If you ship or receive products in the United States, E-log now impacts your inventory cost, profit margin and inventory turn rates. Since covered wagons and steam engines gave way to semi-trucks for the delivery of freight, driver log books have largely gone unregulated; until now.
E-log went into effect in December of 2017, transitioning the documentation of over the road freight from hand written log books to digital, downloadable driver logs that electronically monitor the hours of operation and rest periods for every truck driver in the US. This government regulation has single-handedly reduced truck availability, increased freight costs and increased transportation time for product shipments.
In January, orders for 48,000 new semi-tractors were placed with truck manufacturers to overcome E-log logistics hurdles caused by the reduced hours drivers may now legally operate. On the surface, orders for new trucks sounds like a great economic stimulation, until you consider that tractors must be operated by a driver. With the US workforce shortage, simply adding trucks is not an immediate solution to the freight problems we now face.
Drivers are no longer able to “fudge” their hours of operation to travel greater distances each day for the sake of faster deliveries, greater earning potential and more efficient use of trucking assets. E-log is “fudge” proof, which reduces historical trucking efficiencies by drivers able to spend more hours per week behind the wheel. This change in hours of operation as a result of E-log has an immediate and long term impact on freight costs because of reduced hours of operation.
With reduced operating hours, freight costs are rising to cover the required down time which is putting additional stress on an already under served trucking industry. Additionally, trucking companies have increased options for loads, resulting in the selection of higher paying trips that serve their revenue needs over needing to keep their trucks moving longer hours in a day.
What does this do for basic material costs within our industry? If you are flooring distributor or installer, the products in your warehouse have made multiple trips prior to delivery to your dock. Each of these trips now takes longer, costs more and increases the cost basis of your inventory.
When you consider that logs must get to sawmills by truck, and lumber travels to dry kiln facilities, flooring mills and onto the distributor by truck, the basic wood fiber within hardwood flooring may have traveled on as many as four semi-trucks before it’s picked up by flooring installers at their local distributor.
With trucking rates increasing by as much as 40% to cover reduced truck efficiencies and increased transportation times from limited truck availability, increased freight costs are here to stay.
A load of flooring that travels 1,000 miles from mill to distributor may find freight increases of $1,000 or more as a result of E-log which translates into $.06 per SF or more on the landed cost of hardwood flooring. The net result of this government regulation is longer waits for truck availability to deliver products to distributors and increased freight rates which translate into increased product costs. Distributors and installers working with lean inventories may find their business and product availability in a pinch if they fail to plan for these changes.