The study, done by the Global Supply Chain Institute at the University of Tennessee in Knoxville, recommends shipperss can, in lieu of raising rates, work with their carriers to extend lead time for some customers, increase customer delivery windows, improve shipment consolidation and increase the use of drop and hook freight.
The study says it’s “obvious that the loss of productivity cannot be absorbed by the carriers. Shippers will have to improve their operations in order to minimize the HOS Rule change impact.”
UT’s study included survey responses from 417 shippers, mostly in manufacturing, and 58 percent of them said passing on costs to their customers was the most viable strategy for coping with the costs of complying with the new rules.
About 47 percent of them said they anticipated a rate increase due to the new regulations. The researchers behind the study were more declarative: “It is our belief that the latter group is in denial about what’s going to happen. Rate increases will be coming,” the study reads. “It’s just a matter of how much.”
The same group plans to study the subject more in the middle of this year, it says, but in the December-released conclusions, the researchers said the new rules could “fatigue carrier relationships with customers” by causing shipments to take longer. It could also congest roadways due to a potential increase in trucks on the road designed to mitigate the productivity hit caused by the July 1 hours rule change.
In a separate survey, however, 70 percent of shippers said they would not consider shifting their freight to intermodal, although use of rail could reduce transit time of freight.
