How New Legislation May Impact the Commercial Trucking Industry
As we finish out 2019, we gain some additional insight as to how we can expect the transportation industry to look going into 2020. This year was an especially busy year, with a significant uptick around the holiday season. We’re finishing out 2019 with more freight activity than ever. The rise of online retail paired with increased demand for quick and immediate shipping services has fostered a demand for shipping and carrying services at a bigger capacity than in previous years. FedEx is estimating a holiday load of 510 million individual packages to be delivered this year, a staggering figure. The busy holiday season truly exemplifies the growth of the industry as a whole. It is from this that we gauge where we are headed in the future. Here are the big ideas that truckers can expect to be addressing in 2020.
New Overtime Laws
One of the most controversial policies coming into effect in the year 2020 is about overtime regulations and pay. It’s expected to impact the jobs of 1.3 million Americans who might be in for some extra cash. This affects a smaller portion of the community, as it is most beneficial to drivers who are paid by the hour. For reference, most truckers are paid by the mile to avoid inflation of rates during traffic fluctuations. This new change will mostly affect carriers and those working in facilities and ports. This rule would increase the salary threshold for who is and is not exempt from overtime pay. It lifts the threshold from $23,660 up to $35,568, a significant increase.
Additionally, it places regulations on what can and cannot be considered salary. Only up to 10% of commission earnings or bonuses can be counted towards a “salary” when it comes to being eligible for overtime pay. For example, say an employee makes $25,000 annually and brings in about $10,000 of commission. According to this new legislation, you can only estimate their income as being $26,000. This is permanent and not adjusted every three years as it was in the Obama-era counterpart.
And finally, employees must pass something called a “duty test” in order to properly determine if they qualify for overtime pay consideration. This is to ensure that the types of tasks they complete on a daily basis line up with the proper descriptions set by the Department of Labor.
Drug and Alcohol Clearinghouse
The Drug and Alcohol Clearinghouse is a new set of rules and regulations that is scheduled to be implemented on Jan. 6, 2020. This system will work to provide more substantial information to employers about their employees. This Clearinghouse is a modern online database. It provides potential employers to see previous drug and alcohol violations that someone might have before making a decision about hiring them.
Previously, it was very easy for drivers with serious drug and alcohol violations to remain undetected when they looked for new jobs in different areas. The trucker life is fairly nomadic as it is, and the consistent moving made it difficult to keep track of a driver’s history when they moved to a new state. Drivers who have poor criminal records would simply move around frequently to avoid unemployment, but this led to high risk drivers and poor quality control. This database transcends state lines and allows for a more accurate view of potential hires for carriers. It aims to more effectively uphold quality, safety, and legal standards and overall make for a better employee pool for companies to pull from. While this is good, it makes the pool of candidates smaller, which adds to the national driver shortage that the industry is experiencing right now.
The Effect of the ELD Mandate
The ELD Mandate has been in the works for years, but the deadline for implementation is finally upon us. While this originally was supposed to improve safety and productivity, many industry experts fear that it may be doing the opposite. This new regulation requires special Electronic Logging Devices to be installed in all commercial trucks. With new ELDs, you cannot reclassify your drive time and there is a speed threshold sensor to log your drive time only when you’re traveling at five miles per hour or more. This particular feature of the program is controversial with many drivers, as sitting idle in traffic does not count towards your pay scale with this type of logging.
The implementation has been coming since 2017, but the deadline for switching is here and many of us waited until the very last minute to make the switch. Going into 2020, many drivers are going to require training on the usage of these new devices. Training drivers gradually wouldn’t have interrupted productivity in an excessive way, but many companies choose to do it all at once right before the mandate took effect. Industry experts predict that productivity at the start of the 2020 year will be decreased due to the sudden adjustment of many major carriers.
The holiday season is immensely busy for the trucking and transportation industry. With the drastic focus on consumerism that’s associated with this time of the year, retail sales soar in preparation for holiday gift-giving. While most people don’t think twice about where their selected gifts come from, truckers and carriers understand the intense efforts that need to happen before people can get their packages in the mail or pick up their Christmas ham at the grocery store. Many of the purchases made during this season come from around the nation, and even across the world, and the trucking industry makes it all happen. Here is our insight on how this booming industry is impacted by the holiday season.
The Growth of E-Commerce and Retail Sales
With the rise in online shopping jumping 16.9% last year, the demand for drivers is only expected to increase in upcoming years, especially during the holidays. A large amount of the freight during Christmas time consist of gifts and extra retail merchandise that result from deals and sales. The holidays have always been the busiest time of the year, but with the exponential growth of online shopping, it’s not uncommon for many businesses to rely on holiday business to get them through the rest of the year. The extra cargo can mean more truckloads, stricter deadlines, and longer hauls. For consumers, this can be a means of easy and quick delivery of gifts and treats, but for the transportation industry, it means extra work to make it all happen.
Carriers are doing more daily loads than ever and it’s only increasing with each year. In fact, UPS is expecting a five percent year-over-year increase between November 29th and December 30th this year as opposed to 2018 numbers.
FedEx will be shipping approximately 510 Million individual packages from Black Friday to New Years. Many companies choose not to hire seasonal help, especially with the national driver shortage making it harder to find additional drivers. Usually, only the massive scale carriers such as Walmart and Amazon hire huge amounts of seasonal help to make up for the increased loads.
The rise of e-commerce brands such as Amazon have changed the shipping game for everyone. Amazon’s famous two-day shipping has prompted everyone to step-up to the plate and speed up their shipping. Since the boom of Amazon Prime, another powerhouse in retail, Walmart.com, has also begun offering two day shipping. Both have really amped it up recently, offering one day shipping on thousands of items. While this is convenient for the customer, it adds an immense amount of pressure on the transportation companies responsible for fulfilling all of these demands.
