How Transportation Companies Can Effectively Manage the Driver Shortage Crisis

Commercial driver shortage and high driver turnover are creating significant financial costs and liabilities for transportation companies. 

According to estimates from the American Trucking Association, companies are losing between $7,000 and $10,000 for every single driver turnover. Overall, companies are experiencing an average driver turnover of roughly 60%, and in many cases more than 100%, according to Duke Tomei, head of USI’s Transportation Group.

“Imagine the impact if you had 100 employees in your company and each year you had to replace 60 to 90 of them - it’s painful,” said Tomei.

Given these challenges, Tomei and his team have been working closely with trucking firms and companies that operate large commercial fleets on effective solutions to reduce losses tied to driver turnover, accidents, recruiting and training.

The Driver Profiling System

Among the varied solutions, the USI Transportation Group has created a driver profiling system to help clients make informed decisions around hiring, retaining and retraining drivers.

The predictive modeling system evaluates drivers using key metrics such as violations from motor vehicle records, years of experience, age, CSA Basic Score and tenure with the company. The process, which includes analyzing drivers’ historical accident records, is designed to equip employers with critical information about individual drivers to hire and retain, and those who are more likely to have an accident in the next 12 months. 

Accident and Safety Issues

Poorly trained drivers increase accident costs for transportation companies, and also can have a negative impact on Compliance, Safety, and Accountability (CSA) data. The Federal Motor Carrier Safety Administration (FMCA) compiles and publishes the CSA data, which is used to rank and prioritize motor carriers for possible intervention. The categories include unsafe driving, crash indicator, hours-of-service compliance, and driver fitness.

Insurers are increasingly using the CSA data to make underwriting and pricing decisions. For example, a high CSA rating could increase insurance premiums by $500 to $1,000 per power unit annually. Prospects with multiple CSA alerts may experience a premium increase the same multiple for each additional alert.

In addition to insurance costs, accidents have a direct impact on the bottom line. For every at-fault accident, a truck is forced to run a full year just to cover the loss - depending on the size of the claim it likely could take several others in the fleet to make up the loss.

It is important to find an experienced risk consultant who understands the insurance marketplace and has strong relationships with underwriters to obtain the most favorable rates and broadest coverages. 

Recruitment and Training Challenges

A large percentage of the commercial driver pool are Independent Contractors (ICs) so it is critical to develop creative recruitment and retention programs that addresses their specific needs.

For example, USI can help companies create “golden handcuff” programs to attract and retain Independent Contractor drivers. Benefit programs focused on increasing driver satisfaction can also be designed to suit individual company risks. Designing robust driver screening programs and innovative return-to-work programs can help companies avoid claims before they happen and reduce their impact when they do occur.

Recently, by leveraging the driver profiling system, USI helped a company retain 10 additional drivers by suggesting targeted training and a speed management program. In this specific case, USI got the insurer to provide training on ways to reduce backing accidents and critical crashes. After analyzing excessive speed violations, USI recommended the company implement a speed management policy, including lowering its speed governors to 65 MPH. Since the company averaged around $7,500 on recruiting, training and hiring cost per driver, the measures helped reduce costs by $75,000 and also lowered fuel spending by a significant amount.

This is just one of example of how the USI ONE Advantage?, a unique risk management approach built around industry-leading expertise, state-of-the-art analytics and rigorous strategic planning, is helping clients make better informed decisions about their risks.

The USI Transportation team of experts contributed to this article. For more information about our deep resources and how USI can help your organization better manage driver-related issues or other transportation challenges, contact a USI consultant or visit www.usi.com.