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Making Sense of the New Hours of Service Regulations

by Tom Nightingale

Nearly every aspect of the supply chain is impacted by driver productivity and it’s about to be strained like never before. On January 4, 2004, the revised Hours-of-Service (HOS) regulations go into effect in the United States. How will this step impact your business in America and Canada?

Nearly every aspect of the supply chain is impacted by driver productivity. It is a critical link that is about to be strained like never before. On January 4, 2004, the revised Hours-of-Service (HOS) regulations go into effect in the United States. Unfortunately, few carriers are talking about it and fewer shippers are planning to mitigate its impact.

Background:
The revised HOS regulations affect all commercial truck drivers and due to sound science will benefit all of us from a safety standpoint. Due to its safety benefits most carriers, including Schneider National, support the changes.

While the changes may not initially astound you as revolutionary, a closer look proves that we are heading into one of the most troubling single-driver productivity environments in decades. When drivers cross the border, they are required to observe the rules of the country in which they are driving and the two sets of rules will be quite similar. For the purpose of this discussion, the emphasis will be on the U.S. revised HOS since nearly all of us have some element of a supply chain that either begins or ends in the United States and connects to Canadian roadways.

Impact:
As the table illustrates, the required rest period was extended from eight hours to 10 hours and the daily limit of work hours was reduced from 15 to 14. On the positive side, the number of driving hours allowed will be increased from 10 to 11 and the weekly rule was softened by allowing a driver who had rested a total of 34 hours straight a clean slate. Many people thought the two points of increased restrictions and two providing more leniencies would negate each other - but careful analysis and modeling are proving that it does not.

The increased break time requires two more hours before starting to drive again, which means two more hours between each work period. Using a current driver schedule and assuming the driver works at optimum productivity, a Monday delivery would be on time,but a Tuesday delivery would be the equivalent of the driver oversleeping by two hours. Likewise, Wednesday is four hours later and it continues to compound throughout the week. Of course, many challenges impede drivers from working at optimal productivity levels.

The reduction of total work time from 15 to 14 hours seems minor on the surface,but in reality, it is the most problematic.
No longer is a driver’s day broken up by work and off-duty time totaling 15 hours. As of January 4, the rule states that the 14 hours are consecutive and begin when the driver starts to work and ends 14 hours later. Today, a stop at a restaurant for lunch or at a rest area to stretch does not count as worktime and does not count against the current 15-hour maximum. Under the new HOS rules, the clock starts at the beginning of the work period and does not stop - for anything. If a driver arrives to pick up or drop off a load and the dock is not ready, the clock is running but the truck is not moving.

The total effect of the rule changes is estimated at between 4 percent and 19 percent in driver productivity depending on individual freight characteristics.

Preparation:
A few shippers,consignees and carriers have been preparing for the revised HOS rules and are implementing a series of best practices and measures to mitigate the potential financial impact of the rules.

In addition to best practices, many shippers are seeking modal alternatives. There is an expected shift to greater intermodal transportation and an increase in short-haul intermodal in particular because of the revised HOS. A recent Council of Logistics Management (CLM) panel featured one of North America’s largest retailers openly pushing railroads to develop a viable service offering in the less than 800-mile range.

We are also in the early stages of an unprecedented wave of outsourcing private fleets. As private fleet owners model their networks and face increasing complexity and cost, they are shifting to a realization that it is best to focus on their core competency and outsource transportation to the commercial market.

Lastly, there is an upsurge in network modeling underway. Routes and destinations that were once tenable are being re-examined by logistics engineers across many 3PLs to determine ways to revitalize the supply chain post January 4.

Conclusion:
The benefit of the revised HOS is expected to be fewer collisions and fewer fatalities due to fatigue.Of course, it will be difficult to tell the actual results, but the U.S. Department of Transportation estimates a reduction of at least 75 deaths per year. In Canada, although only 11 fatalities per year are directly attributed to fatigue, it is widely felt that these statistics are underreported. Some sources suspect that fatigue could be the cause of 15 percent of annual road fatalities, while others place the number as high as 40 percent. Regardless where you place the number, it’s too high and we are all hopeful the revised HOS will reduce it to zero.

Driver productivity will become a priority to minimize the impact of the revised HOS on shipping costs.Any lost time from driving that is under the control of shippers and receivers must be scrutinized.Those who have been using the drivers’ time to offset internal inefficiencies will see the largest impact and price increases. Those who can make pick-ups and deliveries more driverfriendly will see the least.

We all share in the supply chain and we are all impacted by trucking. Whether it’s the convenience store that supplies us with chips and soda, the propane delivery, or a truckload of critical parts to keep a production line running – trucking touches each of us.As a result,we all have an obligation to educate ourselves on the impact of the revised HOS and prepare for its affect while finding ways to minimize it.


Further information is available at www.schneider.com or www.fmcsa.dot.gov/hos/hos.htm.