Safety reporting system could cause transportation cost spike

11/24/2010 01:04:37 PM
Ashley Bentley

New Federal Motor Carrier Safety Administration safety reporting rules set to be enacted Dec. 6 could cause transportation costs to rise, especially for produce carriers.

The new reporting system, called Compliance, Safety and Accountability 2010 (CSA 2010) is likely to take some smaller carriers — the kind the produce industry tends to use — off the roads and increase costs for the ones who can stay in business.

Kenny Lund, vice president of support operations for Allen Lund Co., said he wouldn’t be surprised if transportation costs rise as much as 30%.

The new system assigns safety scores to carriers through use of more metrics, including all safety-based roadside inspection violations and driver assessments, and will update scores more often. The new reporting system is likely to add cost for carriers in researching driving records, and trucking companies are likely to terminate drivers whose records could negatively affect their ratings, further reducing the already tight supply of available drivers.

There is also speculation that insurance premiums for carriers could increase. The rules are also likely to be harsh on regional distributors because some ratings are reported on violations per 100,000 miles, and these trucks don’t travel as far and can have more opportunities for issues in city traffic.

“The FMCSA has said, in effect, that it expects the new rating system to take some drivers out of the system,” said Doug Stoiber, vice president of produce transportation operations for L&M Transportation Services, a sister company of Raleigh, N.C.-based L&M Cos.

More liability

For shippers it could mean greater liability in the event of accidents, and higher cost in managing a large number of carrier relationships, according to a study published by C.H. Robinson, Eden Prairie, Minn.

“The fear is that 20% of truckers are going to be named deficient in each (of seven) category, minimum,” Lund said. “I’d be surprised if freight rates raise less than 10%, but I would not be that surprised if it’s over 20%.”

The accuracy of the safety information being reported is also under question, and many unknowns remain, including if carriers will be able to address mistakes or false information and what control they will have over improving their scores, Lund said.

Henry Seaton, general counsel for the National Association of Small Trucking Cos. and other carrier associations, said the data collection methods and relevance to safety have not been subject to review or government rulemaking. He also said the rule’s effect on small businesses have not been analyzed, in a Sept. 30 motion to postpone the release of CSA 2010 data.

“It could eliminate a lot of small truckers, and 95% of produce is moved on those truck lines,” Lund said. “We’re not shipping with J.B. Hunt or guys like that.”

Allen Lund works with 16,000 carriers in a year, Lund said.

“We have no idea how they’re going to fare until we get the stats,” Lund said. “I think it will eliminate 10% to 15%.”

The Federal Motor Carrier Safety Administration counters these concerns with its mission to make the roads safer, and it claims the information will give those scheduling shipments more information to choose the safest drivers.

“What they don’t get is in the summer and spring you already don’t have any trucks,” Lund said.

In a June testimony to the U.S. House of Representatives’ committee on transportation and infrastructure subcommittee on highways and transit, Anne Ferro, administrator of the Federal Motor Carrier Safety Administration, said the new system allows the agency to better target high-risk motor carriers and allows it to address the safety deficiencies of a much larger segment of the industry.

The current system of rating is based on a comprehensive compliance review, which can take an investigator up to a week to complete for each carrier.

“The end result of these limitations is that FMCSA can address the safety deficiencies and rate only a small fraction of the industry — between 2% and 3% of the carrier population annually,” Ferro said.

What can be done

Third-party logistics companies and other transportation brokers have tried to mitigate potential issues by encouraging carriers to be aware of safety scores and start making changes where there are issues. Motor carriers have been able to preview their own data since April, but only 10% have accessed the CSA 2010 website, Lund said.

Lund said the safety reporting system doesn’t make sense to him.

“You have the government that licensing the driver, then you license the trucking company, and you license the trailer, but on safety, you’re going to let the market decide?” Lund said. “If a company’s not safe, why not pull its license?”

Lund said the produce industry may not feel the effects of the regulations for a few months, especially because it’s a slow time of the year.

“It’s not going to be implemented without some stumbling blocks,” Stoiber said.

Lund hosted a Web conference titled “CSA 2010 — What Shippers Need to Know” through Red Book University Nov. 23. The conference can be accessed at http://tinyurl.com/redbookFMCSAseminar.



Comments (0) Leave a comment 

Name
e-Mail (required)
Location

Comment:

characters left

Join the conversation - sign up for FREE today!
FeedWind
Feedback Form
Leads to Insight