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Fleet risk management: 9 cost-cutting essentials

By Higginbotham on September 28 , 2016

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When you’re operating a transportation company, you’re up against a multitude of risks every day – driver shortages, road and weather hazards, regulatory headaches and stiff competition just to name a few. Staying profitable is a constant battle against these and other exposures, and your very survival depends on how well you manage your risks and control costs.

Your first priority should be to create a safe fleet. You’ll never run a successful business without having a safe operation, and that means minimizing driver risks, lowering accident rates and making safety a company priority from the top down.

But what exactly does an effective, cost-cutting risk and safety management program look like? What does it include? For starters, it has to be a “big picture” effort, encompassing regulatory compliance, human management, asset protection, loss prevention and other areas.

The most effective and cost efficient fleet risk management and safety programs implement these nine essential elements:

  1. Written policy. You need a simple, clear, yet comprehensive policy that outlines such things as responsibilities, disciplinary and accountability measures, required training, hours of service, accident reporting and investigation procedures, drug and alcohol testing policies and vehicle inspections. Tailor your policy to your specific operations, exposures and hazards.
  1. Administration and accountability. Everyone from executives on down needs to have skin in the game and be held accountable for safety. When outlining program administration and accountability, clearly delineate who is responsible for what, when and how.
  1. Driver management. The risk behind the wheel is one of your biggest, and drivers are the vital link in the chain for getting products to market. That’s why proactively managing this risk is so mission critical. That means smart hiring, adequate testing, thorough training (including regular refreshers), strict driver distraction policies, accident reporting procedures and other measures to ensure the safety of your drivers, safe transport of goods and lowest operational costs.
  1. Drug and alcohol testing. According to the Federal Motor Carrier Safety Administration (FMCSA), drivers are legally mandated to be tested before being allowed to operate a commercial vehicle. Make sure your company policies are clear and consistent with regard to pre-employment and post-accident testing, zero tolerance vs. second chance, drug and alcohol training, supervisor training, and recordkeeping.
  1. Accident reporting and investigation. Every accident could lead to litigation. Prompt reporting is often necessary for a favorable outcome when you report a claim. In other instances, the best approach may be to memorialize the scene by recording the facts of the incident for future reference. In either case, a thorough investigation is paramount to your safety program. It should focus on identifying root causes (as opposed to assessing blame) and developing effective risk control methods to prevent similar occurrences.
  1. Vehicle inspection and maintenance. Maintenance issues are increasingly cited in vehicle crashes, so keeping your fleet in top operating condition is a safety issue as well as a cost saving issue. Maintain a strict maintenance and inspection regimen, including pre- and post-trip inspections, and keep accurate records.
  1. Proper recordkeeping. Keeping thorough and accurate maintenance and accident records isn’t just a regulatory compliance issue. It can also save you time, money and hassles during a DOT investigation or compliance review to assess your company’s safety fitness or if you’re involved in litigation. It also provides valuable benchmarks for occasionally reevaluating your risk and safety policies.
  1. The right financial protection. In your line of work, the exposures you face can be financially devastating. That’s why you need robust insurance protection for your fleet and your operations to top off your risk management program. Identify every risk and make sure you don’t have any potentially costly coverage gaps.
  1. Risk management technology. Consider using evolving technology to complement traditional fleet risk management methods. This can include electronic onboard recorders, telematics, GPS, in vehicle cameras and lane departure warning systems. While there is often an upfront capital investment for these types of risk management tools, the ROI is improving as this technology becomes more common in the transportation industry.

For more tips on creating a safe fleet, managing your exposures and lowering your total cost of risk, call the fleet risk management and transportation insurance professionals at Higginbotham Insurance.

Related: Common commercial vehicle accidents and how to prevent them

 

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