ATRI: Value of Risk and Safety Per Annual Operating Expense

SAFETY AS AN INVESTMENT

Doug Marcello

WHY IT MATTERS:  Safety protects profits, not draining it as an expense burden many erroneously believe.

WHAT’S THE PROBLEM:  Too many view safety as just an expense.  A burden.  A drain.

The folks in finance who live-and-die by the P & L statements, myopically see “safety” on the expense lines rather than what it is—an investment.

They look at money spent on safety as a hemorrhage of profits.  The result—safety expenditures are internally challenged.  They are shortsightedly cut to puff profits.

Like an owner-operator reducing maintenance during tough times.  Short term return, but a long term loss.

The reality is that reducing expenditures for effective safety programs can actually cost more off the bottom line.

I had a client with a $1 million deductible.  He would tell me that how his company did at year end depended on how I did in the courtroom.

WHAT IS THE REALITY:  Safety saves.  Lives.  Injuries.  And Money.

This is especially true in today’s world of trucking companies taking on risk to reduce the amount that their insurance will increase.  It’s their deductible.  Their “retention.”

The result is that companies pay for the first $X per accident up to the amount of their deductible.  Where does that money come from?  Off the bottom line.

Safety is an investment to prevent the incidents that drain revenue.  Prevent the “death by a thousand cuts” of the “costs of defense payments” made even when there is no fault or no injuries.

That starts with safety.  Investment in safety.  Investment in technology.  But also investment in a culture that puts safety above all else.

No compromise.  Safety compromises cost.

SUPPORTED BY STUDY:  ATRI issued its study on the issue, “The Rising Insurance Costs of the Trucking Industry.”  A key takeaway from the study is that premium is no longer the sole determination of costs. It is just the start.

Instead, the key is “Total Costs of Risk”—premium plus deductible payments plus safety investment.  And the result?

It found that, “Carriers that increased deductibles or [self-insured retention] levels as a strategy for lowering premiums successfully lowered our-of-pocket costs more often than other carriers,,,”

Eighty (80) percent of those that increased retention and deductibles decreased their MCMIS crash rates the following year.  “This counter-intuitive finding appears to result from a heightened awareness of increased liability and exposure that leads to increased safety investment.” (Emphasis added)

And how did they do it?  “As noted in the research, this likely requires a top-down emphasis on safety culture starting with the senior executives who authorize changes in coverage, deductibles and/or SIR levels.”

Further, ATRI recommends carrier evaluate all costs associated with risk, including coverage, deductibles and/or SIR levels, financial and litigation liability exposure, safety technology investments, driving hiring and training, and out-of-expenses.”

“Safety technology investments.”  That’s the perspective.

SAFETY IS “ANTI-REPTILIAN”:  Investment in safety is not just preventative.  It is also a proactive defense against a Reptilian attack.

The Reptile Theory isn’t about the accident.  Nuclear verdicts rarely, if ever, detonate because of the facts of the accident.

The Reptile lawyer preys upon “Systemic Failures”.  Things you do on a ongoing basis that can be levered to inflame the jury and explode a verdict.

Your “safety investment” deprives them of the explosive source.  The “systemic failure.”

Rather than reeling in the deposition to the Reptilian inquisition, you can respond, “I’m glad you asked that question.  Let me tell you about safety program.”

BOTTOM LINE:  Safety profits.  Rather than a drain, safety keeps money on your bottom line.  And the bottom line is, well, the bottom line.

An Overview of CSA Scores & Why They’re So Important

Drivewyze

The topic of CSA scores often dominates conversations in the trucking industry, both with for-hire and private fleets. But what are CSA scores, and why do they hold such significant weight with truck drivers and trucking companies?

In this guide, we’ll take a look at what Compliance, Safety, and Accountability (CSA) scores are and why they’re so essential by providing insights into their calculation, importance, and the best methods for improvement.

What are CSA Scores?

