Transportation companies need insurance, just like any business. There are some unique considerations for companies in the trucking and transportation business. It is helpful to know about the types of challenges transportation companies face daily.
Common Challenges for Transportation Companies
Finding Good Drivers
The main challenge for any transportation fleet owners, both now and for the last few years, is drivers—finding drivers, hiring drivers, getting good drivers, training drivers. The success of a trucking company is directly attached to “driver behavior.” If you can get drivers, either experienced or inexperienced, who have exemplary character, adding a positive attitude, willingness to learn, and driving skill, you will do very well.
In the past few years, insurance companies have made their standards higher for approving drivers. They look for more experience, more hours on the road, and whether the driver has received any formalized training.
In the past, people would get into the trucking business because they thought it would be easy. People used to think they could buy a truck and trailer and go work for a company with no experience. The next thing you know, they would have an accident because they did not know what they were doing. Insurance companies have cracked down on that. Generally speaking, insurance companies do not want to see young inexperienced drivers taking control of a large truck that can do some severe damage if not appropriately controlled.
In Ontario, the government requires that new truck drivers take the recently created (2017) MELT (Mandatory Entry-Level Training). This training was put into place to assist the transportation industry in training and keeping competent drivers. MELT is a six-week course consisting of 103 hours of instruction, a combination of in-school and in-truck driving. Insurance companies look for companies that have implemented this type of training because it shows that their drivers have some baseline experience.
Most insurance companies, save for a few exceptions, are looking for drivers with three years of experience. So, the issue is, how do you get those three years? That is where training like MELT comes in to ensure there is a baseline for road experience for drivers wanting to get into the industry. Some transportation companies also have dedicated training that they offer in addition to MELT training. That can be highly beneficial for the driver and also for the company.
Risk Mitigation
Another challenge centers on risk services and risk mitigation. Risk management is about training your drivers, not just about driving the vehicle but also about the “rules of the road.” Proper training needs to cover defensive driving and other courses designed to bring to the forefront specific annual items such as winter driving. Drivers can sometimes fall into routines, where the activity becomes automated. Even a driver that has years of experience can fall victim to this. That is why drivers should always get refreshers about basic defensive training to keep them sharp.
Benson Kearley sends reminder emails to their transportation clients in the fall (around September and October), reminding drivers that they need to slow down and change their driving habits when it snows. Drivers need those reminders, whether they have been doing it for one month or 20 years.
Truck driving may look easy, but it is incredibly complicated. When you are on a highway like the 401, travelling from Ontario to Montreal, it can get monotonous. But the weather can change quickly, and you need to adapt to the road conditions. When you get to your destination, you may have to back your truck into a spot with only four inches on each side. If that happens, you’d better know what you are doing.
Risk mitigation is a significant part of managing a transportation business. Your transportation organization needs to provide ongoing training and provide in-house seminars or, more recently, provide tools whereby drivers can take online training rather than in large group settings.
Keeping up with compliance laws
Staying in compliance with the laws of the road is incredibly important. Many fleet companies have trucks destined for other provinces and every state. The driver needs to know all the rules because the rules change depending on where they’re driving. For example, the regulations in Canada about hours a driver can be behind the wheel differ from the regulations in the USA. Drivers need to make sure they know current rules and regulations for all of the different places they will be travelling.
What is the Cargo?
Trucks react differently depending on what type of cargo is being hauled by each. The most common unit you see on the road is a 53-foot box trailer pulled by a tractor. The load could be light in weight (cereal or paper products) or something heavier, such as furniture or electronics. Compare that to a tanker truck that might be carrying 50,000 liters of milk. The cargo and the truck transporting it will behave very differently, depending on the situation.
Insurance companies need to account for driver experience on the road and what experience in handling the specific commodity.
When an insurance company writes a policy for a transportation company, there needs to be a detailed account of the cargo (also called commodities) that they will be hauling. The insurance company is required to know what the commodities are and the maximum value of that particular load. Also, where is it going? Is it a high-ticket item such as electronics or something with a higher potential for theft? The rates are adjusted depending on the commodity and amount of each commodity carried.
In Ontario, every vehicle on the road has to be insured, and every unit also has to be plated. The same applies to heavy vehicles, although heavy vehicles need to be safeties every year to have their plates renewed. Because of the unique considerations for logistics and transportation companies, insurance companies need to weigh additional factors when determining coverage.
If you have questions about your coverage or if you are looking for more information about risk management and risk mitigation for your logistics business, we are here to help.
