How to Improve Driver Retention & Fleet Profitability with ELDs

It’s been a busy week of news focused on driver compensation for some of the trucking industry’s largest players. From the definition of independent contractors to minimum wages based on on-duty time, fleets are struggling to balance the need for quality drivers, improve driver retention (and, likewise, driver pay), and fleet profitability.

While there is some disagreement within the industry around what is considered work time and what’s not, most are in agreement on one of the transportation industry’s most pressing issues: there’s simply not enough money to go around.

profitability chart

We all know that transportation is a low margin industry, and with increasing fuel costs, as well as other rising expenditures, already thin margins become even thinner.

At first glance, solving one problem creates new ones. Increasing driver pay can make employee drivers and owner/operators happier, but can eat at overall profits. Limiting driver pay can decrease job satisfaction, making driver retention an even more significant challenge—something fleets want to avoid in a time when the current driver shortage is only expected to become worse.

With that in mind, what are fleets to do?

Resolve trucking industry challenges with ELDs

As you’re likely aware, the Electronic Logging Device (ELD) mandate is coming. With the FMCSA currently scheduled to rule on this legislation in September 2015, fleets are looking for the latest information on how this will affect them and their operations. While there is a wide range of opinions on this topic—ranging from how ELD implementation will save the trucking industry all the way to how it will cripple fleets—many of the negative perceptions haven’t been substantiated.

One of the key things to remember is that the FMCSA conducted research on how electronic logging devices will affect the trucking industry prior to making a decision on the ELD mandate.

As part of this, the FMCSA weighed the cost benefits and ROI associated with ELD implementation. This is important to remember, as the benefits are often left out of the equation in regards to debates around ELD costs.

While it’s true that there is an initial cost for purchasing an ELD, fleets that implement ELDs will start seeing immediate ROI. In fact, even during the first year, fleets can expect positive ROI.

How, so?

For starters, ELDS improve efficiency fleet-wide

Based on assumptions stated by the FMCSA in its Regulatory Impact Analysis for ELDs, paperwork savings per driver per year are estimated to include:

  • Driver filing RODS: $487
  • Driver submitting RODS: $56
  • Clerk filing RODS: $120
  • Elimination of paper driver log books: $42

That’s a total of $705 per year in just paperwork savings alone—and that’s a conservative estimate.

Even if the reduction in paperwork costs were not enough, ELDs provide other benefits, which can substantially decrease costs and increase safety.

Some examples include:

  • Decreased fuel costs
  • Reduced truck downtime
  • Lowered crash rates
  • Simplified trucking regulatory compliance

ELDs help you reward performance and improve driver retention

ELDs can be used to track activity for different driver compensation models.

For example, fleets can look at ways to pay, or build creative incentive plans, on:

  • Hourly pay: ELDs can track on-duty hours, driving hours, or a combination of both. Fleets can build a model that pays different rates for different activities.
  • Activity based pay: ELDs can track critical activity like mileage, number of stops, or items delivered.
  • Efficiency incentives: If a fleet is able to save money from performance gains, there are opportunities to let drivers earn incentives as well. Fleets may want to consider a bonus, such as a $200 gift card to their favorite restaurant for exceeding an MPG goal for the month.

ELDs are much more than an HOS compliance tool

Fleets are constantly looking for ways to save money, and it would make sense to focus on the method that’s easiest.

Instead of trying to search for new, unproven ways, fleets can utilize ELDs, which will be required anyway in the near future.

In addition to supporting HOS compliance, fleets that implement ELDs will get the benefit of a solution supported by sound cost/benefit data.

To keep up to date about the Electronic Logs Mandate and how it affects you, explore ELDfacts.com, an important new information site designed to foster industry understanding of this critical legislation.