The trucking industry is facing supply-side catalysts that potentially will constrain truck supply in 2020. The first is the final ELD ruling requiring carriers to convert from automatic on-board recording devices (AOBRDs) to ELDs by Tuesday 12/17/19. 2020 could provide a similar scenario to 2018 when the original mandate to ELDs from paper logs went into effect. The mandate is to enforce stricter adherence to hours of service rules which resulted in high single digit to low double digit hit to capacity and causing TL spot rates to spike 30 percent.
The second catalyst is the precipitous increase in insurance rates. Juries in lawsuits related to catastrophic accidents have begun to award tens of millions of dollars causing premiums to spike by 50% to more than double.
The Drug & Alcohol Clearinghouse which aims to speed up the reporting of drivers’ positive drug or alcohol tests also has the potential to affect capacity. The clearinghouse was designed to prevent drivers from failing a pre-employment screening with one carrier then find a job with another carrier before the positive test appears on their record. Reporting of failed test on the federal date base is required to start January 6, 2020.
The International Maritime Organization (IMO ) 2020 regulation which begins January 1st is aimed at reducing sulfur emissions by enacting a 0.5% sulfur restriction in 2020. This will require the maritime industry to use fuels with lower sulfur content which forecasters speculate will use 2.5 million barrels of distillate per day. This could increase diesel prices by 5-33 % placing financial strains on smaller carriers which make up the bulk of the industry.
Lastly, California has a bill in the Assembly ….California AB 5 rule that goes into effect January 1st. This rule is designed to limit the definition of independent contractors requiring many independent owner operators who carriers contract to haul loads be reclassified as company employees. The new bill is facing legal challenges but is already in the works in New Jersey.