Could Employee Stock Ownership Plans Fix Trucking’s Turnover Problem?

While trends have been improving, large trucking fleets continue to struggle to keep their qualified drivers from leaving. The U.S. annual driver turnover rate has been roughly 90 percent or higher since 2012, according to the Journal of Commerce, which tracks global trade topics.

That’s extremely costly for trucking companies, with estimates in the thousands of dollars to recruit and hire each driver, resulting in an overall toll in the billions of dollars to industry. But switching jobs also is costly to truck drivers. Many of those who pilot semis, tractor-trailers and other big rigs are unable to accumulate retirement savings, often live paycheck-to-paycheck and then take a huge step backward once they are unable to work and have only Social Security to rely upon.

We have discussed in previous blog posts the many elements that could help retain good drivers – better pay, safe driving financial incentives, improved work/life balance and quality of life.

ESOP

Well, here’s an additional idea: Major carriers could take a page from the playbooks of other industries, including grocery, construction, manufacturing and distribution, and create employee stock ownership plans (ESOPs).

A recent Forbes examines the ESOP set up at Paladin Capital Inc., a 1,000-truck operation based in Nashville, Tennessee, formerly called Quickway Distribution Services Inc. The company’s voluntary driver turnover rate is 20 percent (plus 15 percent initiated by the company in enforcing quality standards). Drivers have helped Paladin reach a near-perfect on-time performance record for retail chain clients and have cut fuel-wasting idle time for a savings of $500,000 to $1 million. The safety record also is admirable.

“We have a company where everybody has the same last name: shareholder,” Bill Prevost, Paladin CEO, was quoted as saying. In just 10 years, some Paladin drivers have amassed ESOP retirement accounts of nearly $200,000, the Forbes column explains.

Giving workers a piece of the business that employs them is surely a powerful incentive toward good work, cost savings and employment longevity. As the U.S. economy continues to improve, big trucking companies may find it even more challenging to retain good drivers. An employee stock ownership plan seems like one smart idea some companies should consider.

Coercion Rule Will Make Highways Safer

At the end of January, “regular” drivers and those who pilot 18-wheelers, semis and other big rigs will benefit from a new Federal Motor Carrier Safety Administration (FMCSA) rule that undoubtedly will make our roads safer.

The so-called “coercion rule” prohibits motor carriers, shippers, receivers and transportation intermediaries from threatening or otherwise coercing drivers to operate commercial vehicles in violation of several FMCSA regulations. Violators will face fines of up to $16,000 per incident or the FMCSA may order that their operations be closed.

wreck-ahead-for-blog

Many think $16,000 is a pretty flimsy fine considering the potential damage when trucks are not operated properly, but it does represent a start. What may grab more attention in the trucking industry is if the FMCSA uses its authority to actually shut down a violating company or companies.

Although the original version of the new rule would have held trucking companies and the others listed above to the “know or should have known” standard in terms of knowing whether drivers were violating federal safety rules, that language was removed in the final version.

Regardless, we now have a new rule that will punish companies that threaten to retaliate against drivers who refuse to flout safety laws. While the new rule was being developed, the FMCA heard from truck drivers who said they were threatened with termination and reduced pay, denied subsequent loads and other forms of punishment.

According to the FMCSA, threatened drivers were coerced to violate requirements for securing a commercial driver’s license; ignore hours-of-service rules designed to prevent fatigued or distracted driving; violate testing for alcohol or drugs; and transporting hazardous loads, among others.

Department of Transportation Secretary Anthony Foxx was quoted as saying, “This rule enables us to take enforcement action against anyone in the transportation chain who knowingly and recklessly jeopardizes the safety of the driver and of the motoring public.”

Those are noble words that everyone will agree should be backed by a strong response from the FMCSA the next time a trucking company threatens a driver in hopes of convincing them to break the law.

New Highway Law Allows Too-Low Insurance, Hides Safety Scores

On Dec. 4, President Obama signed into law a $305 billion transportation bill, the first long-term highway spending in a decade. While many drivers will appreciate these coming improvements to highways and mass transit systems, the president himself noted, “This bill is not perfect.”

Indeed it is not.

There are at least two major flaws that protect trucking companies at the risk of ordinary motorists in the new law, called the FAST Act (Fixing America’s Surface Transportation).

