The Federal Motor Carrier Safety Administration (FMCSA) has finally published the long-anticipated ELD mandate in the Federal Register in December 2015. It affects the majority of fleets, and probably affects yours. Here, we discuss your company’s needs in order to ensure compliance with the new federal mandate.
The new rule requires drivers to use compliant Electronic Logging Devices (ELDs) to maintain Records of Duty Status changes (RODS). FMSCA will maintain a registry of compliant ELD manufacturers and device models on their website. Unfortunately, the link is not yet available. Keep checking our site – we will post the link once FMCSA makes it public.
If you did not have on-board recorders in vehicles prior to December 2015, then you must install a compliant ELD system in your vehicles within two years, by the end of December 2017.
What if my fleet is already running on-board computers?
Your current on-board system may not be compliant with the new list of functional requirements, but this buys you extra time. You have an additional two years, or until the end of December 2019, to implement a compliant ELD solution. Each manufacturer must certify and register their devices with FMCSA. The agency will publish the list of compliant ELDs, in time. If your current on-board system is not on that list in two years, you will have to upgrade.
What about LoadTrek ELDs and compliance?
Good news! LoadTrek will be compliant. Current Fleetilla-LDT systems, LoadTrek Connected Android tablets, and LoadTrek ProDriver platform meet the hardware requirements of the mandate. We are in the process of certifying devices and registering the devices with FMCSA. We expect to complete the formal process by June of this year.
If you are an existing LoadTrek customer, then you need not worry or take any action at this time. The existing systems will receive an automatic over-the-air update. We estimate that we will complete this process by July of 2016. However, since you are not required to comply with the new rules until the end of 2019, you may choose when to activate the features. LoadTrek profiles will include an ELD mandate switch that you can enable when you see fit.
What are the technical requirements for a compliant ELD?
The list of requirements is very extensive. You can read the complete section 4, Functional Requirements, on the pages 101 through 116 at the following link:
Federal Register Document
We are including a quick distillation of relevant points:
- ELD must be connected to the engine ECM
- ELD must notify driver of its own malfunction
- ELD should have a mute function for drivers in sleeper
- Drivers may edit non-driving HOS periods
- ELD must retain the original log
- Drivers can validate daily logs
- Drivers must validate log changes performed by the company
- ELD must transfer data in a predefined format via USB, WiFi or an internet download to inspectors during the roadside inspection
How long does it take to rollout a system?
The length of implementation depends on three factors: the size of your company, the ease of hardware installation, and the degree of changes to internal processes.
The first and second factors represent the physical limitations on the speed of rollout. More trucks to install means more time required. The complexity of installation affects the time to install each vehicle. Many ELD manufacturers, including LoadTrek, provide quick install kits that may decrease the total installation time to fifteen minutes per truck.
The third factor is the most commonly underestimated. Companies must develop internal controls and establish audit processes. They need to train drivers, and allow drivers time to become familiar with the system. It may take 30-60 days before the execution of all processes is adequately error-free.
A ninety-day implementation is a realistic yet ambitious goal for companies that are new to on-boards. The timeline is shorter for companies that already use electronic logging systems. They have to contend with the new audit and log validation requirements, and integrate them into operational processes.
In Summary…
The path to compliance will require effort from most companies. A few will need only a minor process adjustment and a set of new policies. For others, researching and selecting vendors, acquiring and installing equipment, training personnel will become a large project. We encourage you to start today.
Check out LoadTrek webinar calendar. We will hold a series of webinars specifically about compliance with the ELD mandate.
http://www.loadtrek.net/calendar/
Federal Motor Carrier Safety Administration (FMCSA) today announced a rulemaking proposal designed to enhance the Agency’s ability to identify non-compliant motor carriers. The Safety Fitness Determination (SFD) Notice of Proposed Rulemaking (NPRM), to be published in the Federal Register, would update FMCSA’s safety fitness rating methodology by integrating on-road safety data from inspections, along with the results of carrier investigations and crash reports, to determine a motor carrier’s overall safety fitness on a monthly basis.
The proposed SFD rule would replace the current three-tier federal rating system of “satisfactory–conditional–unsatisfactory” for federally regulated commercial motor carriers (in place since 1982) with a single determination of “unfit,” which would require the carrier to either improve its operations or cease operations.
Once in place, the SFD rule will permit FMCSA to assess the safety fitness of approximately 75,000 companies a month. By comparison, the agency is only able to investigate 15,000 motor carriers annually – with less than half of those companies receiving a safety rating.
The proposed methodology would determine when a carrier is not fit to operate commercial motor vehicles in or affecting interstate commerce based on:
- the carrier’s performance in relation to a fixed failure threshold established in the rule for five of the agency’s Behavior Analysis and Safety Improvement Categories (BASICs);
- investigation results; or
- a combination of on-road safety data and investigation information.
The proposed rule further incorporates rigorous data sufficiency standards and would require that a significant pattern of non-compliance be documented in order for a carrier to fail a BASIC.
When assessing roadside inspection data results, the proposal uses a minimum of 11 inspections with violations in a single BASIC within a 24-month period before a motor carrier could be eligible to be identified as “unfit.” If a carrier’s individual performance meets or exceeds the failure standards in the rule, it would then fail that BASIC. The failure standard will be fixed by the rule. A carrier’s status in relation to that fixed measure would not be affected by other carriers’ performance.