CSA scores are percentiles calculated through the Federal Motor Carrier Safety Administration’s (FMCSA) Safety Measurement System (SMS) to assess a carrier’s safety performance. The scores, which are assigned to carriers based on their safety performance, are a part of the CSA program, a safety measurement initiative managed by the FMCSA.

CSA scores are essentially designed to hold truck drivers, owner-operators, and fleet operators accountable for compliance with safety regulations.

How are CSA Scores Calculated?

CSA scores are determined based on roadside inspection, traffic enforcement, and crash report data from the previous 24 months. These scores reflect multiple factors, including the number of violations and crashes attributed to the fleet, the severity of those violations and crashes, as well as the age of them. More severe events count more as do more recent events. The factors are viewed in the context of carrier size (e.g., number of trucks and miles driven).

Carriers receive a CSA score for each of the seven Behavior Analysis and Safety Improvement Categories (BASICs):

• Unsafe Driving
• Hours of Service Compliance
• Vehicle Maintenance
• Driver Fitness
• Hazmat Compliance
• Crash Indicator
• Controlled Substances and Alcohol

Below, we’ll take a deeper look into each of the seven basic categories.

Unsafe Driving

This category focuses on the operation of a commercial motor vehicle in a dangerous or careless manner. It includes dangerous practices such as speeding, texting, not wearing a seatbelt, or improper lane changes.

Crash Indicator

According to the DOT’s official SMS methodology, “this BASIC is based on information from State-reported crashes that meet reportable crash standards.” This includes crashes that result in a fatality, injury requiring treatment away from the scene, or enough vehicle damage to require towaway.

HOS Compliance

This BASIC reflects compliance with hours of service limitations (e.g., maximum driving time) and recordkeeping requirements, including the use of an electronic logging device.

Vehicle Maintenance

This BASIC measures compliance with vehicle maintenance and general condition requirements, including vehicle defects (e.g., faulty brakes, bald tires).

Controlled Substances/Alcohol

This BASIC measures compliance with drug and alcohol regulations, including prohibitions on use and employer requirements to test for misuse.

Hazardous Materials Compliance

This BASIC measures compliance with regulations relating to the safe transportation of hazardous materials, including marking, packaging, loading, and the possession of appropriate paperwork for each shipment.

Driver Fitness

This BASIC reflects compliance with regulations requiring employers to ensure drivers are “fit” to drive. In other words, drivers must meet minimum qualifications with respect to age, medical condition, and licensure.

Why Should I Care About a CSA Score?

A carrier’s CSA scores reflect its compliance with Federal safety regulations. A good score can significantly reduce the possibility of interventions, such as roadside inspections and on-site audits.

Maintaining low CSA scores comes with a lot of benefits, including:

• Fewer DOT audits and roadside inspections
• Better opportunity to bypass weigh stations
• Lower insurance rates
• Better reputation in the industry

An essential aspect of getting and keeping a good CSA score lies in hiring drivers with strong safety records. A good place to start is by looking at a potential hire’s Pre-employment Screening Program (PSP) records, which can let you know a lot about their willingness to play it safe.

What are Good and Bad CSA Scores?

Similar to an ISS score, CSA scores are calculated on a percentage scale of zero to 100. A score of 100 equals the worst possible performance, while a zero indicates the best performance (or a lack of data on which to derive a meaningful score). The FMCSA sets intervention thresholds based on crash risk analyses and professional judgment. Generally, staying far below these thresholds positively impacts the operations, profitability, and reputation of carriers and owner-operators.

How to Check Your CSA Score

CSA scores are not publicly available, but checking your scores is easy for carriers. Here are the steps:

1. Request a PIN online from the FMCSA website, by email, or via a hard copy letter in the mail.
2. Visit the CSA program website using your PIN and carrier name or DOT number.
3. View your CSA scores and underlying data that affect your score (crashes, violations, etc.).

Can You Improve Your CSA Score?

