Donald Broughton, a transportation analyst for Avondale Partners, recently spoke at the CCJ Summer Symposium in regards to the spike in carrier bankruptcies.
Normally, a large increase in bankruptcies can be linked to rising fuel prices. However the number of insolvent carriers have increased steadily since 2013, a midst relatively stable fuel prices and demand.
After speaking to many carriers that went under, one major factor was present among the majority: They were audited by the FMCSA and forced to equip their fleets with electronic on board recorders, or E-Logs.
When E-logs were implemented, many of these companies saw their utilization drop as much as 10%. Employees drove less miles, earned less income, and driver turnover spiked. Many carriers were left with 10 to 15% of their fleet sitting idle, without enough drivers to fill these positions.
In his presentation, Broughton summed up the results of his research by saying:
“The net result of regulation was forcing people out of business and constraining capacity even further”
Rising insolvencies have continued into 2014 and more than 10,000 trucks have been taken off the road because of bankrupt carriers.
However, there may be a silver lining in it all. Broughton’s data showed that although fleet utilization usually drops immediately after implementing the devices, they usually rise to levels higher than previously experienced, 18 months later.
It seems the challenge for carriers now may be surviving the initial implementation of E-logs, but unfortunately many have not been able to do so in recent months.
