Pricing Dynamics in the Truckload Sector: The Moderating Role of the Electronic Logging Device Mandate

Abstract

M ost truckload freight in the United States is priced using long-term contracts. It is widely recognized in industry that contract prices evolve based on prices shippers pay for one-time spot market transactions. This research examines whether the impact of spot market prices on contract prices has become more pronounced following the start of the electronic logging device (ELD) mandate. We draw on economic theories regarding how firms process information to explain why the ELD mandate, by reducing carriers' ability to artificially adjust capacity up or down as spot prices changed, should strengthen this relationship. To test this prediction, we construct a database that combines monthly proprietary spot market pricing data from DAT Solutions with monthly public contract pricing data from the Bureau of Labor Statistics. We test our predictions using time series regression and evaluate the robustness of our findings using both instrumental variable estimation and seemingly unrelated regression to rule out reverse causality. Consistent with our theorizing, we further this relationship has become more pronounced since the ELD mandate started. We explain the importance of these findings to theory and practice.

Expanding supply chain management and logistics research: A year in review

“…They offer additional insight and knowledge related to transportation, purchasing, and L&SCM technology. This issue reflects the traditional logistics-focused phenomena that remain the foundation for JBL (Miller et al 2021a(Miller et al , 2021b. It also highlights our desire to expand the Journal's focus to upstream issues that have been everpresent in firms but outside of JBL's traditional focus (Ellram & Tate, 2021).…”

“…Finally, this issue underscores the importance of examining new L&SCM issues that most firms have yet to embrace but grapple to understand (Gligor et al 2021). Miller et al (2021b) address the effect of an important policy change in the U.S. trucking industry. In "Pricing Dynamics in the Truckload Sector: The Moderating Role of the Electronic Logging Device Mandate," the authors explain how the electronic logging device (ELD) mandate was initiated to make it harder for carriers to violate hours-of-service (HOS) rules.…”

“…Since the mandate, carriers have not been able to artificially adjust capacity in reaction to spot price changes. Miller et al (2021b) examine another important issue in the trucking industry: driver turnover. In "Exploring Longitudinal Industry-Level Large Truckload Driver Turnover," the authors use labor economic theory to examine the relationship between industry-level turnover rate and employment.…”

“…Further use of primary data was reflected in quantitative studies that employed the Delphi technique (Durach et al 2021;Kurpjuweit et al 2021), a traditional survey approach (Iyengar et al 2021), a scenario-based role-playing experiment (Falcone et al 2021), and a natural experiment (Wallenburg et al 2021). Archival data were utilized to construct complex network structures (Wiedmer & Griffis, 2021), offer time series analysis (Miller et al 2021a(Miller et al , 2021b, and examine outcomes using a difference-in-differences technique . Finally, Volume 42 offered empirically grounded modeling approaches (Ambra et al 2021;Li et al 2021;Sternberg & Denizel, 2021).…”

The interrelationship between ocean, rail, truck and air freight rates

“…We obtained monthly data on long-distance truckload (TRUCK), rail transportation of freight (RAIL), air transportation freight (AIR) and deep-sea freight (SEA). Transportation freight indices from the BLS have been used in prior transportation time series data series research, including indices of trucking freight (Miller et al, 2020;Miller, 2019), deep-sea freight (Fuller and Kennedy, 2019) and air freight (Hummels, 2007). The SEA Index includes all freight between the US and foreign ports operated by US flagged ships.…”