CSA scores aren’t set in stone. With persistent compliance, they can be improved by making safety and compliance a core focus of your company. In doing so, you’ll not only increase your CSA scores, but you’ll also improve your ISS scores, which makes weigh station bypass much more likely.

Drivewyze can play a significant role in helping improve your CSA score by providing real-time insights into your fleet’s safety and compliance status with tools like PreClear and Safety+.Our bypass service even records and measures safety inspection data (including violations), highlighting specific areas where your scores can be improved across an entire fleet.

FAQs About CSA Scores

Do Drivers Receive CSA Scores? 

No, drivers do not receive individual CSA scores. The scores are assigned to carriers based on their violations and crashes. That means that when an individual driver gets a violation, it negatively impacts the carrier, not the driver (other than their PSP records).

Do CSA Scores Really Matter? 

CSA scores are critical to trucking companies. They have a major influence on a carrier’s reputation, safety record, and the potential for negative interventions by FMCSA. All of those factors impact your ability to get customers and remain in operation.

What is CSA Compliance? 

CSA compliance is another way of saying “following the Federal Motor Carrier Safety regulations.” Both drivers and carriers are held accountable for violations (to varying degrees), so it’s in the best interest of all parties to prioritize low scores.

How Long Does it Take to Improve Your CSA Score? 

That can depend on various factors, including the severity and frequency of violations. If you have several recent and severe violations, it can take longer than usual to improve your score. Violations occurring in the most recent six months bear the most weight. Those more than 12 months old carry the least.

What Happens if You Receive a Violation? 

If a driver receives a violation, it is assigned to the carrier and not the individual driver. Repeated violations can negatively affect a carrier’s CSA score.

The ELD Hacking Threat

Jack Roberts

Did you know your fleet’s electronic logging devices may be vulnerable to hackers?

It’s true. Serjon, a cybersecurity firm specializing in fleet transportation security, held a press conference during the Technology & Maintenance Council annual meeting in New Orleans in early March. Urban Jonson, senior vice president, information technology and cybersecurity services for Serjon, briefed media on the threats facing fleets with compromised ELDs.

ELDs are essentially communication devices used to record and report truck driver hours of service. Due to certain technical requirements of the regulations, ELDs require the ability to “write” messages to the truck’s network to obtain information, such as engine hours. The ELD also requires internet access to report the HOS information.

This creates a truck network-to internet communication bridge that introduces significant cybersecurity concerns.

We sat down with Jonson to learn more about this new cybersecurity threat to North American fleets and what they can do to protect themselves. (This interview has been lightly edited for clarity)

HDT: Many fleets aren’t aware that ELDs can be hacked. Talk a little about how hackers can gain access to an ELD.

Jonson: Different ELD vendors use different designs to deliver the functionality required by the ELD mandate. A common design is a hardware device that connects to the vehicle’s on-board diagnostics (OBD) port and then uses a Bluetooth or Wi-Fi connection to a cellular device, such as a tablet or cellphone, to collect the ELD information and report it.

That ELD information can be attacked by hackers locally (close to the truck) or remotely across the internet.

In a recent paper presented at VehicleSec’241, the researchers were able to compromise an ELD device locally by simply connecting to the ELD Wi-Fi connection point, which had a predictable SSID [network name] and a weak default password. This allowed the researchers to send arbitrary CAN messages to the vehicle and even modify the firmware of the ELD itself.

There have also been reports of remote compromise of these types of vehicle OBD-connected devices going back to 2015, when a researcher could compromise Progressive Insurance OBD devices over the internet because the devices’ cellular modems were discoverable and openly accessible on the internet and had a weak default password.

HDT: What are these hackers looking for?

Jonson: The most likely ELD attack scenarios do not involve obtaining sensitive information from the ELD or the trucking company, but rather disabling or impacting the vehicle’s ability to function.

