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May16, 2016

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4 THE JOURNAL OF COMMERCE www.joc.com Editor's Letter William B. Cassidy THE SPRING OF 2016 isn't a bad time to be a shipper in the United States. Sure, there's the SOLAS problem, but soft demand combined with excess capacity on land and sea and low fuel costs are pushing down transportation costs and g iving shippers more bargaining power in annual contract bids, whether in the trans-Pacifi c maritime trade or U.S. domestic truck lanes. That's led to some tough talk as the contracting season for various transportation modes progresses. Logistics managers say they are coming under more and more pres- sure to seek transportation savings. For now, they're fi nding them, and carriers that a year ago were looking at strong single-digit rate increases are adjusting to a diminished rate reality in 2016. At the recent NASSTRAC Ship- per Conference in Orlando, there were abundant signs that excess capacity, at least on land, won't last long. Trucking companies are already reining in capacity swelled by nearly 285,000 truck orders last year. Now canceled orders are racking up, along with the unsold inventories of heavy trucks at deal- ership lots and manufacturers. The big unknown that keeps shippers awake is the potential impact of the electronic logging mandate. The U.S. will require truck drivers to replace paper logbooks for recording hours-of-service with electronic logging devices by Decem- ber 2017. That's expected to squeeze truck capacity, but no one really knows by how much or how soon. The contraction could begin earlier than expected, especially as shippers push their contract carri- ers to prove they are preparing for the deadline. "A number of shippers I've talked to say they want to go into 2017 with only ELD-compliant carri- ers," said Derek Leathers, president and COO of Werner Enterprises. "That ain't too far away. I don't see how we get there." As many as half of U.S. trucking companies do not yet have ELDs, Leathers said, and the second round of pur- chasers are likely to be smaller companies that will initially lose more productivity, because of reduced truck utiliza- tion, than their larger competitors did. And those carriers lost some- where between 3 and 5 percent of their productivity when they installed ELDs. "Here's the big bugaboo: No one has any idea how much capacity is running illegally," not just occasion- ally, but habitually, said Mike Regan, chief of relationship development at Tranzact and NASSTRAC advocacy chair. "We all know it's happening. One of the dangers is that we all want to continue to believe it's not nearly as bad as it actually might be." That's the very reason shippers aren't delaying action on ELDs. "We bear a lot of liability if we do not do our due diligence," one shipper told a CEO panel that included Leathers. "We're mandating ELDs to our car- riers; it's costing us more." For shippers, the cost of inaction could be even higher. JOC Don't Wait to Act on ELDs The Journal of Commerce (USPS 279 – 060), ISSN 1530-7557, May 16, 2016, Volume 17, Issue No. 10. The Journal of Commerce is published bi-weekly except the last week in December (printed 26 times per year) by JOC Group Inc. 2 Penn Plaza East, 12th Floor, Newark, N.J. 07105. Subscription price: $344 a year. Periodicals postage paid at Newark, N.J., and additional mailing offi ces. © All rights reserved. No portion of this publication may be copied or reprinted without written permission from the publisher. POSTMASTER: Please send address changes to The Journal of Commerce, Subscription Services Department, 2 Penn Plaza East, Floor 12, Newark, N.J. 07105-2257. MAY 16.2016 EXECUTIVE EDITOR, THE JOURNAL OF COMMERCE AND JOC EVENTS Chris Brooks 973.776.7818 christopher.brooks@ihs.com MANAGING EDITOR Barbara Wyker 973.776.7817 barbara.wyker@ihs.com EXECUTIVE EDITOR, JOC.COM Mark Szakonyi 202.872.1234 mark.szakonyi@ihs.com SENIOR EDITORS Joseph Bonney, Breakbulk/Project Cargo, Gulf Coast 973.508.2417 joseph.bonney@ihs.com William B. Cassidy, Trucking and Domestic Transportation 202.872.1228 bill.cassidy@ihs.com Bill Mongelluzzo, West Coast 562.428.5999 bill.mongelluzzo@ihs.com Hugh Morley, Northeast, Mexico 973.776.7811 hugh.morley@ihs.com Greg Knowler, Asia Editor, IHS Maritime & Trade +852 3975 2647 greg.knowler@ihs.com Turloch Mooney, Global Ports, IHS Maritime & Trade +852 9011 9109 turloch.mooney@ihs.com ASSOCIATE EDITOR Reynolds Hutchins, Intermodal, Government/Regulation, Southeast Ports 202.572.1487 reynolds.hutchins@ihs.com EDITOR-AT-LARGE Peter T. Leach 212.755.0940 peter.leach@ihs.com RESEARCH EDITOR Marsha Salisbury 973.776.7828 marsha.salisbury@ihs.com ASSISTANT WEB EDITOR Dustin Braden 973.776.8652 dustin.braden@ihs.com ECONOMIST Mario O. Moreno 973.776.7850 mario.moreno@ihs.com SENIOR CONTENT EDITOR Alessandra Gregory Barrett 860.248.5238 alessandra.barrett@ihs.com SENIOR DESIGNER Sue Abt, 973.776.7825 sue.abt@ihs.com DESIGNER Bryan Boyd, 973.776.7827 bryan.boyd@ihs.com PUBLISHER Tony Stein 770.295.8809, tony.stein@ihs.com SALES Cindy Cronin, Strategic Account Manager Southeast, Gulf, Canada sales, 954.551.8305 Zachary Gorman, Account Executive Northeast sales, Classifi eds/Reprints/Copyrights 973.776.7820 Misty Belser, Senior Sales Executive 919.869.7404 Ria Van den Bogaert, Sales Representative Europe, Middle East sales, +32 2 569 8905 Bon Kwok, Sales Representative Asia sales, +852 31707373 Michihiro Kawahara, Sales Representative Japan sales, +81 3 3212 3671 For Magazine Subscription Customer Service: www.joc.com/help 2 Penn Plaza East, 12th Floor, Newark, N.J. 07105 973.776.8660 • 800.952.3839 MANAGING DIRECTOR, MEDIA AND EVENTS, IHS MARITIME & TRADE, Rhiannon James SENIOR DIRECTOR, CONTENT, IHS MARITIME & TRADE, Peter Tirschwell DIRECTOR, JOC AND RAILRESOURCE, IHS MARITIME & TRADE, Amy Middlebrook DIRECTOR, IHS MARITIME & TRADE, Julia Murphy MANAGER, PRODUCTION, Carmen Verenna MARKETING PROGRAMS MANAGER, PIERS AND JOC, Jesse Case ©2016 The Journal of Commerce — All Rights Reserved For more information, visit our website, www.joc.com. "Here's the big bugaboo: No one has any idea how much capacity is running illegally."

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