It’s been two years since the Electronic Logging Device (ELD) mandate went into effect in the U.S., and many have wondered: Is it working? Did driver safety increase? Alex Scott (Assistant Professor of Supply Chain Management at Michigan State University) tackled these questions and more in his 2019 award-winning research study.
Alex is a rare breed of academic who gained more than a decade of industry experience at JB Hunt, Kenco Logistics, and IBM before heading back to school for his PhD. After graduating from Penn State University, he started his academic career at Northeastern University before moving to Michigan State University in the summer of 2019.
Before digging into Alex’s ELD research findings, Chris asks him to summarize some of his earlier work, including:
- Service Refusals in Supply Chains: Drivers and Deterrents of Freight Rejection: This research focused on procurement auction results after the award process. His analysis revealed that carrier behaviors, like tender acceptance, change in different market cycles. As a result, shippers should monitor acceptance rates more closely and potentially provide price incentives for carriers to increase acceptance rates during tight market cycles. Chris points out the challenges of how to operationalize these price incentives, suggesting accessorial fees during tight markets as a possible solution.
- Carrier Bidding Behavior in Truckload Spot Auctions: This study highlighted the different behaviors observed by brokers and asset carriers when bidding in spot markets. Scott reported that asset carriers bid less frequently and at lower rates verses brokers, who bid more frequently and at higher rates. Scott also shared that short lead times have a large impact on increasing rates. Given this, Scott discusses the idea of measuring the tradeoff risks of going back to the carrier that rejected the tender verses tendering earlier to the spot market.
The duo then discuss Alex’s most recent research, Did the Electronic Logging Device Mandate Reduce Accidents? This study raised questions such as: Does clock pressure change driver behavior? Will drivers drive faster and change lanes more often when racing against the clock? Alex explained that the FMCSA data shows that speeding, not fatigue, is more frequently associated with accidents. And the research focused on smaller carriers since they had yet to self-impose the ELD mandate.
Alex and his research partners (Andrew Balthrop from the University of Arkansas and Jason Miller from Michigan State University) found that after the mandate was imposed, while hours of service compliance did improve, speeding did go up, and accidents did not go down (and likely increased). Alex and Chris agreed that the proposed changes to the HOS rules should add some much needed flexibility for driver’s to set their schedules.
This episode recap was written by Chad Kennedy, Sr. Product Manager, FMIC.
Market Update & Forecast: 16 January 2020
Dry Van
Active rates were flat; spot rates increased 3%; and replacement rates went up 1%
Temp-Control
Active rates were down 0.5%; spot rates increased 2.5%; and replacement rates went up 1%
Intermodal
Both active rates and spot rates were flat whereas replacement rates went up 1.5%
This is the first time in 6 months we’ve seen positive replacement rates (which mean new rates entering the market are above the rates which are exiting). Spot rates have spiked over the last few weeks. However, we believe we’re not at an inflection point yet as most of the bid results we saw in late 2019 were neutral.
