ELD Mandate Poses Special Challenge for Truck Leasing, Rental Operations
This story appears in the April 18 print edition of Transport Topics.
As the trucking industry prepares for the federal electronic logging mandate, carriers and equipment providers are grappling with one of the murkier aspects of the regulation — how to use the technology in lease and rental vehicles.
“The industry is currently looking at all the options it has available, but especially for rental trucks, the answers are not easy to come by,” said Jake Jacoby, CEO of the Truck Renting and Leasing Association.
The Federal Motor Carrier Safety Administration has stated that it does not regulate truck leasing and rental businesses, but drivers of those vehicles still will be obligated to use electronic logging devices to record their hours of service if they fall under the purview of the agency’s final rule on ELDs, published late last year.
Under that rule, nearly all drivers currently required to keep paper logbooks will need to install electronic logging systems in their trucks by Dec. 18, 2017.
Deploying ELDs in lease and rental vehicles, however, adds a layer of complexity compared with installations in fleet-owned trucks.
Transportation and equipment companies are exploring different ways to tackle this challenge.
Carriers may simply install their own portable ELDs in the lease and rental trucks they operate. On the other hand, leasing and rental companies could offer preinstalled ELDs to help their carrier customers comply with the mandate. Equipment providers and technology vendors said the market likely will settle on a combination of those approaches.
FMCSA, for its part, is leaving it up to the industry to decide how to comply.
In the rule, the agency said carriers “will have a number of options to choose from the marketplace of ELD providers,” including “portable units that stay with the driver as opposed to being installed in the vehicle.”
Joe DeLorenzo, director of FMCSA’s Office of Enforcement and Compliance, reiterated that the industry will need to determine the best ways to use ELDs in leased and rented vehicles.
“The market’s going to have to figure out exactly how that’s going to work,” he said at a recent technology conference. “This is why we have transition time. I think it’s something that’s going to get figured out over the next couple years.”
Jane Clark, vice president of member services at NationaLease, said the company will work with its customers individually to find the best approach but ultimately expects ELDs to be supplied by equipment providers and carriers alike.
“Some customers have a mix of owned and leased trucks, so they want their leased trucks to work with the same software they use on their owned vehicles. They often provide the units,” she said. “Some customers want us to take care of it for them. We are happy to do that as well.”
Ryder System Inc. also expects multiple compliance strategies to emerge, said Scott Perry, vice president of supply management and global product management.
In the meantime, though, fleets are going to have to contend with the potential complexity of using a primary device in their permanent fleet vehicles but relying on a secondary platform or integrated device in replacement vehicles, he said.
“Based upon our assessment, this initial implementation period has the potential to be quite clunky during the rollout of this first generation of technology to support the ELD mandate,” Perry said. “Over time, we should see a lot of convergence in platform capabilities that will focus more on software as a service and less on the hardware that’s installed in the vehicle.”
Lance Bertram, senior vice president of sales, marketing and distribution at Idealease, said equipment providers really have only two options: “Either outfit some or all of your trucks in your rental fleet with an ELD or put the onus on your customer to utilize their own portable device to capture the necessary information.”
He said lease customers likely will be given the choice to provide their own ELDs or utilize the lessor’s ELD partners. That would be similar to how onboard systems are used in lease trucks today.
“Some customers wish to utilize their own supplier. Others ask us to help provide solutions using our supplier partners and then include the cost of the onboard computer in the lease rate,” Bertram said.
Penske Truck Leasing declined to comment for this story.
Looking ahead, Jacoby, of Trala, predicted that leased trucks likely will come with preinstalled ELDs, offered either by the leasing companies or through built-in hardware from original equipment manufacturers.
With rental trucks, however, the situation is “much more complicated,” he said.
“We do not feel as though rental trucks, with all their complications, are ready to easily fit into this ‘box’ that FMCSA has created with this rule,” Jacoby said. “Trala intends to meet with FMCSA to flush out many of these concerns and to see if we might find an exemption for rental trucks of a certain time period — probably 30 or 60 days or less.”
Allowing paper logs for this segment would not harm safety but would allow the industry to avoid a significant overhaul of business procedures, he said.
Although many shorthaul operations will not be required to use ELDs — specifically those that fall under the 100- and 150-air-mile radius logbook exemptions under the hours-of-service rule — a small percentage of rental-truck usage would require an ELD under the mandate, Jacoby said.
“It is important to remember that while the number of rental trucks that would require an ELD is extremely small, Trala members would need to make adjustments for the scenario that every one of their vehicles would potentially need to be equipped with this technology,” he said.
Some Trala members rent vehicles to large and small companies as well as consumers. In situations where a rental truck is used by multiple customers for multiple purposes within a short time frame, it would be “extremely difficult” to maintain the technology if users want to use different ELD platforms, Jacoby said.
At the same time, if a rental vehicle is equipped with a different ELD system than the carrier’s primary vendor, it could complicate the collection of miles-driven data and fuel receipts for compliance with the International Registration Plan and International Fuel Tax Agreement, he said, adding that data ownership could be another concern.
Executives at two large carriers addressed the issue of ELDs in lease and rental trucks last month during Transport Topics’ LiveOnWeb program.
To comply with the ELD requirement during rental-truck use, Herman Funk Jr., vice president and general counsel at Cowan Systems, said he envisions his company’s drivers simply taking a spare unit of the fleet’s logging device and plugging it into the truck’s diagnostics port.
The carrier will need to authorize the truck ahead of time, but once the driver logs in and provides the truck number, “he’s off and running, just like he’s in one of [the trucks in] your regular fleet,” Funk said.
However, various truck manufacturers use different diagnostics plugs, which could force carriers to keep several kinds of plugs on hand.
“Hopefully, there will be some kind of standardization,” Funk said.
Given the potential need to install ELDs in rental trucks, fleets will hope to minimize the frequency of one- or two-day rentals to replace broken down or in-maintenance equipment, Sam Faucette, vice president of safety and compliance at Old Dominion Freight Line, said during the program.
While some devices can be installed within minutes, others that incorporate an onboard computer can take a couple of hours, he said. Either way, fleets will need to find a way to comply.
“If it’s a requirement, it’ll have to be met,” Faucette said.
Old Dominion Freight Line, headquartered in Thomasville, North Carolina, ranks No. 11 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers. Baltimore-based Cowan ranks No. 66 on the for-hire TT100.
Meanwhile, lease and rental companies said they are working with their carrier customers to help them comply with the ELD rule.
Ryder offers a proprietary telematics platform, RydeSmart, which offers hours-of-service capabilities and can be upgraded to meet the new requirements outlined in the mandate, Perry said.
The company also has partnered with a few other technology providers to give its customers additional options.
Right now, there is no “one size fits all” approach, but the industry likely will see significant advancement in ELDs and onboard technology in the years ahead, Perry added.
Bertram of Idealease said his company is working with several ELD suppliers to offer packages that meet the needs of various customers.
Clark said many NationaLease members have been offering e-logs for years, especially in leased trucks. For the rental units, the organization has been phasing in e-logs and will continue to expand their availability prior to the December 2017 deadline.
She said short-term rentals will require flexibility.
“If the customer already has a system, they will typically want to plug and play,” Clark said. “In cases where the customer doesn’t have their own ELD units, we will provide them or provide the ability to connect to the GPS units and allow them to use their own handheld device so that they can maintain their own history.”
Education about the rule remains an important priority as well, Clark added.
“One of our biggest initiatives over the next 18 months is educating our customers, especially the smaller companies that haven’t already adopted the ELD technology,” she said. “We are in the process of informing these customers of their obligations under the ELD mandate, then helping to train drivers as well as management.”