Once again, the trucking industry has managed to fend off the commonsense requirement that carriers buy a respectable level of liability insurance. This is needed to cover the modern-day costs of medical bills and other financial losses of crash victims. As noted earlier, it has been 30 years since the last time the minimum insurance requirement was changed! That minimum is a mere $750,000 – which today is not nearly enough for the costs of serious injuries and deaths that can come from a collision with an 18-wheeler. While the major companies do carry impressive levels of insurance – some up to $50 million – small companies, those with four trucks or fewer, successfully lobbied away the proposed increase. The new law requires a full study of the commercial impacts and safety benefits of raising the minimum requirement – a delay that is profoundly unnecessary.

container truck on the bridge with motion blur , modern logistics background

container truck on the bridge with motion blur , modern logistics background

A second major weakness in the FAST Act is the fact that the public will no longer have access to key driver and maintenance safety scores for trucking and bus companies. Just minutes after the highway bill was signed, the Federal Motor Carrier Safety Administration (FMCSA) pulled down the safety scores as required in the new law. This scoring system represents the heart of the FMCSA’s Compliance, Safety Accountability (CSA) initiative – an effort to make our highways safer. The safety scores rated trucking companies on key criteria, including unsafe driving, hours on the job, driver fitness, drug and alcohol use, truck maintenance, mishandling of hazardous materials, and an analysis of crashes, including frequency and severity. What information could be more useful to those who have a highway encounter with a truck? Notably, this data is no longer available for victims of crashes and their lawyers, who will no longer be able to show juries how a careless carrier compares to the competition.

Now, the FMCSA must review the scoring program and find ways to make it “the most reliable” system possible. As noted previously, trucking critics had complained that the program wasn’t fair, and that some companies were penalized by “minor infractions.” But the same criteria were used for everyone, so that argument is hard to swallow. It is ironic that soon after the scores were removed, some truck drivers noted voiced their disappointment because they had “worked hard” for their good ratings and now have no evidence to show for that.

The FAST Act is not all doom and gloom, however. Two of the scariest proposals that had been discussed did not make it into the final bill signed into law:

  • Heavier, longer trucks – making them potentially even deadlier – will not be allowed on our highways.
  • Nor will there be a stampede toward hiring drivers under age 21. Instead, there will be a pilot program to test drivers between 18 and 21 taking trucks across state lines. The study will be done by the FMCSA and focused on drivers who are former members of the military or reserves.

New Safety Ratings for Trucking Companies

The new safety rating system established by the Federal Motor Carrier Safety Administration for tractor-trailers, semis and other big rigs is finally being made public with the goal of providing safer roadways with an update to the current system that has been in place for more than 30 years. The proposed new rating system still leaves a lot to be desired, and may actually result in some motor carriers and freight brokers being able to hide behind several parts of the new rules.

The biggest (and best) change is that the FMCSA now will be able to rely on highway inspections to shut down a noncompliant trucking company rather than conducting a full-blown audit of the entire company, which can take weeks, months or longer. Previously, such highway inspections were used only to identify those companies that deserved audits.

semi-trailers-534577_1280

We previously discussed the FMCSA’s plans to unveil the new rules last year, but delays pushed the release until this January. The revised rules, which are set to be published later this month, will be followed by a 60-day comment period.

Under the new “Safety Fitness Determination (SFD)”, the FMCSA says it will be able to investigate roughly 75,000 trucking companies per month compared to only 15,000 per year under the prior system. The new SFD, which was last updated in 1982, replaces the previous three-tier ranking system of “satisfactory-conditional-unsatisfactory” with the lone ranking of “unfit.” Those companies determined to be “unfit” will be required to improve their safety rating or be forced to shut down their operations.

One problem with this consolidation is that those motor carriers that would have otherwise been rated as “conditional” now will enjoy the benefit of not having any rating at all, which will prevent injured victims, their lawyers and the public at large from being able to find the red flags that clearly identify unsafe companies. Additionally, freight brokers may now be able to use unsafe motor carriers that previously were labeled as “conditional,” which potentially will make it more difficult to prove that they should have used carriers with better safety records. This may end up being a trade-off of the public’s safety for purposes of expediency.

