This post is part of a series sponsored by IAT Insurance Group.
In 2024, the transport sector will face further challenges.
The U.S. economy continues to be the biggest concern for drivers and fleet operators. Factors such as inflation (the industry’s biggest concern in 2023), rising interest rates and higher diesel prices are creating ripple effects across the transportation industry.[1] It is true that inflation has stabilized, but from higher levels and shows no signs of falling. Prices continue to rise and a higher cost base for repairs, maintenance and new vehicles is expected.
The same inflationary pressures are also impacting the insurance industry through increased claims costs and claims settlements. Premiums must continue to rise to keep pace with rising claims settlement costs due to inflation.
In addition to economic pressures, government regulation at the state and national levels will also be a concern.
5 Considerations for Fleet Operators in 2024
With so much uncertainty due to issues from the previous year, the best defense is to be informed and proactive. Here are five trends fleet operators should be aware of to strengthen their success in 2024:
1. Delays in maintenance
As margins continue to shrink, companies may be tempted to hold back on routine maintenance and inspections to save money in the short term. This workaround results in costly long-term risks such as service violations, expensive repairs leading to downtime, and an increased likelihood of accidents.
Take action: Resist the urge to reduce maintenance procedures below the manufacturer’s standard requirements and continue to perform pre- and post-trip inspections. DOT roadside inspections that result in higher CSA scores or increase a carrier’s accident rate due to maintenance issues negatively impact insurance premiums. Look for other ways to trim the budget and keep your maintenance schedule on track.
2. Increase in thefts
The number of theft claims is increasing and this trend shows no signs of slowing. Last year there was a 20% increase in reported cargo thefts, ranging from cargo theft to entire vehicle theft, most commonly occurring in car parks and rest areas as thieves take advantage of drivers’ need for sleep or a break. Brokerage cargo theft increased 600% in 2022, making seizure or misrouting of shipments the most common method of cargo theft.
Take action: Be proactive in your efforts to deter theft and its negative impact on business costs. Here are five easy ways to get ahead of the problem:
- Plan routes in advance to find safe places for drivers to stop, eat and rest.
- The lack of truck parking has been a problem for decades and has been one of the top five concerns since 2015.1 Consider reserving paid private parking spaces. Private parking lots often include fencing, adequate lighting, security cameras, and 24-hour on-site staff.
- Attach portable tracking devices to your vehicles, chassis and cargo so they can be easily located in the event of theft or loss.
- Pay close attention to how you manage duty hours and secure loads.
- When shipping high-value/theft-prone loads, discuss them with the driver and inform them of security measures when loading and transporting these loads.
3. Changes to DOT Rules
Seven high-level DOT rule changes introduced in 2022-2023 are expected to be released in 2024. While there is currently no confirmation of what the final rule updates will entail, keep an eye out for these rules coming soon:
- FMCSA Safety Management System Update
- Mandatory speed limiters
- Automatic emergency braking systems
- Program to determine accident preventability
- CDL Drug and Alcohol Clearinghouse resumes service
- Competence and skills test
- Oral fluids and urine samples for drug/alcohol testing
Take action: Stay up to date on what’s happening. Stay up to date with industry news and get involved in your local associations for useful information and support.
4. New California rules for electric vehicles
Regulatory pressure across the country is driving the transition to electric vehicles (EVs), and California’s truck emissions standards are leading the way in the trucking industry. California’s stricter compliance regulations don’t just affect California-based airlines. All transportation companies that travel into the state are affected, which poses significant hurdles for many companies across the country.
In fact, zero-emission vehicles were identified as a critical issue in the trucking industry for the first time in 2023.1 In the wake of new regulations, companies are struggling with the financial viability of continuing their California-based operations and contracts. In addition, distribution centers are being built just outside the California border to accommodate non-compliant trucks that no longer cross state lines.
Take action: Transitioning to an electric vehicle fleet is no easy task; Consider all the variables at play before deciding whether this is a practical option for your business in 2024. These expensive vehicles present charging capacity challenges, and the increased weight of the batteries reduces charging capacity. Making matters worse, mechanics working on electric vehicles are not readily available, which could make route planning challenging as plans need to account for charging stations and repairs when needed. There is also confusion about how insurance companies will cover electric vehicles, as the cost of repairing or replacing devices is uncertain.
5. Retention and recruitment of drivers
Many economists expect the freight market to weaken further in the first and second quarters of 2024 before recovering in late 2024. Therefore, companies should continue to focus on retaining their best employees. With turnover in some segments of the trucking industry reaching 85% to 90%, fleets have invested in retention bonuses to retain their best drivers. In fact, the average customer loyalty bonus has increased nearly 90% over the past four years to $1,272.1
Take action: Whether you focus on retaining or hiring employees, value quality. The benefits of good drivers are far-reaching and even impact insurance costs – better drivers mean better rates. Consider deploying in-cab telematics to gain an informed view of your drivers’ safety habits and efficiency on the road. This GPS-based technology can provide insights into driver performance, including speed, hard braking and more.
If utilization volumes pick up again later in the third or fourth quarter of this year, be prepared to have to hire staff again. Do your due diligence and adhere to best practices, regulations and your guiding principles, and stay true to your commitment to hiring the best drivers available for the job.
looking ahead
The year 2024 is already shaping up to be a year of change. So stay abreast of new rules and regulations, plan to minimize the likelihood of theft, and be flexible when it comes to fluctuating market growth.
If you need help managing your fleet’s risk in 2024, contact IAT Insurance.
By Tom MacCallum, Peter Matthews and Nick Martin
[1] American Transportation Research Institute “Critical Issues in the Trucking Industry – 2023,” October 2023.
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2024-03-18 04:22:13
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