Trucking has always been a tough job, and a digital transformation in transportation will not only make that job more complex but it will also introduce new risks and exposures that motor carriers can’t afford to ignore. Based on the recent trends and knowledge from many years of experience in managing transportation risk, here are a few predictions:
Truckers’ jobs will become even more complicated. Technology is shifting the road ahead. Trucking equipment continues to evolve, with 18-speed transmissions, fleet telematics and sensors that monitor engine wear and tear. More sophisticated tractor units cost a lot more than they used to, because of the technology they contain. In each cab, there will be even more for motor carriers and drivers to coordinate, keep track of and monitor, every mile of the way.
Trucking will enter the era of digital transformation. The evolution of data analytics that’s occurring in all industries will introduce similar opportunities for operational improvements in trucking. Motor carriers and drivers already face additional regulatory compliance burdens from the Federal Motor Carrier Safety Administration and the U.S. Department of Transportation. Digital transformation will accelerate the evolution of trucking. One example of this is the phase-in of electronic logging devices (ELDs). On the positive side, digital technology gives motor carriers the ability to analyze and improve their logistics, on-road performance, and profitability.
Skill sets needed will help mitigate the driver shortage. It might sound too good to be true, because right now every motor carrier is struggling to find enough quality drivers. But the skills truckers will need in the future are going to expand the talent pool and enable the industry to hire more well-suited people. Trucking will appeal to a broader population. Drivers will be increasingly professional, more analytical, and less intuitive. The "cowboys" who once dominated the ranks of drivers, many of them with a devil-may-care attitude, have become relatively few. Trucking today and tomorrow requires more methodical, courteous, and professional drivers who don’t view rules and regulations as things to break.
Safety Measurement System (SMS). FMCSA, which conducts roadside inspections and has authority to investigate and intervene in motor carriers’ safety practices, makes most of its findings available to the public through the online Safety Measurement System. Anyone can look up a motor carrier by name or USDOT number and see its on-road performance in the following areas: unsafe driving, hours-of-service compliance, vehicle maintenance, controlled substances and alcohol, and driver fitness. The only categories not publicly available are crash indicator and hazardous materials compliance. These seven categories comprise what FMCSA calls the BASICs — Behavior Analysis & Safety Improvement Categories. FMCSA studies have found that motor carriers’ performance in the BASICs is strongly correlated to future crashes.
Risks and Exposures
Trucking is an expensive business, and it’s becoming even more costly with high-tech equipment and regulatory requirements. Ignoring or inadequately managing the risks in trucking can eat up motor carriers’ profits and force them to make tough decisions.
The flip side is not pretty for motor carriers. Poor safety practices and non-compliance carry all sorts of penalties, up to and including fines and orders to remove vehicles from service. And that’s before tallying up the direct and indirect impact in employee injuries, accidents involving others and reduced productivity. With profit margins in the transportation business already narrow, can motor carriers afford not to take safety to heart?
Even as motor carriers consider how technology will change their business, ushering in new types of risks, they need to remember that traditional risks and exposures persist. These include:
- Autonomous vehicle technology. It's possible that we’ll see autonomous long-haul trucks on the road before we see autonomous passenger cars. It’s not clear how hours of service rules will be adapted to autonomous trucks — if you’re not actively driving because an autopilot is operating the rig, are you still on the clock? That’s something to keep an eye on.
- Economic impact on motor carriers with older fleets. Installing ELDs can cost motor carriers hundreds of dollars per vehicle, not counting monthly subscription costs. Other regulations may require some costly retrofitting or even the purchase of new equipment. A brand-new semi-truck, or tractor, can cost between $130,000 and $180,000 on average, while a new trailer can cost $30,000 to $80,000. Those don’t include operating expenses, such as fuel, maintenance and driver compensation.
Emerging risks and exposures in trucking include:
- Driver injuries
- Automobile physical damage
- Third-party property damage
- Shipper customers’ cargo loss
Tokio Marine America (TMA) can help motor carriers and their risk advisers during this era of digital transformation. We’re a digitally savvy insurer that understands transportation logistics and cargo risks. We help manage conventional and emerging risks through our expertise and proprietary needed coverages. During times of change and stress, we prove our value by focusing on delivering Anshin, the Japanese word for safety, security and peace of mind. Where do you see the transportation business going? Talk to us about the risks your business faces. We’ll help you get there.
To learn how Tokio Marine America can make a difference in your business, visit our product page.
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