When people think of risk issues facing the trucking industry, common concerns that come to mind are cargo theft, terrorism threats, workers' compensation and environmental hazards. Yet, when we talked with risk professionals in the industry, few even mentioned these topics at all, and if they did, they ranked them third or lower on their lists.
So what tops the list these days? No. 1 is the risk issues associated with the driver shortage. No. 2 is the costs associated with major accidents.
HIRING FOR KEEPS
According to Bob Heinisch, vice president of safety for Eagle Transport, a hazardous-material carrier based in Rocky Mount, N.C., the driver shortage is not only the biggest issue in trucking in general--it also creates the most serious risks, in that some companies may decide to select unqualified drivers in order to satisfy their need to put warm bodies on the road.
"Driver recruitment and retention is a huge hurdle for trucking companies, particularly the long-haul companies," says David Mitchell, director of risk control for Aon Truck Group in Little Rock, Ark.
One reason for the shortage is that the trucking industry is often not represented in high-school job fairs.
"These days," he says, "students tend to be interested in more glamorous jobs, and a lot more attention is being paid to careers in computers and the medical field." One recommendation Mitchell offers in the driver selection process: Know the difference between selection guidelines and selection standards. Guidelines are approximations. Standards are firm. "The safest fleets develop and enforce standards," he says.
As a service to its clients, Aon offers to review driver orientation programs, and then provide detailed reports, including action plans and suggested budgets to improve the programs.
One trucking company with a strong commitment to selective hiring and long-term retention is the A. Duie Pyle Cos., based in West Chester, Pa. A. Duie Pyle recently won the American Trucking Associations' award for best safety program within its size classification.
This was the result of a lot of initiatives, including comprehensive injury prevention and accident-reduction programs. However, one of the most important elements of its safety performance is its commitment to selecting and training drivers carefully.
"First, we often promote from within," reports Pete Dannecker, director of loss prevention for A. Duie Pyle. For example, the company hires people with no driving experience to start out in dock work. After a year, if management likes what it sees, it may allow the employees to advance to driving. The company created an in-house truck-driving school two years ago.
"It costs us $20,000 to produce a finished driver, but it's worth it," says Dannecker.
The course consists of eight weeks in a classroom, followed by two to three weeks of in-truck training. Trainees are paid while attending the course. After graduation, they spend their first year driving easier, more predictable and familiar routes, where they gain experience in how to handle traffic jams, poor drivers on the road, road closures and other hazards. After a year, they move into full pickup and delivery work. Currently, about 40 of the company's 600 drivers are graduates of the program, and it expects to put another 30 or 40 through the program next year. "We have been extremely happy with the results," Dannecker says. And his company had better be. Driving a truck is a high-risk occupation.
Tuck drivers led the list of occupational injuries and illnesses involving time away from work, according to data compiled by Dr. Ronald Leopold, of MetLife Group Disability, in a 2001 snapshot of workers' comp and disability published in a report called "A Year in the Life of a Million American Workers." That year, there were 129,100 cases of truck drivers requiring recuperation away from work. Nursing aides and orderlies were next, with 71,000 cases.
PREVENTION COMES FIRST
Aon's Mitchell pulls no punches when discussing accidents. "Severe crashes are 'killing' profits for truckers," he says. In many trucking firms, less than 1 percent of crashes account for about one-third of total liability costs, and 10 percent of crashes account for about two-thirds of their costs. "Most of our clients are making significant efforts to prevent the really big crashes," he says.
Aon research has identified the six most common scenarios that can lead to severe accidents in the trucking industry: rear-end collisions, lane changes, rollovers, intersections, U-turns and trucks and cars parked on road shoulders.
"Certain driver habits create these problems," says Mitchell. "Companies need to identify these habits and educate drivers to safer habits."
Preventing accidents, of course, is the first and most important line of defense. However, knowing what to do after an accident is also important, according to Alan M. Shetzer, executive vice president, transportation division, for Hilb Rogal & Hobbs, an insurance broker based in San Diego. Shetzer handles a significant number of large trucking accounts, including many trucking companies that haul hazardous materials. "What I have found is that a lot of trucking companies' 'first-48-hour response' programs are inadequate," he says. "For example, many of them have no fallback plan if plan A doesn't work."
He cites a hypothetical scenario: "There is a bad accident at 3 a.m. in the middle of nowhere. How do you get a claims adjuster, an attorney and a reconstructionist to the scene in a timely fashion?"
Prime Inc., a trucking firm based in Springfield, Mo., is one company with a strong accident-prevention program. As a result of its initiatives, the company has been able to reduce the frequency and severity of its accidents over the years.
Jim Owen, the company's vice president of risk management, favors a team approach. "I work very closely with our safety department and training department to make sure our employees and members of the motoring public don't get hurt," says Owen, whose point men include company safety director Don Lacy and manager of recruiting and training John Hancock. "In sum, we find the best drivers, train them well and then monitor them," he says.
