One of the biggest issues facing trucking carriers today — and one that can’t help but also impact the cost of the goods being transported — is rapidly increasing costs for insurance.
“There are situations in the industry where premiums have almost doubled in the past three years, and we don’t see that trend changing in the near future,” said Rochelle Bartholomew, president and CEO of CalArk International in Little Rock. “Rising insurance costs are a very large concern for many motor carriers. The average claims’ cost has tripled, especially when an injury is involved. It is not uncommon that carriers pay out north of $5 million if they have a fatality.”
What she describes as “nuclear verdicts” have been more common in the past five years. Bartholomew said that even when carriers are trying to do the right thing and have strict safety programs and good equipment, they still have a slim chance of winning cases because of the industry’s “unfortunate” negative reputation due to some circumstances that are outside of its control.
When insurance costs increase, the best thing carriers can do to limit costs is to operate as safely as possible, said ArcBest Vice President of Investor Relations David Humphrey. As the only seven-time winner of the American Trucking Associations President’s Trophy for safety — the highest safety honor in the industry— ArcBest is proud of its safety record and will continue to invest heavily in safety initiatives, he said.
“Our ABF Freight tractors are equipped with forward-facing cameras, lane-departure technology and collision-avoidance systems, plus our drivers are consistently trained and coached on how to operate equipment safely,” Humphrey said. “On our asset-light side, we maintain a strict vetting protocol to ensure we’re utilizing safe carrier partners.”
Driver shortages have been an issue for years. Humphrey said finding the right employees and filling available career opportunities is challenging right now for all carriers, especially as capacity demands increase.
“In the first quarter of 2021, we were able to add to our asset-based workforce on a net basis, and it helps with retention that we pay the best wages and benefits in the industry and that many of those drivers are home every night,” Humphrey said. “We also have several veteran hiring initiatives in place to help bolster our driver workforce. By utilizing the skills and experience of military members, we’re filling an employment need while also offering soldiers a stable, prosperous career once their military service is complete.”
CalArk’s Bartholomew said while the driver shortage has been a problem for many years, it is especially critical now with the rise in demand, the current condition of the economy and the unemployment offerings that are taking place. It has been estimated that in the past year, about 250,000 U.S. drivers either left the industry due to the pandemic or didn’t enter the industry because of all of the restrictions.
“That is a huge impact on carriers, and it will take years to overcome the loss we have endured,” Bartholomew said. “The Drug and Alcohol Clearinghouse was created with the best of intentions for carriers, and we are very much grateful for the clearinghouse, but it is also a contributor to the amounts of drivers exiting the industry, for good reason. Over 60,000 drivers were added to the database that tested positive for drugs or alcohol in 2020, and only a small percentage have been found to go through a substance-abuse program to get back into the industry.”
Another negative factor is the age restriction. Bartholomew said it is difficult to invite young talent to the industry when they have to be 21 years of age to act in interstate commerce. That means students graduating from high school have to wait three years before they can work for an interstate motor carrier.
The average age of a driver in the industry is in the mid-50s, which is concerning for what the next five to 10 years will hold. “Many drivers are retiring now, and some can’t qualify medically, which will get harder as they age,” she said. “It has been stated that the industry will have to onboard over 1 million drivers in the next 10 years to keep up with demand.”
Autonomous vehicles are becoming more common and getting support from the largest carriers in the industry. Bartholomew said this is going to be a topic for some time to prepare for the lack of drivers in the industry. She sees potential help through working with the Drive Safe Act that the American Trucking Association created and pilot programs for 18-year-olds with restrictions. And she said they are continuing to diversify offerings to better fit the wants and expectations for the workforce.