The auto industry enjoyed record sales in 2016, but a mid-year report from Urban Science shows that per-store sales are likely to slow in 2017. With dealers watching their profit margins, they may not be aware of a national development that could impact vehicle-transport costs.
In 2015 the Federal Motor Carrier Safety Administration issued a mandate for all commercial interstate vehicles to have an electronic logging device by December 18, 2017.
The intent of ELDs is to accurately gauge compliance with laws regulating hours of operation, mostly affecting long-range truckers. Those laws are part of an effort to reduce the number of accidents involving commercial vehicles, especially those due to driver fatigue.
According to several reports, most truck operators have yet to install an ELD, and efforts in the U.S. Congress to delay the implementation date have failed to gain any traction.
The new mandate has its supporters and detractors, with some pointing to the estimated $1.6 billion per year savings for the industry by limiting paperwork costs and enhancing fuel efficiency. Others say the cost of purchasing and installing ELDs will negate those projected savings.
So, if the Dec. 18 deadline stands, truckers will have to factor in these considerations:
- All trucks with an engine model year of 2000 or later (regardless of the truck model year) will need to comply and install an ELD. There are an estimated 3.5 million trucks that fit that description.
- One ELD provider estimates that the devices will cost carriers between $199 and $2,200 per truck, plus a monthly service fee of $20 to $60 per truck.
- Truckers who currently use an automated on-board recording device get a two-year extension before they have to switch to ELDs.
Implications for used-car dealers
Auto dealers will likely be impacted by the new mandate in several ways:
- The cost of transport will likely increase. One industry analyst is advising truck drivers to raise their rates by 1 percent per mile.
- There may be some sticker shock right around Dec. 18. Truckers with ELDs know they have an advantage over noncompliant trucks and may use that as a bargaining chip to ask for higher rates during the first few months.
- There is a slight chance of delayed delivery times for two reasons: 1) truckers with ELDs stopping when they hit their limit of driving hours; and 2) noncompliant trucks being detained and cited for not adhering to the new rules.
- Industry watchers say the new costs and regulations will cause some operators (potentially up to 26 percent) to leave trucking altogether, adding to the current driver shortage. This would mean fewer long-haul drivers, leading to even higher costs and longer delivery times.
A good auto-transport company will work with you to maximize loads and provide the most cost-efficient service possible. It may mean sharing loads or combining purchases with other dealers in your area. You can always contact a transport company for a free shipping quote, but in the meantime you should start factoring in increased transport costs in your 2017 budget.
Melissa Trautman is vice president of marketing strategy and integration for MetroGistics (www.metrogistics.com).