In order to determine whether a trucking company is unfit, the new SFD will rely on a test that includes how well the company performs in its Behavior Analysis and Safety Improvement Categories (BASICs), which include unsafe driving, hours-of-service compliance, driver fitness, controlled substances/alcohol, vehicle maintenance, hazardous materials compliance and crash indicator. The FMCSA also will look at investigation results or a combination of on-road safety data and information gathered during any investigations.

While shutting down trucking companies more quickly when they ignore safety, and the notion of exponentially increasing the number of safety inspections are ideas we all should embrace, like any new government rule, the devil is in the details.

Some believe the new “unfit” ranking will result in too few companies being identified as potential safety risks since the FMCSA says it believes only 300 carriers per year will meet the criteria. Currently, there are many more trucking companies that are covered by the current three-tier system. There are also rumblings that the new FMCSA rule may include areas that conflict with the recently signed FAST Act.

Once the public comment period is concluded and any conflicts with the FAST Act are sorted out, we should have a better idea of how much better – or worse – the new FMCSA rules will protect our highways. Please check in for updates as we continue to monitor this critically important issue.

Traffic Deaths Rising after Long Decline

In 2014, the number of people in the U.S. who died in traffic accidents fell to 32,675, just a 0.1 percent decrease from the previous year, but still continuing a general decade-long decline. That’s more than 10,000 fewer deaths than in 2005, a remarkable improvement.truck-accident-death-toll

This year may break that impressive trend, however. Federal officials say that a statistical projection for the first six months of 2015 shows a sharp upward trend in traffic fatalities, an increase of 8 percent compared to the same period in 2014.

The 2014 analysis and the 2015 projection recently were reported by the National Highway Traffic Safety Administration. The agency noted some of the key factors involved in fatal accidents during 2014:

  • Distracted driving was reported in 10 percent of fatal crashes.
  • Speeding occurred in 28 percent of all fatal accidents.
  • Alcohol impairment accounted for 31 percent of all traffic deaths.

Notably, the NHTSA reports that 49 percent of passengers who died were not wearing seatbelts – a grim reminder that everyone in a vehicle must buckle up.

Getting behind the wheel is one of the most dangerous things many of us do each day. It’s essential that we are vigilant, sober, focused and wearing seatbelts. That way we stand at least a chance of avoiding collision with other drivers who may not be following the rules.

House Version of Transportation Bill Delivers Wins, Losses

The U.S. House of Representatives recently passed its version of the Surface Transportation Reauthorization and Reform Act of 2015 after days of fiery debate and multiple amendments. Some of the last-minute changes are aimed at making our roads safer, while others are certain to lead to more accidents involving 18-wheelers, semis and other big rigs if they gain White House approval.

The six-year, $325 billion package has been a hot-button issue for politicians and safety advocates alike since it was first introduced. Trucking industry leaders and safety advocates spent countless hours and dollars lobbying elected officials in hopes of preserving their favorite provisions while working to scuttle those they opposed.

congress-building-dc

The House version of the bill that was sent to President Obama eliminated the proposed graduated commercial driver’s license (CDL) program that would allow drivers under the age of 21 to operate tractor-trailers and other heavy trucks. We labeled that effort as the worst idea ever in an earlier post.

The trucking industry’s push for bigger trucks also came up short in the House version. The legislation that was introduced would have increased the weight limit for big rigs to a mammoth 91,000 pounds with an extra, sixth axle. Unbelievably, supporters claimed that bigger semis would be safer than the 80,000 lb. five-axle trucks that already cause incredible damage to our highways and are involved in many death and injury accidents every year. For some additional perspective, the M4 Sherman tanks used by the U.S. in World War II weighed less than 70,000 lbs. each.

Even though those two ill-reasoned provisions and others were eliminated, several items that were passed in the House vote will do anything but protect drivers on the nation’s roadways if signed into law.

One of the more notable amendments that will have a negative impact on safety will prohibit states from imposing labor laws and regulations on trucking companies that are subject to the Department of Transportation’s rules governing the allowable hours of service (HOS) for drivers. Supporters say this amendment was needed to align state and federal policies, but the real result is that truckers and trucking companies no longer will be subject to minimum wage and rest break laws imposed at the state level.

