Some analysts don’t believe an easing of instruction and testing rules for issuing commercial driver’s licenses will meaningfully change the current tight supply dynamic that exists in trucking.
Federal regulators recently issued a final rule allowing a third-party skills instructor to administer both instruction and qualifying testing to the same driver applicant. Previously, both functions could not be performed by the same instructor for one candidate. States will now have the discretion to decide whether they will allow qualified third-party trainers to complete both functions.
The proposal to change the rule was undertaken in 2019 following complaints that the process was too cumbersome. The Federal Motor Carrier Safety Administration said the change will reduce testing delays and costs and improve the turnaround time for licensing.
Data from the Truckload Carriers Association shows the requirement for the separation of duties was a contributor to the equivalent of 6.4 million in testing delay days, more than 250,000 jobs being placed on hold and $1.5 billion in lost wages during 2016.
In a note to clients, Morgan Stanley (NYSE: MS) analyst Ravi Shanker said the rule may “relieve an operational restriction hindering some CDL applicants,” but noted larger headwinds to capacity like the Drug & Alcohol Clearinghouse, low driver school enrollment and insurance costs outweigh the move.
“A move like this may help to ease on the margin but ultimately we do not believe this will have a significant impact on the supply side and don’t expect a flood to the market with new commercial driver licenses,” Shanker continued.
Deutsche Bank’s (NYSE: DB) Amit Mehrotra said, “We view this as a positive for carriers to expand the pool of qualified drivers offsetting the current wage inflation (i.e., competitive pay rates/recently announced driver pay increases) and in turn relieving some margin pressure.” He continued by saying any addition of incremental capacity would be a negative to the supply-demand balance but he doesn’t believe the change will be overly impactful.
As COVID-related demand has prompted the continuous need for and restocking of retail consumables and household goods, the need for truck capacity has surged. However, capacity has contracted largely due to declines in the number of qualified drivers. CDL issuances have been reduced by more than 100,000 and only 10% of the 46,000 drivers with drug and alcohol violations have returned to duty.
Those opposed to changing the rule cited concerns around fraud, conflicts of interest and bias on the part of the examiner. A 2013 change to the rule gave driver schools the ability to provide testing and training, but not by the same instructor as a means of preventing fraud.
“Removing the restriction is expected to reduce skills testing delays and thereby allow drivers to obtain gainful employment sooner, according to the FMCSA. “In addition, the increased efficiency in skills testing will benefit third-party testers and CDL applicants by reducing the time and cost spent to complete skills testing. FMCSA believes this change will not undermine the integrity or effectiveness of CDL skills testing.”
The rule will be effective following a 60-day period after the date of publication in the Federal Register.
Jon Craig
I agree with both Joe and Steven. And add that the only way to increase drivers is making the wages better and improving working conditions. Better trucks with better features, but safety and comfort. But pushing drivers to do more for less. Plan your freight for 8 hour driving shifts and don’t force them to drive in poor weather conditions. Pay them detention. Good pay and every time regardless of the customer. Push governments for increases in available parking.
Steven Gengler
This is ridiculous. I have been driving for 20 years. The drivers out here now can’t drive safely as it is. Yesterday alone I watched a driver (yes I timed him) over 20min to back in a dock door where there was no other trucks. The federal motor carriers administration needs to tighten restrictions and make training more structured to make drivers and other vehicles on the road safer. Last month I had to help a driver who couldn’t speak English back his truck in a door because they couldn’t do it. These driver shouldn’t have a CDL. Please lets make training stricter safer and more structured.
Joe DiTullio
How about the government, and in turn, the trucking industry, stop viewing marijuana (a plant, an herb, a spice) as a drug that should remain illegal, and a bar to legally obtaining and holding a CDL? That’s an idea that I can absolutely guarantee will get you a ton of potential driver candidates. If a trucker can end his shift and go home and enjoy a few alcoholic bevs, why can’t that same guy replace the beer with a bowl of weed? Enough of the government control nonsense already. Stop controlling people and telling them what they can and cannot do and I bet you’ll be a lot happier with the results you get. No one likes to be told what to do in life, and especially when it’s nonsensical and hypocritical. One life to live.