Factoring Solutions Help to Manage Regulations and Staffing
It is no secret that the trucking industry is seeing the biggest surge in demand since the industry began. With consumers spending more in a booming economy, the demand for delivery has hit every sector hard, and while this is good news financially speaking, the industry is still facing some major issues. Along with the driver shortage, regulations remain a key concern for the industry.
Recently proposed changes in Washington D.C. are looking to deregulate commercial trucking policies and decrease rest breaks now mandatory under current laws. While some drivers welcome the changes as a way to make more money, fleet managers are concerned about the consequences of their employees driving too many hours while fatigued. Unfortunately, mandatory rest periods for drivers also take a toll on the economy. It appears to be a double-edged sword that fleet managers are handling with robust staffing recommendations and financial strategies that include fleet factoring solutions.
It All Starts With the Drivers
Walmart announced at the end of January that they would be increasing pay to more than 8,000 drivers. The company hired 1,400 new drivers in 2018 to help handle their private fleet of 65,000 trailers. With mounting pressure to compete with Amazon and a focus on driver retention, Walmart has stepped up with a commitment to pay those drivers an average of $87,000 per year. While Walmart is clearly the largest fleet out on the roads and can afford the pay boost, their model is something that the rest of the industry can follow. For smaller fleets without Walmart’s access to cash flow, access to dependable fleet factoring solutions can help with the cost of labor and more. Higher salaries and better benefits can offset the federal regulations that restrict hours of service on the road. Larger fleets are using this strategy to retain drivers, and it’s working: Turnover at large trucking carriers saw a decrease last quarter.
Large pay increases fleets have been offering appear to be working.
The median pay for drivers was approximately $42,000 last year and fleets are looking to increase those wages by at least another $10K. Fleet factoring is the obvious solution to help make pay increases and more robust benefits packages a reality. Companies like Fleet One Factoring are offering multiple ways to keep up with what drivers are expecting. Not only are they experts in finances, they also know the trucking industry and what it takes to run a fleet efficiently. Factoring solutions can provide the cash flow needed to make payroll, and Fleet One can help with strategies to get drivers on the road more quickly to tighten schedules and so retain drivers.
Regulations Can Cost Money. Fleet Factoring Can Help
As with any industry, some costs that impact the day-to-day business cannot be recovered. Those costs include training requirements and regulations compliance, and fleet factoring is prepared to help.
- Driver training and certifications: Due to the rising demand for drivers, many fleets are paying for the cost of training and certification. That cost can amount to between $3,000 and $7,000 depending on the lever of certification. Fleet Factoring Solutions can help cover those costs. An investment in the driver shows the company’s commitment and will pay for itself in the retention of that driver.
- Electronic Logging Devices (ELD): The digital system that plugs into a truck’s engine to monitor driving time on the vehicle can also keep the driver in compliance on how many hours they are driving. The mandate took effect on December 18, 2016, to alleviate driver fatigue, keeping the highways safer for both the truck driver and other motorists.
The Federal Motor Carrier Safety Administration estimates the devices will eliminate 1,844 crashes, prevent 562 injuries, and save 26 lives annually. Time will tell if those numbers prove true, but the mandate’s already affecting local businesses. — Chicago Tribune
Some industries, however are seeing a negative effect and price increases because of it. Truckers are experiencing difficulties and delays in the transition, which have a direct impact on the efficiencies and number of deliveries their trucks can make. Produce wholesalers like Anthony Marano Co. and Testa Produce suggest that the logistics challenges that ELD presents have led to price increases. Last year the produce industries in California, Arizona, and Florida saw price hikes that could very well be passed on to consumers. For now, fleets are focusing on these issues and looking to fleet factoring to provide the potentially delayed cash flow.
Along with the costs of the ELD compliance, tougher drug testing laws have been proposed that will cost money in compliance as well as loss of time in the process. The two proposed drug-testing regulations could add to the industry’s driver shortage by screening out recreational drug users. Both have industry and government support.
- The first proposed regulation says carriers must search the Drug and Alcohol Clearinghouse by January 2020 for violations when conducting pre-employment screenings for drivers. The second piece of legislation, the current transportation funding bill, calls on the FMCSA to issue rules to permit hair follicle testing in lieu of urine testing. This would happen after the Department of Health and Human Services issues guidelines. The transition would be more thorough but would come at a higher cost. Depending on the size of the fleet and number of drivers, the cost could be intimidating and hurt a fleet’s bottom line.
At the same time the trucking industry is experiencing incredible demand, it is also seeing increases in operating costs, which is why smart fleets are partnering with fleet factoring companies in considering compliance and regulations as part of a bigger strategy for addressing costs and cash flow.