mandate on the back-burner, but did not rescind it outright, which means that they could possibly resume work on it at any time; however, that seems unlikely. We also saw an expansion of how the DOT conducts its on-site compliance reviews with the addition of carrier and employee interviews. The FMCSA also unveiled the Crash Preventability Demonstration Program and extensive ELD exemptions. In addition to new rules, they also withdrew a couple big ones that had been highly critiqued: the Safety Fitness rule and 34-hour restart regulation. Following Hurricane Harvey, the FMCSA temporarily lifted regulations in 26 states to allow truckers to deliver goods and fuel to affected areas. Then there was, of course, the ELD mandate, which has been highly debated since its announcement. In June, the U.S. Supreme court chose not to hear a case against the DOT in regard to the mandate, and upheld the compliance date of December 18th.
The FMCSA very heavily pushed not only safety, but education as well. To help relieve some of the burden, and give the states more autonomy, they awarded over $70 million dollars in grants for states and educational facilities. These rulings along with the grants are an attempt to keep drivers and the public safe, and improve road conditions nation-wide. Keep in mind, most of the changes that were released or approved this year will not take effect until 2019, or even 2020.
Outside of the DOT, there were even more big changes. Swift and Knight, two giants in the industry, announced a merger that gave Swift shareholder 54% of the company and Knight shareholders the remaining 46%. Walmart instituted fees for both early and late deliveries. The EPA rolled back regulations on glider kit emissions. Tesla unveiled their new semi designs, which many think will revolutionize the industry. 2017 was a year filled with a lot of big changes, and I am sure 2018 will be much the same.
As we approach the second phase of the three-phase compliance time line, there has been increasing hesitancy and even full-blown refusal from those in the trucking industry. Some of the complaints are reasonable: they are worried about the high costs of the logging systems themselves, as well as the upkeep of the devices draining the resources of smaller companies and ultimately putting them out of business. The ELDs can cost anywhere from $160 to $500 and the upkeep depends on the system. If you want more information about those costs, check out this blog I wrote when the initial ruling was made. Some of the other fears, however, can easily be soothed.
The trucking industry is typically very slow to change, and most major compliance rules are met with a lot of initial push back. One concern that emerged following the ELD mandate that has snowballed within the last few weeks, is the security of the systems themselves in regard an outside person’s ability to hack into them. There are a number of people that are under the belief that because the ELDs are a computer system that monitors the activity of the engine and the brake system, that a hacker can take control of the system from outside of the vehicle. That is not quite true. ELDs, while they do operate on a computer system, do not automate the vehicle, and do not have the capability of doing so. They are completely safe to use. The FMCSA addressed this issue and many others on their FAQ page. There is no current requirement for the automation of truck-tractors, and it is unlikely that there will be any time soon. The nation, or really the world in general, cannot function without the trucking system as it currently stands, and human skills and reasoning in this area are not things that can easily be replaced by a machine. Truckers do not need to worry about ELDs subjecting them to harm or a violation of their safety. If you would like to learn more about ELDs and the FMCSA’s rule, visit their website, or check out our blog.
The FMCSA is renewing an exemption for one of the largest refrigerated fleets in the United States, C.R. England. The exemption is for a federal rule requiring a CDL holder to be in the front seat of a truck with a student driver at all times. With the rule exemption, commercial learner’s permit holders that have passed the CDL skills test will be allowed to operate in a team with a licensed driver. There still has to be a CDL holder in the truck, just not necessarily in the front seat, which C. R. England says will allow them to operate more efficiently until they get back to their home state and the permit holder can obtain their CDL card. The exemption was first granted to the company in June of 2015, and ran through June of this year. This renewal will last until June 2022.
C.R. England stated in their renewal application that 3,046 drivers had utilized the exemption since it was granted, and their data showed better safety outcomes than non-exempt drivers. The FMCSA reported 11 accidents involving drivers using the exemption, none of which resulted in a fatality. England said that changes to the CDL issuance rules make it more difficult for drivers to physically get to their home state to receive their actual CDL card. They said that while the intentions of the FMCSA were good (reducing fraud), they did not grant states the power to issue temporary CDLs in order to allow drivers to return to their home state with the legal paperwork. The FMCSA has granted similar exemptions to other companies recently, and allowed the public to give their input before they allowed the renewals. The majority of comments against the exemption stated that the permit holders were too inexperienced and were safer with a CDL holder in the front seat. The FMCSA rebutted, saying that drivers that have passed the CDL skills test would already have their license had they been in their home state and therefore have the necessary skills to drive legally.
The FMCSA has unveiled yet another plan to help improve highway and road safety: the Crash Preventability Demonstration Program. This program is designed to assess the preventability of the most common types of motor carrier involved crashes, and is expected to run a minimum of two years, starting August 1, 2017. If you were involved in a crash on or after June 1st and would like to report it, go to https://dataqs.fmcsa.dot.gov.
The program allows motor carriers and drivers to submit Requests for Data Review through a FMCSA system; the data will then be looked over and the crash will be determined either Preventable, Not Preventable, or Undecided. Their preliminary decisions will be posted on the DataQ system and will make enforcers, as well as carriers, aware of the evaluations so that they can provide further documentation if available. For crashes found Not Preventable, the notice will provide the crash report number, DOT number, carrier name, date of the crash, the state the crash occurred in, and the crash type (i.e. infrastructure failure, being struck by a motorist/another carrier, etc.). However, before they issue their final decision, the general public can provide input in cases labeled Not Preventable, which provides insight from people that experience these problems first-hand. The final determinations will be located on the Safety Measurement System (SMS).
The FMCSA will use the data obtained from this program, along with others, to improve the agency’s ability to identify risks imposed by motor carriers and institute measurements to help combat truck-trailer involved accidents in the future, as well as examine the costs and benefits of further testing. These crash ratings will not retroactively pardon carriers for violations, nor will they impact other systems within the FMCSA. They will be used to reduce the frequency of accidents in the future. The list of eligible crashes can be found here, and a step-by-step video on how to submit a request is available here.
After months of speed and safety tests, Michigan has begun the process of replacing speed limit signs on over 1,000 miles of highway across the state, following legislation that was passed at the beginning of the year. In January, Michigan passed a series of laws allowing the speed limits to be raised on certain stretches of road, including both freeways and trunk lines. This raised speed limits on a little over 600 miles of road, will give Michigan the highest legal speed limit of any of the Great Lakes states.
When considering these changes, experts looked at crash patterns and frequency, as well as the surrounding terrain. They also polled the people that travel on these stretches of road. These polls showed that drivers in these areas were already driving at these speeds prior to the new legislation, and newer safety regulations for vehicles make the higher speeds just as safe as the lower ones. Because of the newer safety regulations, residents of Michigan should not see an influx of car crashes, which should keep insurance premiums the same.
Michigan uses a split speed limit system that places the maximum speed for truckers lower than those for other motorists, which is meant to factor in the longer amount of time it takes for heavier vehicles to slow down. The new laws raise motorist speeds from 70 to 75, and the speed for trucks over 10,000 pounds from 60 to 65. The minimum speed limit remains at 55 MPH. Along with the new speed limit signs, MDOT will install advisory curve warning signs, shorten passing zones, move signs, and change pavement markings where necessary. Despite the added safety precautions and research, there is still a fair amount of opposition to the raised speeds– among these opposition groups are the Insurance Institute of Highway Safety and AAA Michigan.