Truck rates are in the passing lane.
While haulers of fresh produce and other agricultural commodities have been given a 90-day temporary waiver from the Department of Transportation’s Electronic Logging Device rule mandate, the ELD regulation went into effect Dec. 18 amid reports of rising truck rates in some regions.
Truck rates on Dec. 19 for refrigerated trucks moving from California’s Imperial Valley to Baltimore ranged from $6,900 to $7,200, up 5% from the previous week and 17% more than the $5,900 to $6,100 rate the same time a year ago, according to the U.S. Department of Agriculture truck rate report.
Mexican produce crossings into Nogales, Ariz., on Dec. 19 saw freight rate increases to major U.S. cities ranging from 6% to 12% higher than the previous week, according to the USDA.
South Florida truck rates to Atlanta and other destinations increased more than any district Dec. 19, rising 25% to 50% higher than the week before.
Portland, Ore.-based DAT Solutions, a database of truck pricing information, said the national average spot van rate hit $2.07 per mile in November, the highest monthly average since December 2014, and 5 cents above October levels. DAT said the average reefer rate gained 11 cents to $2.43, the highest monthly average since June 2014.
Truck rates were staying strong in December, said Mark Montague, analyst with DAT Solutions. He said it was difficult to know how much the firm pricing related to the ELD mandate and how much was related to active demand conditions before the holiday.
“I lot of the independent guys, and some of the older guys, said they were going to quit rather than drive (with the ELD mandate),” he said. “The counterweight to that is that the rates are so good that, if you are an owner-operator, why would you quit?”
Longer haul routes of 500 to 650 miles - typically one-day runs now - may have to be restructured into two-day runs with the ELD mandate, he said.
Freight rates typically sag in February and Montague said what the market does that month will be revealing.
“How February compares with the prior year will tell us a lot about the ELD mandate and whether we have enough capacity to get the job done,” he said.
With truck rates rising in mid-December, an estimated 3% to 5% of trucks may be out of service as they go home for the holiday and prepare for the ELD mandate, said Ryan Beno, operations manager for Visalia, Calif.-based Advanced Transportation Services,
“The best gauge will be after Christmas to find out what the true rates will be,” he said.
Replacing paper logs, an ELD is an electronic device connected to a truck’s engine that tracks hours of service compliance.
Even though the hours of service requirement for truckers isn’t changing in December, some industry leaders think the less flexible, more precise enforcement of hours of service could add to delivered costs of goods and add one or more days in cross-country shipments.
Industry leaders say most of the larger carriers are already using electronic logbooks for years, so the largest impact from the rule will fall on small carriers and owner-operators. Owner-Operator Independent Drivers Association has pushed, without success, for a two-year delay in the regulation.