Crestwood responds to FMCSA’s new electronic logging device rule

December 21, 2017 By    

The Federal Motor Carrier Safety Administration’s (FMCSA) new electronic logging device (ELD) regulation took effect this week.

The new rule, which was first published in 2015, applies to most motor carriers and drivers who are required to keep records-of-duty status. Once installed in the vehicle, the ELD synchronizes with a vehicle engine to automatically record driving time. The FMCSA says the rule improves safety and makes the process of tracking driver information easier.

While short-haul operations – those driving within a 100-air-mile radius of the driver’s work-reporting location – are exempted from the rule, companies like propane supplier Crestwood face impacts. These companies were forced to have an ELD or automatic onboard recording device installed in vehicles by the Dec. 18 compliance date. Mandatory use of ELDs takes effect Dec. 16, 2019.

Crestwood operates a trucking fleet of 240 company-owned tractor-trailers, and it runs 50 owner-operator vehicles. Crestwood’s Marketing Supply & Logistics (MSL) Group – based in Kansas City, Missouri – manages the company’s transportation operation and services customers coast to coast, with a heavier concentration on the East Coast, West Coast and in the Upper Midwest. About 60 percent of its deliveries are on the propane side.

Vance Harrington, senior vice president and COO of Crestwood’s MSL division, and Chris Roth, director of east marketing and supply, spoke with LP Gas about the rule. Here’s what they had to say:

LP Gas: Can you explain your stance on the new rule since it was first published in 2015?

Harrington: We saw it coming into effect at some point because it’s the logical thing that needs to happen for highway safety. Shortly after the announcement, we made the decision to go to electronic logs on all of our company-owned and owner-operator vehicles. We put that into motion about two-and-a-half years ago. No. 1 was for the safety side of things. We had, in all honesty, safety scores that needed some improvement. One of the most common things we had was hours-of-service violations. With this [regulation], we saw a way to get control and manage that situation. I can tell you in that time frame, from when we first made the decision to go to electronic logs to where we are now, we have gone from being over on hours-of-service and reportable incidents to now being below across the board in every category. We’ve gone from mediocre, at best, to one of the best in class. A lot has to do with electronic logs to force compliance. The added benefit of that is when you don’t overrun drivers, your number of incidents goes down tremendously, as well. You get a dual benefit out of it.

LP Gas: Will this change the way you service your propane retailer customers?

Roth: I think so. It does a number of things. It certainly requires some additional planning. From a retailer’s standpoint, we’re first trying to forecast what they need, when they need it and where they need it. In addition, we’re trying to dispatch those loads in a timely manner versus maybe further back in time, orders would come across the desk at all hours and you would work your way around and manage it. The benefit for [retailers] is [us] planning ahead and part of the effect of utilization – knowing that a typical business is going to require more units than it did in the past allows us to plan ahead on how we’re going to execute for the customers. Most folks in the industry knew about this. It’s been in the queue for a couple of years now. It’s definitely a huge factor for our industry. Initially folks thought maybe there would be somewhere around a 5 percent decrease in utilization. Folks who have implemented it are seeing 10 to 15, sometimes 20 percent in lost utilization. As this goes into effect, we encourage retailers to maintain a close dialogue with all of their carriers and understand how this will impact their business.

Harrington: To Chris’ point, everybody would say it’s at least a 15 percent decrease in utilization of the existing fleet. When you look at the whole industry, truck fleet and driver ability, not only is it an issue of the utilization of your truck, you find that drivers are not making as much as they used to make. The likelihood is you will start losing drivers unless you increase their pay. The compound effect causes a little bit of a squeeze in trucking capacity in the industry. The thing everybody needs to be aware of, when you have reduced capacity, and the trucking industry as a whole is short on drivers, then add the complexity of hazmat drivers and the pool gets smaller yet. To get a qualified driver, what’s likely to happen is that you’re probably going to see an increase in rates to offset the cost of the loss of utilization.

LP Gas: Does Crestwood anticipate having to raise freight rates?

Harrington: We are not raising our rates specifically as a result of ELD. That said, we constantly monitor our rates to ensure they are fair and reasonable while still allowing us to provide safe and reliable service to our industry clients across the U.S.

LP Gas: How would you define utilization?

Harrington: It’s the number of loads a single truck and driver can deliver in a day. Compound that into weekly and monthly. One of the biggest utilization situations you end up with is the number of hours left for a driver, which doesn’t necessarily fit the load you have available. You know you can’t send that driver out to do that last load because he can’t get back in time.

LP Gas: What steps have you taken to prepare for this implementation?

Harrington: It’s been a multiyear effort to get to a better utilization of drivers. The first step was getting physical [ELD] units ordered and into each truck. Then we started training drivers and dispatchers. Truly the training part is a lot more complicated than you would think; a lot has to do with how to log in and log out, how to log breaks correctly, as well as meal hours and sleep hours. It’s an added cost (Harrington estimates $1,200 per truck). It will eventually cost you more than just the units since there is also training time associated with it. We pay our drivers by the hour when in training. We look at it on the flip side: When you put it all together with the reduced number of events and out-of-pocket costs, whether it’s traffic accidents or backing into something, anything that causes property damage, those claims have gone down at the same time.

LP Gas: What kind of feedback are you getting from your drivers about the ELDs?

Harrington: The full gamut of comments. We have long-term guys who have been with us for multiple years who are fine with it. They are your safe drivers and not going over their hours in the first place. With the ones who are less disciplined, we had turnover because we had some drivers who thought it would hurt their overall pay. They would leave and go to other carriers who weren’t using electronic logs. We make it clear in our hiring process the only way we operate is on electronic logs, so we won’t have that same issue going forward. We take it one step further and have safety dash cams, as well. We’re totally focused on safety. So, we had the same thing with drivers. We lost a few because they felt like it [the dash cam] was too invasive. The guys who stuck it out are actually proponents of it – those guys are doing it right.

Brian Richesson

About the Author:

Brian Richesson is the editor in chief of LP Gas Magazine. Contact him at brichesson@northcoastmedia.net or 216-706-3748.

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