DC Velocity - February 2018

www.dcvelocity.com FEBRUARY 2018 DC VELOCITY 33 BY MARK B. SOLOMON, EXECUTIVE EDITOR – NEWS

INTERMODAL
Transportation Report

U.S. INTERMODAL TRAFFIC VOLUMES SET A record in 2017, and the consensus going into 2018 is for more gains. The global economy ended last year with its best-synchronized recovery since 2010. In the U.S., ocean imports were expected to rise 7 percent over 2016 levels, according to a December survey by the National Retail Federation (NRF) and consultancy Hackett Associates. Meanwhile, already-solid domestic intermodal demand will likely be goosed if qualified over-the-road drivers remain in short supply and if the trucking industry struggles with transitioning to the federal safety mandate requiring that virtually all trucks built after the year 2000 have electronic logging devices (ELDs) onboard.

The ELD mandate, which took effect Dec. 18, could result in a conversion of highway traffic to rail if businesses believe that over-the-road drivers may not be able to meet delivery targets; the ELD rule is expected to cut driver productivity by 3 to 10 percent as drivers accustomed to fudging paper logs in order to run more miles than allowed by law are now forced by technology to stay within federal hours-of-service (HOS) limits.

But the mandate could be a doubled-edged sword for the intermodal supply chain. That’s because dray drivers who haul traffic to and from intermodal ramps are required to comply unless they operate less than 100 “air” miles—roughly equivalent to 115 road miles—per road shift. There is no typical dray distance, as the lengths of haul vary widely depending on the circumstance. There is no available data to determine the percentage of non-compliant dray drivers.

A worsening overall shortage of qualified drivers, exacerbated by the cost and operational pressures of “running electronically,” is likely to lead to higher wages for dray drivers and increased costs for a network still heavily dependent on the dray. Any potential problems could be amplified depending on the number of independent draymen who drop out of the business because they are unwilling to adapt to a post-Dec. 18 world. In