Keep on safely truckin’
As stated by the bureau of transportation the USA is ‘a nation served by freight’. More than 70% of inland US freight is carried on trucks and the total volume is growing, with the US economy bouncing back to pre-recession levels. Transportation of freight is ever increasing due to both the geographic distribution of population and current economic activity, but this vital transportation sector is facing a demographic shift that’s raising the stakes for insurers and road haulage companies alike.
The sector employs about 500,000 drivers but needs 51,000 more, according to the July issue of Fortune. So serious is the shortage of long-haul drivers that freight rates are rising. Companies like Amazon and Walmart have been forced to change their delivery-time promises. Meanwhile, the demographic effect is having an impact on the sector’s safety record and on the insurance market that supports it.
As ageing drivers retire, younger recruits are filling their cabs. But today’s youth are less inclined to find the on-the-road lifestyle appealing. When they do climb behind the wheel, attracted by the potential for high earnings even for those with little education, hiring newcomers means a greater number of less-experienced drivers on the road. That’s led to an increase in the frequency and severity of accidents. About 94% of all highway accidents are the result of driver error. Fatalities involving large trucks were up 7.5% between 2010 and 2015 according to the US Department of Transport and this figure continues to rise. Although the insurance industry has tried to mitigate this trend by implementing minimum commercial driving criteria and tougher commercial driving license (CDL) checks, you still cannot help but notice the number of accidents where the driver is at fault.
Another issue is drivers’ expenses, particularly fuel charges. The cost of purchasing or renting the newer tractor units has increased dramatically in recent years, in part due to 2012 legislation that required vehicles to reach minimum emissions targets. Repair costs and parts are significantly more expensive for these newer units. Technology installed in the cab and under the hood also comes at a high price. License and insurance costs are continuing to rise, so the economics of driving have become challenging. US Truck Drivers, especially those who carry long haul, can still achieve high earnings even after costs, but for retailers and manufacturers the price of getting goods to market is mounting steeply.
Improved safety is one way to reduce costs and therefore make a career in trucking more attractive, but operators and insurers are working against the tide to reverse the declining safety trends. Telematics for truckers are on the increase, boosted in part by a recent regulation that creates a legal requirement that each vehicle has an electronic log of its usage, but much more needs to be done.
To reduce accidents, collaboration between manufacturers, regulators and the trucking industry needs to improve. More effort should be made to ensure safety policies are enforced at the trucking company level. Driver training, education and monitoring are an obvious starting point. Wellness programmes, fatigue policies, dash-cams and electronic monitoring may all play a role. The industry needs to look after its truckers and provide a safe environment in which they can work. That will lead to fewer accidents and a consequent insurance benefit. But these improvements will be difficult: a cultural change is needed.
The insurance sector is lobbying at various levels and beginning to see benefits. These are reflected in the vehicle owners’ bottom line, which helps insurers address their own profitability in this segment. Another partial remedy is telematics: some domestic insurance companies already require this for trucks or fleets over a specific size and will even contact truckers while they are moving if they breach certain thresholds stated within their insurance policies. Some now track cargo too. These are steps in the right direction, but the industry needs to embrace them to allow the US trucking industry to keep on trucking safely.