If an attacker can write arbitrary controller area network (CAN) messages to the vehicle’s CAN bus network, they can impact the vehicle’s functionality in many different ways. For example, if you can write messages to the CAN bus, you can send bogus sensor messages that would make the vehicle derate and go into limp mode, effectively disabling the vehicle.

The threat actor’s motivation could be money, in which case they could hold the company’s vehicles for ransom — not unlike what we have seen with traditional backend systems in the trucking industry.

It could also be a nation-state threat actor whose motivation is to negatively impact the U.S. transportation systems at a time of their choosing. If you disable enough trucks in tunnels or on bridges, interstates, and shipping ports and facilities, it would effectively snarl the entire transportation ecosystem.

In either case, the threat actors would be looking to compromise vehicle function “at scale,” which would require a systematic attack against an entire company or across multiple companies by attacking an ELD provider’s back-end infrastructure.

HDT: Can hacking into an ELD lead to a more widespread hacking issues? Can hackers gain access to other IT systems in a fleet?

Jonson: Getting access to a single ELD can compromise other systems, but usually at the ELD provider level and not the fleet itself. Most telematics system providers connect the ELD device to their backend system(s) for data collection, and then they integrate with the fleets through portals or direct system integrations.

HDT: Can hackers gain access to employees’ personal information?

Jonson: If the threat actor’s motives involve getting employee or customer data, they will attack the backend systems of the fleet rather than trying to get at the ELD devices.

Attacking regular backend systems requires much less effort and expertise. Estes Express was hit with ransomware in October 2023 and lost personal identifiable information due to the breach. This was done by compromising their backend systems and not via their operational technology, such as ELD or TSP devices.

Ransomware attacks against the backend systems of fleets are still the biggest threat to fleets and not attacks against the vehicles themselves. But that is just a matter of time and will happen eventually.

HDT: What is a worst case scenario for a fleet whose vehicles have been hacked via ELDs?

Jonson: The worst-case economic scenario is that fleets cannot use their vehicles to conduct business. Uptime in transportation is a major concern.

As our vehicles become more connected and more automated, with technologies such as lane-keeping assist and automatic emergency braking, the stakes for safety-critical applications increase dramatically.

A compromised ELD device on such an advanced vehicle with the ability to send arbitrary CAN messages could result in tragic consequences, including the potential loss of life.

HDT: What are some telltale early signs that a system has been hacked?

Jonson: There are few real-world public examples of threat actors attacking fleets, so it is hard to say what the early indicators would look like.

A compromised device could result in unexpected and unrelated diagnostic trouble codes (DTCs) being reported. Or there could be no symptoms at all until the vehicle cannot function and the owner receives a ransomware demand.

Trying to determine the difference between a cyberattack and diagnosing and troubleshooting normal vehicle issues is very hard to do.

HDT: What should drivers do if they suspect an ELD has been hacked?

Jonson: If a vehicle driver suspects that their ELD device or vehicle has been hacked due to erratic vehicle performance or activity, they should immediately contact their fleet maintenance professionals for further guidance. Safety should always be the first priority.

Jonson: First and foremost, evaluate the cybersecurity posture of the ELD devices in your fleet.

Not all devices are created equal. Make sure you ask your provider for information about their cybersecurity practices.

For additional information on criteria to use to evaluate a TSP/ELD provider, you can consult Cybersecurity Best Practices for Integration/Retrofit of Telematics and Aftermarket Electronic Systems into Heavy Vehicles by the Federal Motor Carrier Safety Administration and Cybersecurity Requirements for Telematics Systems by National Motor Freight Traffic Association.

All technologies and systems have the potential to fail, either due to outside influence, such as hackers, or on their own. I know of instances where fleets have lost access to their TSP/ELD systems due to cloud computing outages that were the result of provider misconfigurations. It was nothing malicious per se, but it still caused a major failure.

The best way to combat ransomware and ELD hackers is to make your business systems and vehicles as resilient as possible. Analyze your business and vehicles, identify critical systems that need to be protected, do your best to protect them, and develop contingency plans for what to do if those systems fail. I know of a motor freight carrier that got hit with backend ransomware but could continue operations due to a good backup plan.

