ELDs, and why they're important
Shippers who follow the freight industry could see the recent surge in freight shipping costs coming a mile away. Every logistics trade publication predicted that the phased-in compliance of ELDs (Electronic Logging Device)—which began December 16, 2017—would disrupt the industry in terms of productivity and freight shipping costs, and they were correct.
ELDs log how long a vehicle has been driven in both miles and hours. With the change from manual to automated log entry, the numbers of miles a trucker can drive and the hours he or she can work in a given day have been reduced. For hauls in the mid-hundreds of miles, the shortened work day and miles can mean adding a day to the in-transit time. Cross country hauls can end up taking two days longer than in the past.
The purpose of ELDs is to improve highway safety by eliminating what The Truck Crash Causation study of 12,000 commercial truck crashes over a 33 month period found to be two of the top causes of accidents involving large trucks.
- Drivers haven’t gotten enough rest and may be driving while fatigued
- To meet their deadline, the driver must operate the truck at an excessive rate of speed
If ELDs make the roads safer, as expected, we will all be better off.
Economic impact of ELDs
Eventually, data may show that the economic impact of ELDs on carriers is more than made up for by savings enjoyed thanks to fewer accidents, but for now there is a very real impact on freight shipping costs.
The use of ELDs has caused a reduction in available freight capacity for carriers, because hauls are taking longer to complete. If an extra day is required to deliver a shipment, that reduces the availability of the truck making that delivery. Taking a macro view of capacity, there are now considerably fewer vehicles available to carry a load at any given time.
Less freight shipping capacity means more competition for trucks among shippers. And more competition means higher freight shipping costs.
SMBs Hunt for (and find) Deals
For small-to-midsize businesses that ship anywhere from 1-40 times a month, the increase in freight shipping costs may have come as a surprise. It definitely has them hunting for the best deals they can get. Inevitably, that hunting leads them to 3PLs in general, and FreightCenter in particular.
1. 3PLs find and book available carriers for shippers. They earn discounts from carriers in four ways.
2. 3PLs maintain relationships with LTL (less-than-truckload) and TL (full truckload) carriers and receive discounts due to the volume of shipping they book with their carriers. 3PLs book shipments on backhauls, the term for a haul that a truck makes back to its place of origin after a delivery. Carriers want to keep their trucks full in both directions, so they discount significantly on backhauls.
3. For full truckload shipments, 3PLs often negotiate a deal directly with the carrier in real time.
4. 3PLs handle all communications with the shipper as well as all transaction paperwork—including the Bill of Lading— and accept billing from the carrier. 3PLs make the process easier for both parties, shipper and carrier.
The cost increases impacting SMBs are not welcome, but they are at affordable and sustainable levels, thanks to 3PLs.
How 3PLs are not all alike
Enterprise-level 3PLs target major shippers by offering services and technologies that only enterprises might need or be able to afford. These services can include warehouse managing and total shipping management.
Small and new 3PLs look for whatever business they can get, frequently targeting residential and regional shippers. It’s not unusual for a small and/or new 3PL to struggle with technology and customer service issues. Affordable off-the-shelf technology that will do everything your 3PL needs it to do is not readily available. And keeping a customer service team happy while they are being educated in an industry is not easy for any business.
With 20 years of award-winning experience, FreightCenter sits comfortably between the small and enterprise-level 3PLs. Over those 20 years we’ve developed long-lasting relationships with hundreds of carriers nationwide and thousands of customers, especially SMBs that ship 1-40 times per month. Our in-house team of LTL, TL and Parcel shipping experts puts us way ahead of the pack in terms of customer service, while our proprietary technology gives SMB shippers immediate access to free instant quotes from multiple shippers.
For SMBs that ship 1-40 times per month, FreightCenter is the place where the best freight carriers compete for your business. As Goldilocks might have said, "FreightCenter is just right."
Additional cost increases ahead?
The news is full of talk of tariffs and fuel tax increases which, if put in place, could cause even more increases in freight shipping costs. Freight industry changes happen all the time. What never changes is FreightCenter’s dedication to providing affordable shipping solutions to our SMB customers, thanks in no small part to our relationships with carriers and shippers, our proprietary technology and best-in-class customer service.