Trucking has always been a tough job, and a digital transformation in transportation not only will make that job more complex but it also will introduce new risks and exposures that motor carriers can’t afford to ignore. From the trends we’re seeing now, and based on my many years of experience in managing transportation risk, here are a few predictions:

Truckers’ jobs will become even more complicated. Technology is shifting the road ahead. Trucking equipment continues to evolve, with 18-speed transmissions, fleet telematics and sensors that monitor engine wear and tear. More sophisticated tractor units cost a lot more than they used to, because of the technology they contain. In each cab, there will be even more for motor carriers and drivers to coordinate, keep track of and monitor, every mile of the way.

Trucking will enter the era of digital transformation. The evolution of data analytics that’s occurring in all industries will introduce similar opportunities for operational improvements in trucking. Motor carriers and drivers already face additional regulatory compliance burdens from the Federal Motor Carrier Safety Administration and the U.S. Department of Transportation. Digital transformation will accelerate the evolution of trucking. One example of this is the phase-in of electronic logging devices (ELDs). On the positive side, digital technology gives motor carriers the ability to analyze and improve their logistics, on-road performance and profitability.

Skill sets needed will help mitigate the driver shortage. It might sound too good to be true, because right now every motor carrier is struggling to find enough quality drivers. But I think the skills truckers will need in the future are going to expand the talent pool and enable the industry to hire more good people. Trucking will appeal to a broader population. Drivers will be increasingly professional, more analytical and less intuitive. The “cowboys” who once dominated the ranks of drivers, many of them with a devil-may-care attitude, have become relatively few. Trucking today and tomorrow requires more methodical, courteous and professional drivers who don’t view rules and regulations as things to break.

Safety Measurement System (SMS). FMCSA, which conducts roadside inspections and has authority to investigate and intervene in motor carriers’ safety practices, makes most of its findings available to the public through the online Safety Measurement System. Anyone can look up a motor carrier by name or USDOT number and see its on-road performance in the areas of: unsafe driving, hours-of-service compliance, vehicle maintenance, controlled substances and alcohol, and driver fitness. The only categories not publicly available are crash indicator and hazardous materials compliance. These seven categories comprise what FMCSA calls the BASICs — Behavior Analysis & Safety Improvement Categories. FMCSA studies have found that motor carriers’ performance in the BASICs is strongly correlated to future crashes.

Risks and exposures

Trucking is an expensive business, and it’s becoming even more costly with high-tech equipment and regulatory requirements. Ignoring or inadequately managing the risks in trucking can eat up motor carriers’ profits and force them to make tough decisions.

The flip side is not pretty for motor carriers. Poor safety practices and non-compliance carry all sorts of penalties, up to and including fines and orders to remove vehicles from service. And that’s before tallying up the direct and indirect impact in employee injuries, accidents involving others and reduced productivity. With profit margins in the transportation business already narrow, can motor carriers afford not to take safety to heart?

Even as motor carriers consider how technology will change their business, ushering in new types of risks, they need to remember that traditional risks and exposures still persist. These include:

  • Autonomous vehicle technology. It is possible that we’ll see autonomous long-haul trucks on the road before we see autonomous passenger cars. It’s not clear how hours of service rules will be adapted to autonomous trucks — if you’re not actively driving because an autopilot is operating the rig, are you still on the clock? That’s something to keep an eye on.
  • Economic impact on motor carriers with older fleets. Installing ELDs can cost motor carriers hundreds of dollars per vehicle, not counting monthly subscription costs. Other regulations may require some costly retrofitting or even the purchase of new equipment. A brand-new semi-truck, or tractor, can cost between $130,000 and $180,000 on average, while a new trailer can cost $30,000 to $80,000. Those don’t include operating expenses, such as fuel, maintenance and driver compensation.

Emerging risks and exposures in trucking include:

  • Driver injuries
  • Automobile physical damage
  • Third-party property damage
  • Shipper customers’ cargo loss

Tokio Marine America can help motor carriers and their risk advisers during this era of digital transformation. We’re a digitally savvy insurer that understands transportation logistics and cargo risks. We help manage conventional and emerging risks through our expertise and proprietary needed coverages. During times of change and stress, we prove our value by focusing on delivering Anshin, the Japanese word for safety, security and peace of mind. Where do you see the transportation business going? Talk to us about the risks your business faces. We’ll help you get there.

To learn how Tokio Marine America can make a difference in your business, visit our product page.


About Author

David Lee,
Director, Inland Marine at Tokio Marine America
David Lee is the Director of Inland Marine Transportation for Tokio Marine America. His insurance career spans nearly four decades with experience in commercial insurance underwriting, MGU program management, and specialty insurance brokerage. David is the Chairperson of the Transportation Committee for the national Inland Marine Underwriters Association (IMUA) and is the former Executive Director of CURE Childhood Cancer - Georgia’s oldest and largest pediatric cancer support organization. He is based in Atlanta and can be reached at David.Lee@TMAmerica.com.

About Tokio Marine America

As part of our commercial inland marine product offering, the transportation industry is well served by unmatched financial strength, dedicated underwriting experts, and a suite of flexible and proprietary insurance products that can be tailored to fit your needs.

With over a 100-year history in the U.S., Tokio Marine America (TMA) offers tailored products to a diverse range of customers – from small to large-sized global businesses seeking traditional multi-line coverage, to larger private and public companies requiring full risk management solutions. Our commitment to providing the highest level of service is paramount. More than 93% of our customers recommend TMA based on our superior claims service. TMA is one of only three insurers with an A++ (Superior) XV rating from A.M. Best. With a solid foundation of financial stability, our strength lies in understanding your business and working in partnership to exceed your expectations.

By offering fully integrated solutions to meet our customer’s needs, we endeavor to deliver ANSHIN – safety, security and peace of mind to all our customers.

Tokio Marine America (TMA) is the marketing name for Tokio Marine America Insurance Company (TMAIC).