Risk Management for the Transportation Industry

Good morning everyone. Today we are going to be discussing the transportation industry, more specifically ways companies can practice good risk management strategies in such a highly regulated industry. I wanted to start this article by taking a quick moment to shed some light onto the importance of the trucking industry; according to the American Trucking Association nearly 70% of all the freight moved in the United States is moved on trucks! Imagine a world without trucking, all of the groceries and commodities we have access to would be gone, or at least a lot more difficult to gain access to. With such a heavy reliance on this industry, you would think everyone would be rushing to get into the market right? Well with great power comes great responsibility, and that holds true in the trucking industry. The transportation industry is one of the most highly regulated industries in the United States. In 2000 the Federal Motor Carrier Safety Administration (FMCSA) was established to try and improve the safety of the industry. The FMCSA established the Safety Measurement System (SMS) which measures the safety performance of trucking companies and drivers while on the road. This system is broken down into seven categories that measure everything from safe driving, hours of service compliance, to maintenance records. A carriers “safety rating” is then calculated by adding up the performance in all seven of these categories.

Now I know you’re asking, “Why does this matter to an insurance company”? That is a great question! If a carrier or owner/operator has a good safety rating, they are more likely to get preferred rates on their insurance. A good safety rating tells the insurance carrier that a particular company is committed to excellence, and that commitment is what insurance carriers look for when deciding who to work with. So, how does a transportation company keep and maintain a good safety rating? According to FMCSA, every fleet management program should incorporate the following elements: first and foremost, you have to hire good drivers. Drivers are the life blood of the transportation industry, but finding qualified drivers has been a difficult task as of late. According to the Bureau of Labor Statistics the trucking industry is expecting growth up to 21% through 2020. Despite that tremendous growth, quality drivers are becoming hard to find.[1] During the process of hiring drivers, FMCSA suggests each driver should be given a road test, as well as safety training before they are hired. Another element to a complete management program is conducting pre- and post-trip inspections every day to stay in compliance with USDOT inspection reports. Some other important elements include following the USDOT guidelines for drug testing, ensuring drivers maintain valid licenses, and constantly promoting safety as a priority throughout your company.

Now if you are reading this and you are not involved with the trucking industry, all I can say is we all need to give truck drivers a break sometimes. It is a very hard job, and our economy relies heavily on the efforts made by these individuals every day. Always practice safe driving techniques, and keep in mind that large trucks need more room to stop and turn. Please let us know if you have any questions regarding this industry, and for more information please visit https://www.fmcsa.dot.gov/. We here at Childress Insurance Agency strive to be your partner in business and life. Our mission is to serve you!

Thank you,

John Max Bolling

[1] http://www.thetruckersreport.com/trucking-industry-statistics-outlook-and-trends-for-employment/

Monday, March 7th, 2016 Risk Management