Urgent Steps for Trucking and Logistics Companies
Trucking and logistics firms need to take prompt action to reduce risks associated with drivers holding non-domiciled commercial driver’s licenses (CDLs), as recommended by a regulatory expert. This guidance includes conducting a thorough audit of all current employee or contract drivers.
The recommendation comes following an emergency rule introduced in September by the Federal Motor Carrier Safety Administration (FMCSA), which significantly revises eligibility criteria for non-domiciled CDLs.
Greg Reed, a partner at Hanson Bridgett LLP, mentioned in an interview with FreightWaves that, “The regulatory language in FMCSA’s interim final rule, along with Secretary Duffy’s comments at the press conference, raises questions about the legitimacy of all non-domiciled CDLs.” He added that this uncertainty could dramatically increase the liability and risk for carriers using these drivers.
Legal Implications of Non-Domiciled CDLs
In his legal alert, Reed emphasized that if any incidents occur, plaintiffs’ attorneys may argue that logistics and trucking firms are aware that non-domiciled CDLs might be operating unlawfully and are inadequately qualified. Furthermore, non-domiciled CDL holders could face immediate revocation of their licenses as the Department of Transportation (DOT) and state driver’s license agencies conduct audits. This could lead to drivers operating without legal commercial licenses.
Reed suggests a series of actions that trucking and logistics companies should take now:
- Conduct an audit of all current employee or contract drivers to check for non-domiciled CDLs. Engage with common carriers to assess exposure to non-domiciled CDLs.
- Consult legal counsel to evaluate whether identified drivers have sufficient documentation to ensure their CDs won’t be revoked during ongoing audits.
- Limit the use of these drivers until their non-domiciled CDLs are confirmed or renewed.
- Enhance or introduce contractual language requiring drivers to be properly licensed, have lawful employment status, and be qualified to operate commercial motor vehicles.
Potential Capacity Changes Ahead
The tighter regulations regarding non-domiciled CDLs have led FMCSA to predict that around 194,000 out of roughly 200,000 drivers with these licenses will leave the market over the next two years, amounting to about 5% of the 3.9 million commercial drivers.
“While the FMCSA’s projection suggests a 5% capacity reduction over two years, I anticipate a more significant tightening in a shorter timeframe,” Reed told FreightWaves. He added that even if carriers don’t immediately let go of their non-domiciled CDL drivers, they will likely be pressured to phase them out to avoid increased liability.
Market Predictions and Future Impacts
Some Wall Street analysts believe that the loss of capacity due to the new CDL regulations will have a greater effect on rates compared to the FMCSA’s recent enforcement of English language proficiency requirements. TD Cowen transportation analyst Jason Seidl noted that the capacity changes will likely have substantial implications in 2026 or 2027.
“Although immediate enforcement may not significantly impact the upcoming bidding season, we expect that ongoing capacity issues could affect shippers’ strategies this bid season, prompting some to accelerate their bids,” Seidl stated.
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