What it takes to advocate for legal abuse reform

Pamella De Leon

The surge of nuclear verdicts – post-crash jury awards exceeding over $10 million – against trucking companies have sent shockwaves through the industry.

Despite a decrease in fatal crashes, verdicts are increasing, according to a 2023 study by the U.S. Chamber of Commerce Institute for Legal Reform. Looking at 154 trucking litigation verdicts and settlements from June 2020 to April 2023, the statistical mean plaintiffs’ award was $27.5 million and a statistical mean award of $759,875 for settlements.

Addressing lawsuit abuse is a “top tier issue” for the American Trucking Association, said David Bauer, vice president of state and tax policy. This involves ATA and its Federation partners at the state level pressing for reforms at the state level.

Besides trying to rein in huge lawsuits and nuclear verdicts, Bauer noted that the goal of tort reform is to restore balance and fairness to the judicial process for the trucking industry, pointing out how the judicial environment has become “unbelievably skewed” against the industry.

Get YOUR Roadcheck inspection questions answered in this Q&A session — sponsored by Bestpass — with CVSA Roadside Inspection Specialist Jeremy Disbrow on May 1, 2024, at 2 p.m. Eastern.

Insurance costs are also a major concern, with Bauer noting an increasing propensity of insurance carriers to completely leave states due to liability concerns is alarming.

“Our efforts are really this industry standing up and saying, ‘enough is enough’ to the plaintiffs’ bar, which has perverted justice and turned civil litigation into a profit center to line their pockets,” said Bauer. “The costs are borne by everyone, not just trucking companies, but consumers in the form of higher insurance rates and higher prices for everyday goods.”

The nitty gritty

As the surge in nuclear jury verdicts intensifies, various states have successfully pushed through reforms.

During this 2024 state legislative session, in Indiana, the “seatbelt gag rule,” which prevented jurors presiding over an auto accident lawsuit from knowing whether the injured party was wearing one and thereby led to unfair jury verdicts, was ended.

Persistence was an important factor, along with requiring “constant, unrelenting information sharing with legislative leaders,” and emphasizing how businesses and individuals were being impacted, said Indiana Motor Truck Association President Gary Langston.

“It took three legislative sessions to get the seat belt admissibility language passed,” he said. The first two attempts, though not successful, established a stronger base to start the next effort for the third session. Langston said they were also able to develop a coalition of stakeholders who were impacted by lawsuit abuse.

“Each attempt gave us additional opportunities to better inform the legislators about how their constituents are consumers being impacted by exorbitant lawsuit amounts being imposed on the transportation industry,” said Langston.

Last year, Iowa passed legislation to put a $5 million cap on noneconomic damages.

Having a member in every legislative district was the most powerful grassroots tool, said Iowa Motor Truck Association President and CEO Brenda Neville. She also credited the association’s volunteer leaders and members in educating lawmakers in their three years effort.

She commended their legislative leaders for their support who were “consistent” and “unwavering.” She added, “The trial bar is a very formidable opponent and many state legislatures are filled with trial lawyer legislators from both sides of the aisle, which make these lawsuit abuse initiatives very difficult and challenging. So, you really do need to have the right political landscape.”

Florida enacted last March a landmark legislation to protect consumers and businesses from trial lawyer tactics. Some of the reforms include increasing transparency in civil proceedings by reducing the ability of plaintiffs’ attorneys to introduce fictitious and inflated medical bills at trial.

“Phantom damages are but one of the tactics used by the plaintiffs’ bar to create a pervasive climate of lawsuit abuse that has sent insurance rates soaring to unsustainable levels,” Bauer said.

The tort reforms in Florida were almost 20 years in the making, said Alix Miller, president and CEO of Florida Trucking Association. Miller credited strong leadership and support at the legislative and executive level, preparedness and communication with the business level community, and long-term education.

