Electronic Logging Device Compliance of Small and Medium Size Motor Carriers Prior to the December 18, 2017, Mandate

• Date: 01 March 2020
• Author: Jason W. Miller,Matthew A. Schwieterman,Yemisi Bolumole
• DOI: http://doi.org/10.1111/jbl.12207
• Published date: 01 March 2020

Electronic Logging Device Compliance of Small and Medium Size

Motor Carriers Prior to the December 18, 2017, Mandate

Jason W. Miller , Yemisi Bolumole, and Matthew A. Schwieterman

Michigan State University

With few exceptions, motor carriers operating in the United States were required to install electronic logging devices (ELDs) as of Decem-

ber 18, 2017. Noncompliance exposed carriers to risk of fines from enforcement agencies. This research examines compliance behaviors

of small and medium size carriers in the four months leading up to the ELD mandate, focusing on the effects of carriers’size and geographic

range of operation (e.g., regional vs. national). Drawing on sociological agency theory, new institutional theory, and theory regarding regulatory

compliance, we explain why (1) carriers’size displays a nonlinear relationship with ELD compliance, (2) the positive effect of carrier size on

ELD compliance diminishes as the enforcement deadline approached, (3) carriers with operations covering wider geographic areas have higher

rates of compliance, and (4) the effect of wider geographic range of operations on compliance will become more pronounced as the enforcement

deadline approached. We test our theory using ELD compliance data collected by an industry data vendor, CarrierLists, from September 2017

through December 2017 from 3,910 motor carriers. Results from a series of discrete choice logistic regression models corroborate our predic-

tions. These results have important implications for carriers, shippers, and regulators.

Keywords: motor carrier; electronic logging device; hours of service; safety; compliance

INTRODUCTION

The Department of Transportation’s (DOT) rule 49 CFR Parts

385, 275, 390, and 395 required that the vast majority of large

commercial trucks operating in the United States install compli-

ant electronic logging devices (ELDs) by December 18, 2017

(Federal Register 2015). As noted by the FMCSA (2017), “An

ELD is technology that automatically records a driver’s driving

time and other aspects of the hours-of-service (HOS)

records...An ELD monitors a vehicle’s engine to capture data

on whether the engine is running, whether the vehicle is moving,

miles driven, and duration of engine operation (engine hours).”

To be compliant with the ELD mandate, nonexempt motor carri-

ers not already using automatic onboard recording devices

(AOBRDs) were required to have power units equipped with

registered ELDs by December 18, 2017, or risk fines. Enforce-

ment escalated as of April 1, 2018, in that noncompliance nega-

tively affected carriers’Compliance, Safety, and Accountability

(CSA) scores and nonexempt trucks without ELDs were placed

out of service (Truckinginfo 2018). The ELD mandate was

passed by Congress to reduce violations of HOS rules made pos-

sible by the use of falsifiable paper logbooks, often called “joke

books”in the industry (Ouellet 1994).

The ELD mandate provides a fertile ground to examine motor

carriers’regulatory compliance and technology adoption behav-

iors. Many carriers expressed concern that installing ELDs would

prove so economically onerous that they would go out of busi-

ness (Commendatore 2018). Likewise, some carriers incorrectly

believed ELDs would alert law enforcement of HOS violations.

Many drivers worried ELDs would negatively affect their earn-

ings and facilitate carrier harassment. These beliefs existed

despite (1) the Federal Motor Carrier Safety Administration

(FMCSA) estimating the average annual compliance cost would

be $495 per truck (Federal Register 2015, p. 78344), (2) ELDs

offering several avenues to increase driver productivity during a

legally compliant workday, and (3) the use of ELD information

to harass drivers was illegal (Omnitracs 2018). Thus, the ELD

mandate provides a context to study firms’compliance and tech-

nology adoption decisions where a significant number of firms

were resistant to adoption. This extends other motor carrier tech-

nology adoption studies that have explored voluntary adoption of

technologies designed to increase productivity and/or improve

safety (Hubbard 2000; Belman et al. 2005; Cantor et al. 2006,

2008). Furthermore, the existence of compliance data prior to the

December 18 enforcement deadline provides an opportunity to

explore how carriers’compliance behaviors evolved as enforce-

ment became more imminent. This enables devising and testing

theory to complement existing work that examines how different

carrier characteristics such as financial performance (Britto et al.

2010; Miller and Saldanha 2016), driver turnover (Miller et al.

2017b), owner–operator use (Miller et al. 2018b), growth or con-

traction (Miller et al. 2018d), size (Cantor et al. 2016; Miller

2017b), and age (Cantor et al. 2017; Miller and Saldanha 2018)

affect carriers’safety compliance.

This manuscript takes the first step toward understanding how

carrier characteristics affected the likelihood of compliance prior

to the December 18, 2017, deadline. Drawing on tenets from

sociological agency theory (Kiser and Tong 1992; Kiser and

Baer 2005; Kiser and Kane 2007), new institutional theory

(Lawrence et al. 2001; Chandler and Hwang 2015), and theory

from the regulatory compliance literature (Genn 1993; Thornton

et al. 2009), we develop predictions regarding how carriers’size

and their geographic scope of operations (e.g., regional vs.

national) influenced their ELD compliance behaviors. Our theory

examines how these two factors shape compliance behaviors by

affecting carriers’(1) economic motivations for adopting ELDs

to improve their monitoring capabilities, (2) economic constraints

(e.g., lack of capital) that make adoption less feasible, and (3)

Corresponding author:

Jason W. Miller, Department of Supply Chain Management, Eli Broad

College of Business,Michigan State University, 632Bogue StreetN370,

48824, East Lansing,MI, USA; E-mail: mill2831@msu.edu

Journal of Business Logistics, 2020, 41(1): 67–85 doi: 10.1111/jbl.12207

© 2019 Council of Supply Chain Management Professionals

degree of regulatory scrutiny. We further examine how the

impacts of these two characteristics change as the ELD mandate

approached. We focus our theoretical efforts around carriers’size

(both power units and range of geographic operations), as size is

considered “perhaps the most powerful explanatory organiza-

tional covariate in strategic analysis”(Dobrev and Carroll 2003,

p. 541), yet has received limited systematic treatment in the

logistics literature (c.f., Cantor et al. 2016; Miller 2017b). We

likewise focus on how temporal factors (e.g., the time until the

ELD mandate takes effect) moderate the relationships between

these carrier characteristics and ELD compliance because the

passage of time is considered an important factor that shapes

how firm characteristics affect compliance behaviors (Chandler

and Hwang 2015; Zhang and Greve 2018).

