Analysis of safety award winners Average operating ratio (expenses divided by revenue was 0.63% better. 95.48% vs 96.11% Insurance costs were 0.12 cent less per mile. 7.5 cents vs. 7.62 cents. ( this was a 1999 survey by Transport Topics)
Operating Ratio Expenses vs.Revenue 97%, for example
$.97 cents of every $1.00 Goes to run company as it currently operates
$.03 of every $1.00 covers Improved driver wages New equipment Unexpected expenses, such as accidents Fuel price increases Costs of new regulations
At our example 97% operating ratio How much additional revenue must be created to cover a $1000 accident (or any other unexpected $1000 expense)?
Poor hiring decisions Can further aggravate driver turnover
Poor Hiring Decisions result in Poor quality attracting more poor quality Fewer referrals from present drivers More time to do verifications More drivers leave in less than 30 days More time spent to do past employment verifications for their next employer
Recent news article Overturned semi shut down I-65 for 3 hrs. 23 yr old driver 5 passengers were in the vehicle 3 passengers thrown from vehicle 2 two-month old babies and a 2-yr old No seat belts were worn
Insurance and claims costs 2% to 3% of revenue is considered very good by industry analysts “normal” is 4% to 6% according to 1999 information from Great West Casualty (including out of pocket expenses and reserves)
Factors that influence insurability and/or cost of insurance
Failure to establish written qualification standards for selection of mature and experienced drivers.
Failure to follow driver qualification standards, policies and procedures, including FMCSR Part 391.
The motor carrier as well as the examining physician can be held liable for damages that occur if a driver is erroneously found qualified to drive and has an accident.
True story: File completed in TX faxed to IN for review File completed on Friday Driver assigned truck on Friday Accident on Saturday, left turn over the top of an occupied Lincoln Driver left the scene Driver tested positive for alcohol after accident
True story (continued) TX MVR didn’t divulge prior drug/alcohol related problems during teenage years. IN review of long form physical indicated driver should not have even been hired. Vision in one eye was 20/50.
Monetary costs of Accidents Injuries to drivers Injuries to other parties Damage to tractor/trailer Damage to other vehicles or objects Damage to cargo Wrecker fees Environmental clean up Insurance deductibles Administration time Attorney fees Punitive damages
Costs in addition to monetary Quality of life for driver Quality of life for other drivers involved Relationships with shippers Increased DOT audits Perception of the public Insurance is harder to get Your self-confidence
Your driver has been involved in a serious accident….. This is usually when a trucking company realizes they simply didn’t do enough to implement important safety policies and procedures
Once an accident has occurred, You are out of time and luck.
Negligent Hiring There is an accident…what if your driver should never have been hired to drive commercially in the first place? What if they uncover a history of serious traffic violations?
Negligent Hiring Hard to defend a driver with a history of recklessness even if he wasn’t at fault in a particular accident.
Negligent Entrustment Places the responsibility for driver error, recklessness, and incompetence on the motor carrier employer and fleet manager
Negligent Entrustment Hiring a driver without conducting past employment inquiries Using a driver whose license or physical has expired Using a driver with a poor motor vehicle abstract Forcing a driver to drive without available hours
Punitive Damages A business can’t be sentenced to death A hard hit in the pocketbook can make reprehensible decisions that seemed at first glance profitable, ultimately very costly.
When you have to face the judge and jury will you be able to show you are serious about your safety responsibilities or will you appear irresponsible and negligent in your duty to protect public safety?
Trucking industry is highly regulated Determining negligence is a simple task.
If a newly hired driver with a history of moving violations is involved in a speed-related crash, can you justify your hiring decision?
If one of your drivers is involved in a fatal accident, will the plaintiff’s attorney uncover information about your driver that you should have known?
Once an accident happens, it will be too late to correct deficiencies or to talk about what you “planned to do”.
The jury’s perception of your company will be based on what you failed to do before the accident.
A recent study by “Jury Verdict Inc. Plaintiffs are awarded damages about 53% of the time…….
….when a trucking company is involved, The plaintiffs win at the rate of 80%
Saying “no” carries it’s own set of liability issues Your decision cannot be discriminatory Your decision cannot be influenced by prior work related injuries. Equal Employment Opportunity Act Fair Credit Reporting Act Americans with Disabilities Act
Consult your attorney for further advice. Put your policies and procedures in writing and then follow them.
ROAD TO RECOVERY Commit to safety Do the Right Thing Select the Right People Train and retrain Let them know what is expected Communicate safety Recognize and reward safety Get drivers involved Get families involved Evaluate Measure Set higher goals for continued improvement