Labor shortages, increased transportation costs and delays are only the most visible consequences of the U.S. Department of Transportation's (DOT) Hours-of-Service ruling. On July 1, 2013, DOT's Federal Motor Carrier Safety Administration (FSCMA) placed more stringent provisions into the Hours-of-Service rules. The U.S. Federal Court ruling allowing the change ended nearly a decade of push-back from the transportation industry.
But the ripple effect of this change goes beyond transportation.
Several members of the International Warehouse Logistics Association (IWLA), the trade association for independent warehousing organizations, offered their perspective.
"The impact is different for warehouse-based 3PLs," says IWLA Legislative Representative Pat O'Connor, partner in Washington, D.C.- based Kent & O'Connor. "For the most part this has been a truck-centric issue, but now the question is: What is the impact on the rest of the industry?"
"Expensive transportation drives rates up and makes prices of goods higher," says Doug Sibila, CWLP, president & CEO of Peoples Services Inc., based in Canton, Ohio. This is in addition to the thousand other variables threatening every shipment—traffic, accidents, cargo issues, weight and routing—all of which alter the delivery times.
Then Sibila does the math: At roughly 60 miles-per-hour, for 9.5-hours the driver can accomplish at most 570 miles. "The new rules reduce the one-day delivery range from 600 to 650 miles to 550 miles, thus limiting our potential customer base," Sibila says.
Sibila poured tens of thousands of dollars into expanding his facility's drop lot so carriers can be pre-loaded after hours, when drivers are not on the clock. "We cannot lose drivers' available driving time to loading and unloading time while the driver is waiting," he says.
Intermodal Gets the Business
Intermodal transportation, already gaining market share as an efficient method for moving goods by rail for the long-haul distance, is sure to benefit from the rules change.
Mark DeFabis, president & CEO of Integrated Distribution Services, Inc. (IDS), based in Plainfield, Ind., says the days of rail being insufficient compared to a truck's door-to-door access are over. Rick LaGore, IDS' executive vice president of transportation, adds that the Hours-of-Service rules make intermodal more competitive because the drivers stay closer to home and they tend not to get held up. The dray carriers that pick-up or deliver containers typically do not travel more than 50 miles from the intermodal ramp, which means the driver hours have less of an effect than long-haul trucking.
Shelli Austin, IDS' vice president of operations and transportation, has seen traditionally truckload-only manufacturers shift to intermodal in recent years, as delivery becomes more precise and the budding networking of ramps near their retail locations.
"[Unlike before] the retailers are using rail because the time in transit is more precise, which allows the docks to time deliveries better with details about where goods are going on purchase orders, and more opportunities for drop delivery—it's intelligent transportation," Austin says.
DeFabis and his colleagues admit not every lane is an intermodal lane and there is a bit of repositioning of the supply chain required to have intermodal surpass long-haul trucking completely. They also agree that the full impact of the Hours-of-Service ruling will not be seen until at least 2014, when the economy returns to its normal speed and competition becomes steeper.
The Impact on Safety
The Hours-of-Service rules were designed as a safety measure to protect drivers and motorists from accidents related to fatigue. However, the laws of supply and demand show that a reduction of hours will result in an increase in the number of trucks to make up for the lost hours. And in theory an increase in trucks and drivers on the road means an increase in potential accidents.
On the positive side, the rule motivates business owners like Sibila and DeFabis to research and implement more efficient dock operations, using strategic mapping of warehouse locations, and working to develop intermodal freight networks. The transportation industry was built on finding such solutions in the face of regulatory hardships.
Morgan Zenner is the senior coordinator of marketing and public relations for the International Warehouse Logistics Association (www.IWLA.com).