Failure of a BASIC based on either crash data or compliance with drug and alcohol requirements would only occur following a comprehensive investigation.
FMCSA estimates that under this proposal, less than 300 motor carriers each year would be proposed as “unfit” solely as a result of on-road safety violations. Further, the agency’s analysis has shown that the carriers identified through this on-road safety data have crash rates of almost four times the national average.
FMCSA encourages the public to review the NPRM and to submit comments and evidentiary materials to the docket following its publication in the Federal Register. The public comment period will be open for 60 days. FMCSA will also be providing a reply comment period allowing for an additional 30 days for commenters to respond to the initial comments.
The Agency is requesting specific comments and data in the NPRM including, but not limited to,
- Moving to dynamic safety event groups
- Moving to low, medium, and high severity weightings
- Removing English Language Proficiency violations from the SFD process
- Establishing lower failure standards for Passenger and Hazardous Materials carriers
- Additional critical and acute regulations
- Implementation impacts to States
For more information on FMCSA’s Safety Fitness Determination proposed rule, including a full copy of the NPRM, an instructional webinar, and a Safety Fitness Determination Calculator, visit www.fmcsa.dot.gov/sfd. To comment on the rule once it is published in the Federal Register, please use www.regulations.gov and docket number FMCSA-2015-0001.
2016 is only two weeks old, but it sure does feel longer than that. In just two weeks, oil is down 18%, oil service stocks have lost 14%, and shares of E&P companies are down 17%. It is widely expected that 2016 will be a year of rebalancing, which will be unpleasant.
Today, we are trying to look beyond the 2016 carnage in front of our noses and imagine the O&G world of 2017. Regular Oilpro readers know that our house view is everything bottoms in 2016. This doesn’t necessarily mean growth comes roaring back in 2017, but it does mean that contraction fades into stability.
2017 may seem an eternity away, but a blurry shape is starting to form, and some baseline expectations have been set. So without further ado, here are some early high-level thoughts on what 2017 may look like in O&G:
- Sharp Oil Production Declines. There is no defined consensus, but most observers (ourselves included) share the view that global oil production will be contracting meaningfully by 2017, particularly in the US. Even with OPEC going full tilt and shale more resilient than expected, low oil prices will take their toll. The massive global spending reduction of approximately 45% from 2014 levels + time = production curtailment. The question is: will it be enough to consume the glut?
- Oil Demand Should Be Higher. Consensus expectations are for an increase in global oil demand of 1.2mmbpd by early 2017. Chinese growth concerns and spreading macro economic concerns are potential flies in the ointment, but we still expect more oil will be burned in 2017 than in 2016.
- NAM Capex Bounce? We evaluated Wall Street consensus expectations for a group of 59 independent E&Ps. After falling 48% in 2015 and another 26% fall forecast in 2016, the market is looking for a spending rebound of 16% in 2017. This seems a bit on the high side of likely, but if oil fundamentals improve, companies may be willing to spend a bit more next year to fend off production declines.
- Less Oilfield Competition. A wave of bankruptcies, distressed sales, equipment attrition, and rig scrapping will occur over the next 12-24 months. This means the oilfield service landscape will look very very different in 2017. Fewer companies and less equipment chasing work could enable a pricing / margin rally in 2017 for oilfield service even with no incremental drilling. In other words, an activity-less recovery may be in the cards.
- Jobs Growth Possible. Because of the massive cash burn the industry is going through this year, lay-offs will likely overshoot to the downside. By 2017, companies should be dipping their toes in the job market again, selectively hiring out of the pool of skilled, sidelined workers. Companies will be motivated to nibble in the jobs market even ahead of a big activity recovery because i) stability will foster recovery predictions, ii) they will realize the loss of skilled workers has adversely impacted operations, and iii) they’ll want to hire the best available talent before their peers do.
- E&P Focuses On Short Cycle, Lower Cost Projects. The industry is rethinking its approach to field development. By 2017, new protocols will be in place to evaluate final investment decisions. The industry’s appetite for long lead time and cost intensive developments will be a fraction of prior levels in 2017. As a result, offshore investment allocations could increasingly move towards onshore projects.
- WTI Oil Price Expectations. We don’t maintain an in-house oil price forecast, but we monitor the consensus view. The median forecast for the 38 analysts polled by Bloomberg is $60/barrel in 2017 vs. $50 in 2016 and the current spot price of $30.60. Downgrades lie ahead as the consensus view needs to catch up to the recent sell-off. The futures price for 2017 delivery is currently $41/barrel (market in contango).
- HHUB Nat Gas Price Expectations. We don’t maintain an in-house gas price forecast, but we monitor the consensus view. The median forecast for the 23 analysts polled by Bloomberg is $3.25/mmbtu in 2017 vs. $2.85 in 2016 and the current spot price of $2.28. The futures price for 2017 delivery is currently $2.77/mmbtu (market in contango).
While it’s still early to completely give up on 2016, it is looking like this may be a lost year for our industry. By 2017, further downside will be limited, but how much upside can be reasonably assumed for 2017? Answering this question is more an exercise in imagination than fundamental analysis as we remain adrift in uncharted waters.
— Joseph Triepke, Oilpro Managing Director
