This post is part of a series sponsored by IAT Insurance Group.
More challenges are coming to the transport sector in 2024.
The US economy continues to be the number one concern for drivers and carriers alike. Factors such as inflation (the industry’s biggest concern for 2023), rising interest rates and higher diesel prices are causing a ripple effect throughout the transportation industry.[1] While it is true that inflation has stabilised, it has done so from a higher plateau and shows no signs of abating. Prices continue to rise and a higher base price is expected for repairs, maintenance and new vehicles.
The same inflationary pressures also affect the insurance industry through increased claims and settlement costs. Premiums will need to continue to rise to keep pace with inflation-induced increases in claims settlement costs.
In addition to economic pressures, government regulation at the state and national levels will also be a concern.
5 considerations for fleets in 2024
With so much uncertainty stemming from issues stemming from the previous year, the best defense is to be informed and proactive. Here are five trends fleets need to know to strengthen their success in 2024:
1. Maintenance Delays
As margins continue to shrink, companies may be tempted to forego routine maintenance and inspections to save money in the short term. This workaround leads to costly long-term risks such as service disruptions, costly repairs leading to downtime and an increased likelihood of accidents.
I take initiative: Resist the urge to reduce maintenance practices below the manufacturer’s standard requirements and continue to perform pre- and post-trip inspections. DOT roadside inspections resulting in increased CSA scores or an increase in a carrier’s accident rate due to maintenance issues will have an adverse impact on insurance premiums. Look for other opportunities to reduce the budget and maintain the maintenance plan.
2. Increase in theft
Theft claims are on the rise and this trend shows no signs of slowing down. Last year there was a 20% jump in reported incidents of cargo theft, which range from the theft of the cargo to the theft of the entire vehicle and occur most often in parking lots and truck stops as thieves take advantage of drivers’ need to sleep or to rest. Brokered cargo theft increased 600% in 2022, making embezzlement or misrouting of shipments the number one method of cargo theft.
I take initiative: Be proactive in your efforts to prevent theft and its adverse impact on the cost of doing business. Here are five easy ways to deal with the problem:
- Plan routes in advance to indicate safe places for drivers to stop, eat and rest.
- Lack of truck parking has been a problem for decades, and since 2015 it has been in the top five.1 Consider reserving paid private parking spaces. Private parking often includes a perimeter fence, adequate lighting, security cameras, and 24/7 on-site staff.
- Attach portable tracking devices to your vehicles, chassis and cargo to make them easy to find in case they are stolen or lost.
- Pay special attention to how you manage working hours and secure loads.
- Discuss high value/high theft target cargo with the driver during shipment, providing them with safety measures to use while loading and transporting such cargo.
3. Changes in DOT Rules
Seven high-level changes to the DOT rules introduced in 2022-2023 are expected to be released in 2024. While there is currently no confirmation of what the final rule updates will include, keep an eye out for these rules coming in the path:
- FMCSA Safety Management System Update
- Mandatory speed limiters
- Automatic emergency braking systems
- Crash Preventability Determination Program
- The CDL Drug and Alcohol Clearinghouse returns to the on-call process
- Competence and skill testing
- Oral fluids as well as urine samples for drug/alcohol testing
I take initiative: Stay up to date with what’s happening. Stay up to date with industry news and join your state associations for helpful information and support.
4. New California Electric Vehicle Rules
Regulatory pressure across the country is driving the transition to electric vehicles (EVs), and California’s truck emissions standards are leading the trucking industry. California’s higher compliance regulations don’t just affect the California-based carrier; all carriers that drive in the state are affected, causing significant disruption to many companies across the country.
In fact, zero-emission vehicles were identified as a critical issue in the transportation industry for the first time in 2023.1 As a result of the new rules, businesses are struggling with the financial viability of continuing California-based operations and contracts. In addition, distribution centers are popping up just outside the California border to accept non-conforming trucks that will no longer cross state lines.
I take initiative: The transition to an EV fleet is not just an achievement; consider all the variables at play before deciding whether this is a practical option for your business in 2024. These expensive vehicles present challenges in terms of charging capacity, and the increased weight of batteries reduces cargo capacity. Further complicating matters, mechanics who work on electric vehicles are not readily available, which can make route planning a challenge, as plans must account for charging stations and repairs should the need arise. There is also a lack of clarity on how insurance companies will cover EVs due to uncertainty around the cost of repairing or replacing equipment.
5. Retention and hiring of drivers
Many economists predict the trucking market will continue to soften in the first and second quarters of 2024 before recovering in late 2024, so companies should remain focused on retaining their best employees. With turnover in some truck segments as high as 85% to 90%, fleets have invested in retention bonuses to retain their best drivers. In fact, the average retention bonus has risen nearly 90% over the past four years to $1,272.1
I take initiative: Whether your focus is on retention or hiring, prioritize quality above all else. The benefits of good drivers are far-reaching, even impacting insurance costs – better drivers mean better rates. Consider using in-cab telematics to gain informed insight into your drivers’ safety habits and road performance. This GPS-based technology can provide information on driver performance, including speed, sudden braking, and more.
When load volumes come back later in Q3 or Q4 of this year, be prepared if you have to start hiring again. Do your due diligence and adhere to best practices, regulations and your guiding principles and maintain your commitment to hiring the best available drivers for the job.
Look forward
2024 is already shaping up to be a year of change, so stay informed about new rules and regulations, plan to minimize the likelihood of theft, and be flexible to changing market growth.
For guidance on how to manage your fleet risk in 2024, contact IAT Insurance.
By Tom McCallum, Peter Matthews and Nick Martin
[1] American Transportation Research Institute Critical Issues in the Automotive Industry – 2023 October 2023
Themes
California trends
I am interested in Transportation?
Get automatic alerts for this topic.