While no one expected the massive bill would reach the White House with all the needed safety considerations intact, it is good to know that we are much less likely to see 91,000 lb. trucks traveling down the road with 18-year-old drivers behind the wheel.

Tractor-Trailer Cameras Benefit Safety

The use of cameras in tractor-trailers and other big rigs has produced amazing safety results, but many in the trucking industry continue to resist the new technology based on a profit-at-all-costs mindset. Fortunately, some trucking companies are actively adopting cameras for their fleets regardless of the widespread industry opposition.

By using cameras to record what happens inside and outside a semi in the moments before an accident, law enforcement and trucking companies themselves are better able to determine which party is at fault, in addition to pinpointing the events that caused the wreck. The video is made available to the trucking companies online, typically through a third-party provider. Much like police body cameras, the devices used to record the area surrounding 18-wheelers and the movements of drivers are invaluable in reconstructing exactly what happened in a highway collision.

Truck_cab

The trucking industry has issued a litany of complaints about cameras, from driver privacy concerns to gripes over lower productivity among those whose trucks are outfitted with video capabilities. However, some shippers are taking a stand, including Liberty, Missouri-based American Central Transport (ACT).

Earlier this year, ACT offered to increase pay for its 80 contract drivers by $0.02 per mile in exchange for installing cameras in their trucks for free. By the middle of this year, ACT announced that it would install camera systems in its entire fleet. According to ACT, the company reported 16 accidents to the Department of Transportation during the first half of 2014. Although ACT reported four accidents in the first quarter of this year, as of August, it had only one reportable accident since it began installing the cameras in February, and the company says that accident was not the driver’s fault.

ACT is not alone in adopting camera systems. Swift Transportation, the nation’s largest roadway carrier with more than 16,000 trucks in operation, announced in May that it was installing front-facing and driver-facing cameras companywide.

With industry leaders such as ACT and Swift embracing this new technology, other trucking companies are expected to fall in line. Eventually, the benefits of cameras – both in terms of safety and accountability – will cause every trucking company to join in. However, there are many that still vigorously oppose cameras, and their vehicles will continue to present greater roadway dangers.

Scary Prospects in Truck Driver Shortage

The growing shortage of truck drivers is something we have discussed on this blog before, and now the latest numbers are in. Don’t be surprised to learn that they aren’t pretty.

According to the U.S. Department of Labor, the trucking industry lost 4,000 jobs in September alone. In a recent report, the American Trucking Associations industry group says the country currently is facing a shortage of 48,000 drivers and predicts that number will increase to nearly 175,000 by 2024 if the downward trend continues.

The driver is holding the steering wheel and is driving a truck on the highway. Empty road is ahead of him. The white truck is going in the opposite direction.

The driver is holding the steering wheel and is driving a truck on the highway. Empty road is ahead of him. The white truck is going in the opposite direction.

Virtually every long-haul shipper is facing this problem, and industry claims the solution has been difficult to find. One ridiculous proposal we noted earlier is to issue commercial driver’s licenses to 18-year-olds. Sadly, some in the industry seem to be fine with that idea.

“I started driving trucks when I was 17 and you cannot do that anymore due to regulations and our litigious society,” was one reported gripe from Detroit trucking executive James Burgin in a panel discussion at the recent FTR Transportation Conference in Indianapolis. Burg, who runs a 90-tractor flatbed fleet, continued, “We cannot even allow children of our drivers to be with them in their cabs to see what their dad does for a living.”

As a father, I can appreciate the notion of wanting your children to know what their dad does for a living, but how anyone can advocate for teenage drivers and putting kids in the cabs of big rigs is beyond me.

This type of thinking reflects a severe lack of understanding in terms of the life-altering damage that a tractor-trailer wreck can cause to drivers, truck occupants and the public at large.

Despite the cries emanating from the trucking industry, this is a problem that can and should be fixed, and soon.

Troubling Crash Statistics Tied to Texas Oil Boom

Many of us have presumed that the Texas oil boom of recent years directly impacted the increasing number of tractor-trailer accidents on our highways, including those resulting in significant injuries and deaths. Now, a study compiled by researchers at Texas A&M University has confirmed what we believed all along.

