Safety as a Path to Profitability
Updated: Jan 30, 2020
Trucking is a great industry to be in, and it affects the lives of every consumer in our society. The main goals of trucking companies usually revolve around providing exceptional service to their clients. In order to maintain quality service, trucking companies must be highly conscious every day about avoiding traffic accidents.
Accidents are one of the biggest setbacks that can happen to a trucking company; costing tens of thousands of dollars for minor accidents to multi-millions for fatality accidents. This is only the surface level cost of visible damage including cargo damage, vehicle damage, property damage, and medical expenses. What most trucking companies don’t think about are the secondary costs which are usually four to ten times higher than the surface costs. Secondary costs include downtime, opportunity costs, PR damage, insurance costs, finding & replacing a driver if need be, administrative costs, etc.
Fatigue and distraction are the leading causes of accidents.
Trucking companies have risk mitigation strategies in place in order to reduce the risk of accidents, including:
1. Safety training
2. Health & wellness programs
Automatic braking systems
Lane departure systems
Fatigue management tech
4. Preventative truck maintenance
5. Safety bonus pay
Increasing driver pay is associated with lowering the probability of crashes
Specifically, for every 10% more in average driver compensation (mileage rate, unpaid time, anticipated annual raise, safety bonus, health insurance, and life insurance), the carrier will experience 9.2% fewer crashes
6. Documenting how each shipment is insured
7. Complying with all regulations to minimize the amount of violations
8. Documenting the risk mitigation strategies along with key performance indicators such as number of accidents relative to miles driven
In the context of an example trucking fleet, let’s see how much money can be saved with prevented accidents when the fleet adopts new safety tech.
500 drivers total
Average 130 accidents per year
43 of these accidents are avoidable
Average cost of a single accident is $344,000
Safety tech companies claim to be able to lower accidents by 9% (simply by influencing driver behavior)
Even if only 5%, or 2 accidents for this fleet, are prevented each year, the prevented cost of those non-injury accidents together is about $688,000
Average cost for lane departure warning system = $1,171.21 per truck
Total cost for 500 trucks = $585,604.5
Savings year 1 with 2 accidents prevented= (ACCIDENTS COST-TECH COST)=($688,000-$585,604.5) = $102,395.5
Savings year 2 and onward with 2 accidents prevented= (ACCIDENTS COST-SYSTEM MAINTENANCE)=($688,000-$1,000) = $687,000
Return on Investment = [($688,000-TECH COST THIS YEAR)/TOTAL SPENT ON TECH]
17% in year 1
Assuming about $1,000 in system maintenance per year for the entire fleet, the ROI in year 2 and onward is about 117%
Without safety tech they would be spending roughly $688,000 on those two avoidable accidents every year. This is just from one piece of safety tech given a low success expectation. It is likely that a single safety tech across the entire fleet will prevent more than just 5% of accidents. The more safety tech you implement the more accidents you can prevent.
With safety tech, trucking companies have insight into driver behavior and will help them better understand how to improve their performance, boost safety, help improve the safety training, and help drivers be more productive. A productive work environment decreases the risk of accidents, reduces the number of insurance claims, and improves overall efficiency.
In the case that a claim does arise, safety tech provides evidence that can help the trucking company protect itself from false mitigations.
Companies are likely to save on insurance if they use evidence data from their safety tech for training purposes as part of their risk mitigation strategy. To increase the likelihood for insurance companies to lower costs, it is up to the insured to communicate clearly to their underwriter about their risk mitigation strategies and how they monitor and use data from their safety tech daily to help improve safety training.
BlyncSync provides a proactive solution that focuses on the leading causes of accidents: human error due to distraction or fatigue. By focusing on the root cause of the problem, and providing predictive data to help plan before drives begin, BlyncSync can safely help reduce the risk of accidents ahead of time.
I encourage your company to center its culture around safety. Not only will you help save lives, but you will make more money too.
The savings really add up when you factor in the direct and indirect costs of accidents along with insurance savings. Not only will you have more cash on hand, you also have your time freed-up for additional opportunities.
Trucking is the lifeblood of our economy. As with any reward, with it comes the associated risks. The reward of completed deliveries comes with the risk of traffic accidents among other risks. Everyone in the scenario wins if drivers can safely accomplish their deliveries and get home to their families safely.