Not only is the industry being blasted with retail shipment, but this is also a busy time for grocery shipments as higher quantities of many items are needed to satisfy the demand. Your delicious holiday turkey doesn’t just appear out of thin air, it was most likely delivered to your store by a carrier. The high demand for these types of seasonal items makes for shipment overtime. Food transport is especially busy due to the time-sensitive nature of transporting food in a short enough window of time to maintain freshness, which is a tricky balance to find when you’re short on drivers or facility workers, as most major providers are lately with the employment shortage.
Pressure on Carriers
Many companies who previously only operated during the daytime may switch to being 24 hour operations to accommodate the massive hoards of product that need to be transported. This effects drop-off and pick-up timed appointments. Smaller or private carrying companies are often left scrambling for workers to work more hours on the road or manage hand-offs at facilities, but many choose to offer various perks to incentivize the occupation of these extra hours.
Potential Bonuses for Drivers
Drivers are in higher demand than ever. To keep up with the demand, many companies are offering perks such as additional overtime pay or a holiday bonus to demonstrate their appreciation. This is especially true if you end up working on any actual holidays such as New Years Day or Christmas. Holiday pay is usually especially lucrative, and while it might seem unappealing originally, many drivers really enjoy it. Driving on a Holiday is supposedly very peaceful, as most businesses are closed and roads are somewhat empty. Additional hours often mean overtime pay as a reward for picking up those longer routes. Overtime pay is often as much as “time and a half” which can greatly boost your overall yield. Keeping drivers motivated and happy will be crucial to fulfilling the heavy demands this seasons.
As we wrap up 2019, we’re left reflecting on the progress made in the industry this year. With the exponential rise of online commerce and ever-growing demand for immediate product fulfillment, the transportation industry is becoming more integral to the American economy than ever before. As the field grows, one would hope that conditions for drivers improve accordingly, but we all know that this is sometimes tricky. While drivers may be receiving many perks for fulfilling this important role, things still aren’t perfect out on the road. In our last post, we detailed some of the most frustrating issues facing drivers this year, and in this edition, we intend to unpack five more of these common complaints.
#6 Speed Limits
While it’s no question that speed limits are an important part of keeping everyone safe on the roads, excessively low speed limits can be a great annoyance for truckers. Speed plays a big role in a driver’s overall fuel efficiency. Fuel is easily the most expensive maintenance cost of owning a semi, and drivers try to maximize their miles per gallon. One of the best ways to do this is to find your trucks “sweet spot” which is the speed at which you’re getting the most out of your diesel. Speed limitations can cause drivers to miss out on their sweet spot and therefore miss out on precious fuel miles.
Slowing down can also slow down your routes significantly. An unexpected slowdown can lead to delayed or even missed deliveries if poorly planned. Efficiency is key out on the road. While safety measures are wildly important, speed limits are often huge hurdles for truck drivers. To minimize this inconvenience, try to take major highways and interstates that will probably have higher limits than surface roads. Additionally, try to find the sweetest spot possible for fuel intake while not risking unsafe or illegal driving habits.
#7 Faulty Infrastructure
Faulty infrastructure can be a huge inconvenience to truckers, particularly when it concerns the roads and bridges that they are driving across all day. Potholes, cracks and generally poorly maintained roads are not only unpleasant and bumpy to drive on, but they can also be a safety concern. Driving a semi-truck is high risk due to its size and power, so absolute control of the vehicle is essential at all times. Rough road conditions can also be hard on the mechanics of your truck. Potholes and cracks can cause damage to your suspension and tires. Particularly deep ones can even break an axle if you’re going fast enough, causing thousands of dollars in unnecessary repairs.
While it’s not necessarily realistic or possible to avoid these issues, try your best to minimize the damages they cause. Slow down a bit if you see a large pothole in your path.
#8 Distracted Drivers
Driver distraction is a huge issue for truck drivers, as it presents a massive safety concern. This is especially true of non-commercial drivers who aren’t always respectful of the amount of space required following an 18-wheeler. Drivers who are not paying attention and are unaware of a semi-truck’s blind spot present a real threat to themselves and the truck driver. Controlling a semi is a tough job already and trying to account for distracted drivers nearby only makes it harder. Trucks can’t maneuver or respond as quickly as regular cars, so when someone drifts into your lane or stops short, it can lead to a catastrophic outcome. Try to avoid potential collisions by always staying aware of your surroundings, frequently checking your mirrors, and never following too closely.
#9 Driver Training Standards
Driver training is the first defense when it comes to creating safe and efficient drivers. While many find extensive driver training protocol to be invasive and boring, its essential when it comes to creating good habits for the future of the industry. Even if you’re a seasoned industry veteran, being an advocate for thorough training creates a better industry standard. To personally help raise the bar, stay up to date on current training and make sure that you’re informed of all essential protocol.
#10 Delays at Facilities
One of the most important things to a driver is efficiency, and the ultimate killer of efficiency is a delay. Delays at facilities can eat away at a driver’s day tremendously. A delay of a few hours can mean missing out on hundreds of miles of driving that day. Depending on your unique employment situation, you may also be missing out on wages. If your hourly rate only includes hours on the road and not sitting in line at facilities, you could be missing out on time on the clock. While much of this is out of your control, you can minimize the waiting to the best of your ability by being prompt for all your appointments. To avoid missed pay, carefully review your employment terms when starting a new position.
If you’re considering getting into this industry, it’s good to have a helping hand. Mission Financial has an informative blog and plenty of resources to help you get started with your financing!