The report published earlier this month details how crashes significantly increased in North Texas during the Barnett Shale boom from 2006 to 2009, and how those numbers fell dramatically when energy companies shifted their focus to the Permian Basin in West Texas and the Eagle Ford Shale in the southern portion of the state. Disturbingly, the report shows that wrecks involving commercial vehicles in rural areas declined by 34 percent when energy companies largely abandoned the Barnett Shale region, but those same types of crashes increased by 61 percent in the Eagle Ford and 52 percent in the Permian Basin once drilling companies arrived.

oil-crash-stats

The A&M study also examines the economic impact on the communities where semi-trailers and other heavy trucks are involved in accidents. Those numbers eclipsed the $100-million mark in both the Permian Basin and the Eagle Ford regions, with the Barnett Shale area shouldering $73 million in related costs during the prescribed time frames. More damning and more significantly, the A&M researchers assessed the costs for the Eagle Ford and Permian Basin areas at north of $4 billion after figuring in quality of life considerations supported by the U.S. Department of Transportation.

The study’s lead author was quoted as saying that the correlation between the increased number of accidents in areas where wells were being added and the decrease in areas where well production slowed was so obvious that it could be used as a predictive model. Said differently, once oil and gas prices start to rise and energy companies start drilling more wells, we are going to see more and more accidents on our roadways.

Here’s hoping that legislators and those in the energy industry do something in the meantime to remedy this obvious problem. Otherwise, countless Texans in oil and gas boomtowns will stand a far greater chance of not making it home safely.

Here We Go Again: The Latest Push for Bigger Trucks

Is there any piece of legislation that seems more of an oxymoron than the Safe, Flexible, and Efficient (SAFE) Trucking Act? This bill would allow already dangerous trucks to haul more than 5 tons over what they are allowed today. Yet, that is the proposal from Congressman Reid Ribble of Wisconsin.

The new bill, introduced in September, would allow individual states to raise the federal weight limit for tractor-trailers from the current limit of 80,000 pounds to 91,000 pounds. The proposed bill is supported by many in the trucking industry because it would allow them to ship their goods – from steel to milk – at a lower cost. But at what cost to ordinary motorists?

A group of parked semi tractors

A group of parked semi tractors

In 2013, nearly 4,000 people died in crashes involving large trucks, according to the Federal Motor Carrier Safety Administration. And the Insurance Institute for Highway Safety reports that two-thirds of those killed were passenger vehicle occupants, followed by another 15 percent who were pedestrians, bicyclists or motorcyclists. The Institute also points out that braking distances for trucks are much longer than for ordinary passenger vehicles, and wet, slippery roads exacerbate the problem.

The Houston Chronicle notes that Texas bears the brunt of these deadly accidents. Texas’ 493 fatal truck crashes in 2013 accounted for more than 12 percent of big rig fatalities nationwide. Among those lobbying Washington against upping truck weight and size allowances is Tim Jayroe, the longtime police chief of Rockport, Texas. He previously witnessed a horrific accident involving an 18-wheeler loaded with pipe that sped into his coastal town’s busy intersection, hitting six cars and sending 12 people to the hospital.

But Ribble’s bill isn’t where the efforts stop. I wrote earlier about the trucking lobby’s push to raise the weight limit even higher than Ribble is proposing – up to 97,000 pounds – along with allowing longer trailers. Around that time, the U.S. Department of Transportation released an overdue report that took a deep dive into accidents and truck specifications. That report concluded that no change be made to trucking weight limits, in part because the department lacked sufficient data to determine the weight of vehicles involved in accidents and the true effects of allowing even heavier trucks on the highways.

“As such, the department believes that no changes in the relevant truck size and weight laws and regulations should be considered until these data limitations are overcome,” said Peter Rogoff, DOT policy undersecretary.

The American Trucking Association predictably has labeled that conclusion politically motivated as the group continues to push for ever bigger trucks for its own financial gains. Meanwhile, the National Troopers Coalition, many independent truckers, and groups such as the Coalition Against Bigger Trucks hope that Congress will put the safety of ordinary citizens ahead of big industry profit. As Rockport Police Chief Jayroe puts it, “I have no issue with truckers….I just don’t think they need longer, heavier trucks to get the job done.”