2015 was a solid year for most truckers, yet it was anything but easy. Looking forward to 2016, uncertainty looms large when it comes to the future of our industry. As risk advisors, we look at 3 types of risk when assessing what's likely to happen in 2016.
Hazard Risk: insurance-related perils that could result in a loss today
Business Risk: non-insurance risk that could affect your business today
Strategic Risk: long-term risk factors
With these 3 types of risk in mind, here are 5 predictions for trucking risk in 2016.
1: Safety technology will become increasingly prevalent (Business & Hazard Risk)
Safety technology will continue to improve and will become increasingly prevalent in fleets. While it is not always easy to calculate ROI on accident avoidance, fleets that are implementing some type of safety technology are seeing significant drops in crash rates. Some technology can actually serve as a predictor of pre-crash behavior, which is huge in terms of crash avoidance and even driver retention. Long-term, insurance rates will trend down as losses reduce, while carriers that don't adopt some type of safety technology will begin to see increased insurance rates due to higher crash frequency and severity than their counterparts.
2: Driver recruitment will be even more challenging (Business & Strategic Risk)
Driver recruitment will become even more challenging than it is today. Drivers are bombarded with job openings touting new equipment, sign-on bonuses, better pay and home time. Recruiting messages have become so prevalent and so similar that they have become white noise to drivers and have little impact. In 2016, fleets that leverage a strong brand and deliver a unique—but authentic—message will have the greatest success in getting drivers onboard. Never underestimate the power of your brand in helping your recruiting team get more at-bats with potential drivers.
3: Leveraging analytics for decision-making will become a bigger competitive advantage (Business & Strategic Risk)
Some signs are pointing toward an economic slowdown in 2016 that will put pressure on rates and profits. Carriers that have mastered getting useful analytics from their (big) data will have a tremendous advantage. The data that is available to most companies today is staggering; those that figure out how to harness and use this critical information to make decisions will continue to reap profits in 2016 and beyond. Companies that continue to guess or use only a limited number of data streams will struggle.
4: Driver pay structures will evolve (Business & Strategic Risk)
Methods of driver pay may change in 2016 and beyond. Legislation in Caifornia and other states makes it almost impossible to pay a driver solely on mileage; rather, the minimum wage laws in California mandate that a driver make at least minimum wage at all times when working. It is not uncommon for a driver to sit idle for extended periods of time in Los Angeles traffic—on duty, yet not getting paid while there are no miles being run. These laws apply to California carriers as well as trucking companies that run into the state.
Driver pay (even long haul) may begin to move toward an hourly rate, perhaps with a mileage incentive. Companies may have to guarantee a gross minimum wage for the week as other states follow California's lead in 2016.
5: Driver wellness will continue to be a huge opportunity for improvement (Hazard, Business & Strategic Risk)
Driver wellness will continue to be a struggle for most trucking companies. Truck driving is a tough life that can result in a shorter-than-average lifespan for drivers. The best trucking companies in 2016 will aggressively address driver wellness in order to improve their healthcare costs and also because it is simply the right thing to do.
Carriers might use technology for creative methods of outreach such as telemedicine, virtual health coaches, and fitness trackers in an attempt to create the greatest impact. Companies that figure out how to best attack driver wellness will ultimately have a healthier, happier and more engaged workforce.
While risk will always play a large role in trucking, how you choose to tackle it can be a competitive weapon that differentiates you from your competitors.
Here's to a happy, healthy, safe and prosperous 2016!