“Before the pandemic, the supply chain crisis and even hurricanes in Florida, the public didn’t really understand the essential nature of the trucking industry,” said Miller. The association took the opportunity to launch a strategic communication plan so Floridians (elected officials and general public) would understand the crucial role of the trucking industry, and how, when it financially suffers, consumers suffer as well.

“If trucking companies are being targeted by billboard attorneys, via nuclear verdicts and the perpetual cycle of settlement mills in Florida,” Miller said, “that cost – or even worse, supply chain delays for the more important of commodities – trickles down to everyone in the state.”

To be successful, Miller said, they had to find a way to change the paradigm on how tort reform has pitted trial lawyers against insurance companies.

“This would not be a fight pitting wealthy trial lawyers, insurance companies with household names, and billion-dollar corporations,” she said. “It needed to be a fight about people, families and small business. The fight needed to defend the backbone of the American economy, not manage a food fight among the Goliaths of wealth and power.”

Miller said that the FTA engaged with not just the trucking industry, but also small business owners to hear the impact and rising cost of lawsuit abuse. “It was our members who testified in front of legislators and legislative committees to share their stories. And in the end, it was our members who joined the Governor to sign the most comprehensive tort reform package in the country into law,” she said.

Other states such as West Virginia, Georgia, Montana, Texas, and Louisiana have also enacted tort reform to mitigate the escalation of litigation costs.

Moving the needle

There’s still a lot of work to do. Wisconsin Gov. Tony Evers earlier this month vetoed a bill to put a $1 million cap on awards for noneconomic damages from commercial motor vehicle settlements.

As a bill aimed to protect small businesses, since most members are small carriers and family businesses, Neal Kedzie, president at Wisconsin Motor Carriers Association, expressed his disappointment, adding he plans to reconvene with coalition business partners over the next few months to strategize.

Kedzie said a formidable obstacle to overcome are the Wisconsin trial attorneys heavily advertising against the trucking industry and promoting lawsuits against carriers on media outlets.

“Though I’m disappointed that we didn’t have our tort reform passed, I’m encouraged that we had it pass both houses of the state legislature and make its way to the governor’s desk on our first attempt,” said Kedzie. “I believe that in time, we will be successful.”

As other states push for reform measures, Langston said it’s important to get legislators other than just those who serve on the judiciary committees involved in understanding the reptile theory tactics that trial lawyers use to divert a jury’s attention from the facts of the trial.

“The story to focus on is the impact of lawsuit abuse to the small business,” said Miller. “98% of trucking companies operate with 20 trucks or less. One fender bender can put an entire company out of business. Spend the time to humanize the industry.”

Bauer said ATA will work with any stakeholder that wants to enact reform. “In any effort to take unfair advantages from plaintiff’s attorneys, you are going to get their best efforts to distort our arguments and keep their gravy train going,” he said.

Bauer pointed out that even rational arguments can get twisted to misleading messaging. For example, in over half the states, it is still not permissible to introduce evidence that a plaintiff was not wearing their seatbelt at the time of an accident.

“These are falsifications we are fighting against as we continue our lawsuit abuse campaign,” he said. “We are not close to completion, in fact, we’re just getting started.”

ELD Mandate Comparison: Canada and the U.S.

Learn about the notable differences between the Canadian and US mandate rules.

Mark Samber

Canada’s electronic logging device (ELD) mandate was adopted on June 12, 2019, and is effective for all federally-regulated carriers.

The Canadian mandate closely follows the U.S. rules and operability requirements, which was a very intentional move by Transport Canada. Regulators and industry knew that Canada’s mandate must closely follow the U.S. rules to avoid disrupting cross-border transportation and the movement of goods across the border.

While the ELD operability requirements are very similar, there are a few notable differences between each country’s regulations. A few of the more prominent differences between the two countries are described below.

ELD Mandate Comparison – Canada vs. United States