Commentary: Are ELD’s All That Bad?

Tags: Trucking, Transportation, Logistics, Technology , Supply Chain

Christian Nebergall is an MS Global Supply Chain Management Candidate, USC Marshall School of Business

By December 2017, The Federal Motor Carriers Safety Administration (FMCSA) will require every motor carrier to implement an electronic logging device (ELD). The ELD connects directly to the engine’s electronic control module and records vehicle data including ignition status, geographic location, mileage, and current speed. ELD technology will replace the manual logging of Hours of Service, a regulation that is often circumvented due to poor enforcement.

Why is ELD data valuable? The transportation industry is plagued by a lack of real-time visibility into motor carrier location, payload, destination, and capacity, and huge expenditures are made in an attempt to increase visibility. Data from ELDs could close that gap for every party in the transportation industry.

How will ELDs help shippers and receivers? Most warehouses are not as efficient as they could be because their labor resources are not well allocated due to a lack of synchronicity with arriving trucks. Trucks that are late for their appointment windows by a few minutes waste warehouse labor resources and may force trucks that are early for their appointment to wait. This visibility could also decrease the amount of necessary safety stock since replenishment shipments could be more accurately timed and anticipated.

How does the ELD mandate affect freight brokerages? Freight brokerages will see just as much of an impact, if not more, than the shippers and receivers. Freight brokerages must also deal with the lack of visibility to vehicle locations and a lot of time is spent tracking vehicles. Employees will no longer need to make individual phone calls to gather and manually enter data into an outdated system. In the future, this process will be done automatically by the ELD technology, improving efficiency across the industry.

How drivers benefit from the ELD mandate? Drivers and fleets are the last but not least to benefit from this mandate. The competition in the ELD marketplace has driven down the prices and improved the product for micro fleets. Now smaller fleets can track their drivers and improve their performance through the features of the telematics. Dispatchers and drivers will have more live market data available to make better decisions on pricing and brokers will be able to more effectively match loads to available trucking capacity.

In the next couple of years, the amount of competition, low barrier of entry, and the relatively indistinguishable features provided will result in many ELD providers. These ELD providers will still be able to generate value from a fraction of the data but if one company can capture a high percentage of the market data, the value becomes exponentially more valuable.






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