To test our theory, we utilize secondary data from Car-

rierLists, a provider of information regarding small and medium

size for-hire motor carriers (Boyle 2018). Starting in September

2017, CarrierLists began large-scale surveying of small and med-

ium size motor carriers to ascertain whether they were either

compliant with the ELD mandate or had started the process of

installing ELDs. By merging weekly survey results from Septem-

ber through December into an omnibus data set of N=3,910

firms, we exploit temporal variation to test our theorized predic-

tions. We focus on small and medium size carriers because most

large carriers already operated with ELDs (Cubitt 2016; Viscelli

2016; McDowell 2017). We model ELD compliance by fitting

logistic regression models and find results that corroborate our

predictions.

The remainder of this manuscript is structured in five sections.

The next section describes pertinent studies. This is followed by

the theory and hypothesis development. We then explain our

research design and measures. The following section describes

the econometric methodology and presents results. We conclude

by describing theoretical contributions, explaining managerial

and policy implications, noting limitations, and making sugges-

tions for future research.

LITERATURE REVIEW

We organize the literature review in three subsections given the

multidisciplinary nature of this topic. The first summarizes

research regarding how firms’size and scope of operations affect

their regulatory compliance decisions prior to the start of a new

mandate. The second reviews studies regarding motor carriers’

adoption of technology and consequences of technology adop-

tion. The third describes research regarding how carriers’size

affects their safety, with an emphasis on compliance with hours-

of-service (HOS) rules.

Firm size and timing of compliance with new regulatory

rules

A vast body of literature has investigated the process through

which technologies and administrative innovations are adopted

by organizations (Tolbert and Zucker 1983; Westphal et al.

1997; Kennedy and Fiss 2009; Melnyk et al. 2013; Scott 2014).

The majority of these studies focus on voluntary adoption deci-

sions, such as adoption of total quality management by hospitals

(Westphal et al. 1997; Kennedy and Fiss 2009) or firms’certifi-

cation as part of the Customs-Trade Partnership Against Terror-

ism initiative (Ritchie and Melnyk 2012; Melnyk et al. 2013; Ni

et al. 2016). In contrast, as noted by Raaijmakers et al. (2015),

little is understood regarding the process by which firms come to

comply with new regulatory rules prior to these rules going into

effect. The likely reason for this lacuna is that scholars have

assumed regulatory rules will be nearly universally adopted by

firms at the same time because of the coercive power regulators

have at their disposal (DiMaggio and Powell 1983; Lawrence

et al. 2001). However, Raaijmakers et al. (2015) challenged this

assumption, arguing that managers’timing of adoption decisions

will vary based on operating circumstances and managers’

attitudes toward regulation.

Our work extends this stream by incorporating theory from

the regulatory compliance literature (Gunningham et al. 2004;

Thornton et al. 2009; Kagan et al. 2011) to explain how charac-

teristics of firms’operations affect the pressures and constraints

they face when complying with stricter rules. We likewise incor-

porate principles from sociological agency theory (Kiser and

Baer 2005) to explain why larger firms and those whose opera-

tions cover wider geographies should be more likely to adopt

monitoring technologies mandated by regulators because such

technologies are more valuable because these firms experience

greater monitoring challenges. We further enrich understanding

regarding how size affects the regulatory pressures firms face by

explaining why firm size will have a less pronounced effect on

compliance rates as enforcement becomes more imminent. This

aligns with the call from Zhang and Greve (2018) to better

understand how temporal dynamics moderate the effects of firms’

characteristics on regulatory compliance behaviors.

Motor carriers’technology adoption

The second stream of literature upon which this research builds

involves motor carriers’adoption

1

of different information tech-

nologies. Prior studies focused on firms’voluntary adoption of

technologies such as trip recorders and onboard computers (Hub-

bard 2000), satellite tracking (Belman et al. 2005; Mello and

Hunt 2009), and various safety technologies (Cantor et al. 2006,

2008). Accordingly, studies focusing on the consequences of

technology adoption such as increased capacity utilization and

productivity (Hubbard 2003; Manrodt et al. 2003); improved

operational performance (Miller et al. 2013a); reduced accidents,

unsafe behaviors, and HOS violations (Wouters and Bos 2000;

Hickman and Hanowski 2011; Miller et al. 2018c); changes in

vertical integration decisions (Baker and Hubbard 2003); and

changes in drivers’work lives (Belman et al. 2005) have looked

at the effects of voluntary technology adoption. Furthermore,

prior studies regarding safety consequences of ELDs have

explored the effectiveness of these devices on reducing carriers’

HOS violation rates and costs (Cantor et al. 2009) and reducing

carriers’overall costs by reducing fines and accidents (Pitera

1

It should be noted that other scholars have investigated infor-

mation technology use by freight forwarders including EDI use

(Murphy and Daley 1996, 1999; Murphy et al. 1998) and Inter-

net use (Murphy and Daley 2000; Lynagh et al. 2001).

68 J. W. Miller et al.