What does the ELD mandate mean for the trucking space?

The ELD mandate, which requires every truck to have a tracker, went into effect earlier this week

Often, when we hear about government regulation it seems to be discussed in only one direction: the way it restricts business, unfairly or not. What is sometimes overlooked is how those same regulations can create opportunities for other businesses within the same space.

Just take a look at the Affordable Care Act. While it may not have been very popular among insurance companies, which all of the sudden had to take on riskier customers, meaning those with preexisting conditions, it also allowed a company like Oscar Health to flourish, as it benefited from the individual exchanges born out of the ACA. What may not have been great for one company was a boon for the other. 

The same might soon happen for the trucking space, thanks to the electronic logging device (ELD) mandate. Passed in 2012 by the U.S. Congress, it forces all trucks to be outfitted with devices that track, manage, and share records of drivers’ on-duty hours.

After many years, and a lot of backlash, including an opposition rally held by truckers earlier this month, the mandate finally went into effect this week, allowing compliance deadline, inspectors and roadside enforcement personnel to start documenting ELD violations. Starting in April, things will heat up even more, as inspectors will start placing drivers out of service if their vehicle is not equipped with an ELD.

Despite having years to comply with the law, trucking companies are very obviously not loving it. A survey conducted earlier this month found that nearly half of owner-operators said they hadn't even select an ELD yet, and only a third had installed one. 

While the trucking companies themselves may be dragging their feet, perhaps hoping that the mandate will still be struck down, startups and venture capitalists already see the ELD mandate as an opportunity for the industry.

That includes Peloton Technology, a connected and automated vehicle technology company, which is in favor of the mandate and has already installed ELDs in its vehicles. 

"We operate a small fleet of test vehicles and we have implemented ELD's internally across our fleet in compliance with the regulations. Our driver-assistive truck platooning system does take hours of service into account when determining platooning eligibility so we are supportive of the ELD mandate," Rod McLane, VP of Marketing at Peloton, told me.

The opportunities from ELDs

While it's understandable that truckers don't love the idea of being tracked (it certainly seems to convey a lack of trust between employers and employees), the devices do more than simply show where the trucks are and how fast they get from point A to point B. They give incredible insights into a space that, for a long time, lacked the technology to get the necessary data from the supply chain to optimize routes and better execute deliveries.

For FourKites, a real-time tracking and orchestration company in the trucking space, the big opportunity that comes from the ELD mandate is the data that will allow trucks to operate faster and more cost effectively. 

"The ELD mandate will create a massive influx of real-time data about shipments on the road across the United States. Companies that know how to leverage that data will be able to use it as a competitive advantage in their supply chain planning and execution practices," said Craig Fiander, Senior Vice President, Global Business Development, at FourKites said.

"The consistent flow of real-time data on the location and condition of shipments will empower companies to operate more nimbly, making on-the-fly adjustments, such as rerouting inventory to areas of increased demand. With the right analytical tools, companies will be able to use all that new data to identify and remedy frequent trouble spots in their supply chains, in areas such as route planning, staffing and assigning carriers."

Matt Kropp, CEO of FR8Star.com, a digital marketplace matching carriers and shippers, also mentioned the vast amount of data that will be streaming in from the devices, which he belives will, ultimately, be good for drivers, who will be able to earn more money thanks to better optimizing. 

ELDs are a good idea in general "for the simple but powerful reason that they put every truck online," he said.

"With an ELD in the truck, that truck is now streaming its location and the available hours that driver has in real time on the internet. This means that the ecosystem of platforms for load matching, logistics planning, predictive maintenance, driver performance management, all can grow quickly. This will increase efficiency, improve utilization and, therefore, increase earning potential for drivers, reduce congestion and pollution and bring transparency and efficiency to the market that today is hindered by lack of visibility to this information."

Ultimately, Kropp believes that ELDs will force the trucking industry to adopt cloud technology, which will finally help bring the industry into this century technology-wise. 

"It forces the industry to completely adopt cloud-connected technology. It creates data which is the lifeblood for tech startups.  It opens up the SMB trucking companies, which are the majority of the industry, to the possibility and need for data and technology.  It brings investment dollars to the industry.  I see it as a real game-changer for the the trucking tech sector."

When it comes to the benefit to the drivers themselves, Kropp's reaction was mixed. While he believes that ELD's are important from a safety perspective, and will make it easier to enforce Hours of Service rules that mandate that drivers can't go more than 10 to 12 hours, he also acknowledges that it may create scenarios where drivers might be incentivized to drive faster than is safe so they don't run out of hours. 

"I think the real impact is mixed and it is impossible to say whether the next impact will be fewer or more accidents," he said. 

Dan Lewis, Co-founder and CEO of on demand trucking app Convoy, however, comes down more squarely on the side of the mandate being good for drivers.

"The transition will be challenging for some trucking companies. However, we’re optimistic that ultimately ELDs will benefit carriers and drivers by enforcing policies that reduce stress, improve safety, and encourage shippers to improve the flow of their facilities. ELDs also eliminate hours of paperwork and can benefit drivers' quality of life, reducing turnover and encouraging new drivers to enter the industry," said Lewis.

He believes that Convoy is in a unique position to help both the shippers and the carriers. 

"We can use data to help shippers and carriers make better decisions and optimize their businesses to improve truck utilization and reduce costly wait times for everyone."

The investor perspective

It's not just the startups themselves that see potential benefits from the ELD mandate, but investors as well, who want to get in on this revolution as it happens.

“Just the sheer fact that, with this mandate now, all of the trucks will be trackable, I think just the fact that those sensors now will be on each and every truck, and you can start tracking them, and those trucks are now visible, that alone creates enormous opportunities," said Ajay Agarwal, Managing Director at Bain Capital Ventures, an investor in FourKites.

"It will create opportunities around labor and shift management. It will create opportunities around managing the back haul and doing better jobs of load matching. It will create opportunities around asset utilization, opportunities around managing dwell times of these assets sitting in these facilities. There will be opportunities across truckload, log haul, short haul, regional. Just the sheer fact that you now have the data, you now have the visibility, creates enormous a set of application opportunities on top a number of companies are going to try to exploit."

Alexander Niehenke is a Partner at Scale Venture Partners, an investor in KeepTruckin, which helps trucking companies manage their fleets and their drivers legally log their hours. Even if trucks "adopt the bare minimum in order to be compliance with ELD," that still means means millions of trucks will now be online.

"If you think about all of those with connectivity coming online, I think that creates such opportunity for the software ecosystem in this space. It ties that front end and back end system together and really provides more real time everything, whether it be booking, communication, awareness," he said.

"It will be the type of experience that we’re used to in the parcel space, where the large player like UPS and Fedex, these very streamlined and easy experiences that, in the non-parcel space, are still relatively complex. Some of that has to do with software and systems and some of that has to do with the fact that the assets that these shipments are spending the most time on weren’t connected yet. I’m super fired up for everything that can be built on top of that connectivity."

(Image: cdn.forconstructionpros.com)