Non-domicile CDL crackdown strains truck dealers, lenders

The federal crackdown on non-domiciled commercial drivers and English-proficiency requirements are hampering dealer truck sales while putting lenders on high alert.  

Sixty percent of surveyed dealers reported deteriorating used-truck demand in November, up from roughly 10% in August, according to heavy-equipment research firm IronAdvisor Insights, citing added challenges tied to recent policy changes aimed at non-domiciled drivers.  

The Federal Motor Carrier Safety Administration (FMCSA) on Sept. 26 issued an emergency ruling that restricts eligibility for non-domiciled commercial driver’s licenses in response to a purported pattern of states illegally issuing CDLs and a series of crashes caused by foreign-born drivers.  

The ruling primarily takes issue with states’ licensing practices and targets most immigration statuses beyond just illegals. Non-FMCSA-approved categories include: 

• Refugees; 
• Asylum seekers with pending cases; 
• Individuals under Deferred Action for Childhood Arrivals; 
• Temporary Protected Status holders;  
• Student visa holders; and
• Dependent spouses and children. 

The rule followed President Donald Trump’s April 28 executive order that strengthened enforcement of English-proficiency requirements for truck drivers.  

The federal rules are expected to remove between 5% and 12% of CDL holders — or 214,000 to 437,000 drivers — over the next few years, according to logistics company J.B. Hunt.  

Swarms of drivers have left the market since Sept. 26, with the FMCSA revoking 17,000 non-domiciled CDLs in California alone, according to a Nov. 12 release from the agency. The FMCSA has also threatened to revoke one-third of Minnesota’s non-domiciled CDLs and up to $30.4 million in federal highway money for the state.  

Dealers respond 

Even though a federal appeals court issued an administrative stay on Nov. 10, pausing the rule until further review, the crackdown has dealt a blow to truck dealers.  

A Daimler Truck dealer, for example, stated in the IronAdvisor report that one customer “lost 38 drivers out of a 60-truck fleet.” A Paccar dealer said it has customers with drivers who aren’t showing up for work due to immigration-enforcement concerns.  

Dealers in areas with large numbers of immigrant drivers are losing a significant portion of their customer base, with a Traton Group dealer noting that “60% of our sleeper buyers were non-native English speakers” last year.  

“It’s hard for a salesman to turn away business from anyone,” the dealer stated. “And that immigrant segment tends to come with their own financing. They will travel all the way across the country for a lower-priced truck, and they will fund you before even seeing the truck.” 

While the loss of CDLs may alleviate persisting overcapacity challenges and lead to higher freight rates, dealers are concerned that the stricter CDL and English-proficiency requirements will take too much capacity out of the market, according to the survey.  

Lenders affected 

The recent policy changes affect truck lenders as many non-domiciled CDL holders are forced to cease operations, and some are being imprisoned, Chris Grivas, president of Chadds Ford, Pa.-based CAG Truck Capital, told Equipment Finance News. More borrowers are in repossession status for these reasons, he said.  

Lenders that finance trucks used by driving schools for training purposes are also vulnerable, Grivas said. 

In fact, the FMCSA recently revoked the accreditation of nearly 3,000 CDL training providers and put 4,500 on notice for potential noncompliance, according to a Dec. 1 release from the agency.  

While foreign-born drivers represent a small percentage of carriers — about 18% according to the Bureau of Labor Statistics — lenders must actively monitor regulatory changes that could affect new and existing borrowers’ ability to repay their loans, Grivas said.  

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