CITI GROUP VIEW OF PROPOSED HOURS OF SERVICE RULES (HOS)

From Citi Group

PROPOSED NEW HOURS OF SERVICE WOULD SERIOUSLY AFFECT OUR ENTIRE INDUSTRY
What’s On our Mind: Takeaways From Hours of Service Listening Session 
 

The Federal Motor Carrier Safety Administration (FMCSA) held a public listening session Thursday soliciting comments on the proposed changes to the Hours of Service Rules (HOS), which set driving time limitations for the trucking industry.
We expected the trend of the comments to focus on the potential disruptions to typical shipping patterns, reduced utilization, and the incremental cost potential of these proposed changes—and we were not disappointed. The tone of the comments was nearly universally negative toward the proposed rule changes, with majority of the concern centered on the 34-hour mandatory restart provision, which exists under the current rules and allows drivers to restart the clock on their weekly 60 to 70 hours by taking at least 34 consecutive hours off-duty. Under the proposed changes, the restart would require two consecutive off-duty periods from midnight to 6 AM within the 34-hour window. Multiple companies and drivers argued that weekend rest periods would be effectively extended to 6 AM Mondaymorning (as opposed to an earlier start), which would have the effect of reducing productivity of drivers by making the first weekly pickup occur later in the day and would likely result in a significant number of trucks entering service at the beginning of rush hour, adding to traffic congestion and increasing the potential for preventable accidents. Private truckload carrier Schneider quantified the proposed changes on the whole as reducing productivity by 4.7%, reducing home time by as much as 25% for its over-the-road drivers, and requiring $3,000 per year in increased driver pay in order to keep drivers whole from a W-2 perspective (due to fewer loads and miles). Ultimately, the arguments were compelling and side discussions we have had with shippers, drivers, and other industry participants indicate that the FMCSA appears open to further study or other measures thatcould minimize the impact or potentially delay ultimate rule changes.
Nevertheless, if passed, HOS changes would clearly result in reduced industry utilization and capacity, which would further promote our view for a tight TL market in 2011.

 

 
 

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