In a year of political shifts and uncertainty, the winner of this year’s Regulatory Shift of the Year Dive Award was a regulation that held steady, despite a persistent push to derail it.

Sure, the same so far could be said for the Affordable Care Act or the North American Free Trade Agreement (NAFTA), but to date, neither has nor will have a more immediate effect than the Federal Motor Carrier Safety Administration’s (FMCSA) electronic logging device (ELD) mandate.

The regulation, first approved December 2015, has faced a barrage of challenges from owner-operators and others questioning its benefits. In its two years of existence, truckers have protested in Washington, D.C., lawyers have sued before the Supreme Court, and many more expressed concerns over the rule’s economic effects.

If the polarizing mandate is under fire, though, it is because ELDs represent a larger battle between the industry that moves supply chains and its own workers – a battle that has been waged since at least the 1990s.

Its survival, then, is a testament to a cultural shift that is about to ensue – no later than December 18, 2017 – and send ripple effects throughout supply chains.

How will the rule affect supply chains?

There are three costs associated with the ELD mandate, according to Jeff Banton, President of Atlantic Intermodal Services: the asset cost, the cost of training, and most importantly, the cost of turnover.

A quick Google search reveals an ELD costs anywhere from $100 to $600, so while the equipment may be incrementally expensive, it is hardly prohibitive for most medium to large fleet owners. The other two costs, though, are far more difficult to mitigate.

“Think about it like this: I would say as many as 80% to 90% of drivers using paper logs were trained by members in their family,” said Banton. “They were (taught) how to work your logs to where you could maximize the most revenue.”

Sometimes, that means drivers may fudge their numbers a little to take advantage of “gray miles” – unused time like the hours sitting in traffic, or extra time to arrive at a rest stop – in their paper logbook. Though even if all miles logged are legitimate, drivers automatically recording their hours with an ELD can expect to face additional compliance pressures and experience “a 6% to 10% reduction in productivity,” said Banton.

“To get the drivers to understand that you could have efficiencies by using this technology was difficult when they could easily go to another company,” Banton said of his experience transitioning his company to ELD-compliance.

To avoid the turnover cost, Banton told Supply Chain Dive he had to raise his employees’ compensation to make up for the 6% to 8% productivity – and therefore pay – they would lose by making the transition.

The low-margin and highly competitive trucking industry cannot afford the additional operating cost, so the indirect costs of the mandate will inevitably be passed on to freight forwarders, brokers and eventually shippers.

What’s next?

Shippers, carriers and forwarders have had two years to prepare for the ELD mandate, and the repercussions have always been clear.

Without a doubt, some drivers and companies will be forced to exit the market, costs will rise – at least in the short term – and those that are prepared or have already adapted will thrive. What few can assess, however, is the scale of these effects on the trucking industry and the supply chains they serve in 2018.

What is also clear, however, is that the short-term rise in costs will also yield multiple benefits.

As compliance improves, the FMCSA argues highway safety will also improve, as truck drivers’ culture shifts to emphasize logbook integrity. The industry, meanwhile, will have to find new ways to reach the same level of productivity without relying on longer hours. Perhaps that is through autonomous trucks, platooning, or other new technologies.

Banton, for one, believes the transition to ELDs is worth it in the long-term. “I can tell you this, my company is a safer company today because of the ELDs,” he told Supply Chain Dive. “Had I not been using (them), my culture may have not changed.”

Watch spot rate fluctuations in the first few months of 2018, as they will indicate the scale by which trucking companies were forced to leave the market. On the safety side, trucking stakeholders will be watching CSA scores and highway fatalities reports for proof of the mandate’s success.