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How Truck Insurance is Impacting the U.S. Supply Chain

Problem:

There is an underreported, seemingly unknown problem plaguing the North American supply chain. That is the vast amount of CDL holders graduating from CDL training programs, who upon completion, cannot find employment with regional carriers and small trucking fleets; they are forced to apply to the few major carriers leaving them no room to negotiate salary, benefits and location. This in turn is forcing smaller carriers to take on the burden of higher salaried drivers albeit more tenured. The reason for this issue is due to the insurance companies not allowing small carriers (less than 100 drivers) to hire drivers who have less than two years of experience behind the wheel. While there are some insurance companies that allow this, they do so at extremely prohibitive rates. Alternatively, large companies (over 100 drivers) may add newly licensed drivers to their fleet if they keep the percent age under 10% of their total driver pool. For example: FedEx can add 2,000 newly licensed driver to their fleet of 20,000 drivers with little to no effect on their insurance premiums. This severely impacts the trucking industry and especially targets most of the trucking market, smaller fleet with less than 100 drivers.


Solution:

Fortunately, there is a solution to the problem. The Federal Government should create a “high risk pool” for all new drivers. This is currently done in all states that offer workers comp. Another solution would be similar to Farm and FHA housing and flood insurance where the risk is backed by the Federal Government. This would keep insurance rates competitive while allowing a level playing field for small and large companies alike.

Now that ELDT has standardized all training for CDL students to ensure that roadways are safe, the Government could also establish a trail period for these new drivers. This would be 6-month trial period were these new ELDT era drivers are allowed to work for small and large companies while gaining experience. If these drivers receive any poor marks on their driving record during this period, they can be removed from their company with no extra insurance cost to the company.


These are a few solutions to the problem we’re seeing in the supply chain industry. This is not an all-encompassing list and some of these problems may be more nuanced in specific industries, but when it comes to keeping the trucking industries competitive and staffed, this is a great start.


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