Researchers expect new trucking rules to drive up costs

Staff Report
colanews@scbiznews.com
Published Jan. 8, 2014

KNOXVILLE, Tenn. — Nearly three out of five companies responding to a survey by the University of Tennessee’s Global Supply Chain Institute think new federal regulations mandating rest time for truckers could lead to greater transportation costs.

The new hours-of-service rules from the U.S. Department of Transportation’s Federal Motor Carrier Safety Administration, which went into place July 1, are designed to improve driver safety by reducing truck driver fatigue.

Mary Holcomb, University of Tennessee researcher
Mary Holcomb, University of Tennessee researcher
The rules, which reduce the maximum number of weekly driving hours to 70 from 82 and mandate a 30-minute rest break prior to the eighth hour on duty, also could slow the transportation of products or force companies to add more truckers to the road, the researchers said.

The study surveyed 417 companies and found that 58% of expected an increase in their carrier rates. They anticipated passing on the costs to their customers in the long term.

This is not a realistic solution, said Mary Holcomb, an associate professor and the study’s author.

“In this economy, companies won’t want to damage the relationships with their customers by raising prices,” Holcomb said. “Carriers may be unable to absorb these increased costs, so companies will have to improve their operations in order to minimize their impact.”

Holcomb is the Niedert Supply Chain Fellow in the University of Tennessee’s Department of Marketing and Supply Chain Management, which is based in the College of Business Administration.

Holcomb’s study identifies ways companies could mitigate those costs. She noted that some of those businesses are incorporating new initiatives.

“Many of them also will be a doubling down on efforts already underway,” she said.

Efforts to transport products more efficiently and control costs include the following:

  • Extending lead time for some customers.
  • Increasing customer delivery windows.
  • Improving shipment consolidation.
  • Increasing the use of “drop and hook,” which involves dropping a loaded trailer at a customer’s facility and hooking up and leaving with another loaded trailer.

The research also uncovered actions that many companies have yet to consider. Fewer than 5% of the polled companies planned to reduce costs by consolidating shipments with other companies.

“The logistics of coordinating shipping across companies is often too complex to sustain,” said Dean Vavalides, logistics analyst for Pilot Flying J who collaborated on the study. “It just requires too much synchronization.”

Holcomb added she was surprised to discover that so few companies plan on shifting transportation methods from truck to rail although research showed that long-haul moves have been the most impacted by the hours-of-service rule change.

Switching the long-haul moves from truck to rail could reduce the arrival time, she said.

The university’s Global Supply Chain Institute will conduct a follow-up study in mid-2014 on the long-term impact of the hours-of-service rules.

Holcomb’s concerns about the new regulations were shared by Duane Long, chairman of the Raleigh, N.C.-based Longistics.

Long called on Congress to support the TRUE Safety Act, a bill introduced by Reps. Richard Hanna, R-N.Y.; Tom Rice, R-S.C.; and Michael Michaud, D-Maine; to stay the new rules until an independent review can be completed.

“Drivers, motor carriers and researchers have identified and documented a clear and wide disparity from FMCSA’s rhetoric and trucking’s new, more costly operating reality,” Long said.

“Congress should postpone the effective date of these new provisions until the Government Accountability Office can objectively evaluate the data and methodology used by FMCSA,” he said.

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