The Real Costs of the Upcoming ELD Mandate and Phase 2 GHG Regulations
If you own a trucking company, it is likely that you have spent the past several years modifying the structure of your business to adapt to recent regulations that have been implemented to increase trucking safety and reduce emissions. These regulatory changes will demand significant upfront costs from trucking companies, as the Phase 2 Greenhouse Gas Emissions regulations will require commercial vehicle manufacturers to implement costly new low emissions technology in their products, and the ELD mandate will demand that carriers purchase electronic logging devices for each of their vehicles. Many industry leaders also expect that these additional costs will rise over time, as carriers contend with losses of time and carrying capacity. Yet, by examining the economic benefits that these regulations offer to trucking companies in the long term, you may see that these costs are well worthwhile.
Greenhouse Gas Emissions Phase 2 (2018-2027)
The EPA and FMCSA have determined that encouraging cleaner, more fuel efficient trucking through the GHG regulations is a necessary solution to the dramatic CO2 emissions being produced by the industry. Unfortunately, improving the air quality, limiting impact to the climate, and preserving public health requires costly modifications to the way that trucking companies select commercial vehicles for their fleets. The Greenhouse Gas Emissions Phase 2 will be implemented over the course of 9 years, but how do experts expect it to cost fleets?
The EPA has estimated that over this 9 year period, fleets can expect to spend approximately $11,000 more dollars on each tractor, and an additional $1,200 on trailer costs. Overall, the EPA has projected that the trucking industry, as a whole, will spend approximately $25 billion dollars complying with the Phase 2 GHG Regulations. Contrasting these hefty projected expenses, the transportation and trucking industry is also expected to save massively on fuel costs thanks to these changes. In a study conducted by the American Transportation Research Institute, it was determined that fleets that focused on enhancing the fuel economy of their vehicles regularly annually saved about $9,000 on fuel per truck. The consensus among many stakeholders in the industry is that if these new fuel efficient technologies can reliably offer a reasonable payback time, fleets will readily accept them.
Electronic Logging Devices (ELDs)
Of the major trucking regulations currently being legislated, the ELD mandate is the most contested, primarily due to the upfront costs that comes with installing these devices universally. Other major concerns are the matter of decreasing the overall productivity of fleets that need additional time to adjust their operations to utilize these devices efficiently. Ensuring compliance to this mandate will certainly create additional upfront costs, but the industry leaders who support the ELD mandate agree that it will have a positive impact on safety, but the opposition only sees these devices as a suppressive financial burden.
The Federal Motor Carrier Safety Administration has already determined that fleets can expect to spend an average of $495 on ELDs per truck, annually. For companies with large fleets, this cost can be quite substantial, especially with upfront costs for the devices starting at $165 and peaking around $832 for higher-end ELD models. This topic is hotly debated, but sometimes it is easy to overlook the savings that can be achieved through ELDs, which often rivals the annual costs of maintaining an ELD. The FMCSA, in its Regulatory Impact Analysis for ELDs, has stated that the paperwork savings per driver per year thanks to ELDs are estimated to reach up to:
- Driver filing Record of Duty Status (RODS): $487
- Driver submitting Record of Duty Status (RODS): $56
- Clerk filing Record of Duty Status (RODS): $120
- Elimination of paper driver log books: $42
The fact of the matter is, each stakeholder in the trucking industry could see their costs increase due to these new regulations. Still, it is necessary to acknowledge the overall impact of these regulation on the industry. By reviewing the costs and savings related to the ELD and GHG regulations, you can project how either will affect your business’s finances, and plan your future operations appropriately.
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