At Prime, Owen says, training never gets short shrift. An example of the company's commitment: Owen wanted a video to show new drivers the danger of rollovers. He couldn't find any, so Prime budgeted, scripted and contracted for its own video on how to prevent rollover accidents.
Jones Motor Group of Limerick, Pa., is another company with a strong commitment to preventing accidents. "We are heavily involved in claims handling, looking at trends and seeing what we can do to prevent accidents," says Ken Lacey, vice president of safety and risk management.
The company has a number of programs focusing on accident prevention. It holds drivers accountable for roadside inspections, and it provides positive reinforcement for safe drivers, as well as negative reinforcement for unsafe drivers.
"We put drivers on a watch list or probation early, so they know we are observing their actions and that we demand certain levels of performance," says Lacey.
In the company's bimonthly newsletter, Lacey includes details of serious accidents the company has had over the past few years--what happened, what went wrong and what was learned. "Once an accident has been covered in the newsletter, we rarely see similar accidents occurring in the future," he states. However, as HRH's Shetzer as already noted, good accident management involves not only preventing accidents, but responding appropriately if and when they do occur. Such wisdom is not lost on Jones, also a client of HRH. "We have reduced the number of attorneys we use nationwide to a small number," reports Lacey. "These are the ones who know our business and are cost-effective. We send them all over the country."
Jones also has a contract with a national independent adjustment company, an accident reconstructionist and a national surveillance entity. "All of them get results for us consistently," he states.
Eagle Transport also has an effective accident-prevention program, much of which hinges on its philosophy toward retraining drivers. "In the past, we used a shotgun approach for retraining," admits Heinisch. "For example, if someone had a rear-end collision, we would do a training program on rear-end collisions for everyone." This approach suffered from two problems. First, it wasted resources on those drivers who didn't need the retraining. Second, it failed to focus maximum attention on the drivers who could benefit the most from the retraining.
Now, Eagle has a partnership with Zurich and Interactive Driving Systems. They have developed a Web-based risk management system called Virtual Risk Management. The company assigns a value based on four criteria to every driver:
-It looks at every safety incident a driver has and assigns a point value to each incident, as well as a time duration. Then, as time elapses following an infraction or incident, the point value charged against the driver gradually decreases.
-It measures a driver's motor-vehicle record and assigns a value and duration for each violation on that record. A speeding violation might be three points, for example, and a rear-end collision or following too close might be five points.
-It measures out-of-service violations. A log violation would be one point.
-Finally, it measures motorist and customer complaints about a driver, usually assigned a one-point value.
The system then ranks drivers from the highest to the lowest. It has been shown that those drivers with the highest number of points are the ones most at risk for future incidents. Management shares the results with drivers. For those with low scores, the information is a source of pride. "For those with high scores, it is usually a source of embarrassment," says Heinisch. "And it is generally enough of an incentive to want to improve."
Next, management discusses its specific concerns with the drivers and the root causes of their high scores. It also encourages driver feedback and input. The next step is a specific, targeted, on-the-job training program, developed with the driver's assistance, that lasts 90 days.
"This allows us to devote time on retraining that is targeted specifically to the individuals who need it," he emphasizes. The training is handled by the company's field safety coordinators, terminal managers and other specialists in the company. "The program has done wonders," Heinisch adds. "In the last three years, we have reduced our accident frequency by 30 percent and also reduced the severity of incidents."
MONITOR AND MEASURE
While trucking-company loss prevention and risk managers are most concerned about driver shortages and serious accidents, they also pay attention to workers' comp. HRH's Shetzer emphasizes the importance of paying specific attention to the claims-handling process. "A lot of truckers rely too much on third-party administrators and insurance-company claims people to do all the various functions of claim handling," he says. "You need to bring your own people into the process to monitor how claims handling is done."
Shetzer has found that the most successful trucking companies are those that handle their own claims, or have a TPA that they carefully direct and monitor. Measurement systems are very important. "Most trucking companies claim that they have good programs in place, and a lot of these programs look good on paper, but they have no formal measurement system to determine whether the programs actually work," he says. You need to conduct claims reviews on a regular basis--not just large claims, but claims of all sizes. Shetzer has found that severe claims tend to get handled properly because insurance carriers put their "A teams" on the cases. But what about midlevel claims, those ranging from $25,000 to $50,000? "You may be paying too much on these settlements because you're getting the carrier's B or C team," he says.
A. Duie Pyle has had success in reducing the costs of its workers' comp program over the last year as a result of implementing a return-to-work injury-management program. In 2004, the company adopted a sports-medicine approach. This involves providing injured workers with the best medical help possible, and then getting them back to work as quickly as possible performing tasks that they are physically capable of handling. To determine this, the company has conducted a physical job analysis on each of its jobs. "In the first nine months of this program, we saved more than $1 million dollars," states Dannecker.
JOHN WILLIAMS is an Indiana-based writer and frequent contributor to Risk & Insurance®.
December 1, 2005
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