Fleets don't have a choice when it comes to complying with safety regs. But boosting the bottom line can be an added incentive to going above and beyond minimum requirements
If you don't think vigorous safety compliance can save money, then you haven't visited Viking Freight lately. For starters, the fleet's accident rate last year was just 0.44 per million miles, compared to an industry average of 2.16.
Don't think that's a big deal? Consider the numbers for a moment. According to DOT, the average trucking accident costs about $5,000 in physical damage alone - excluding litigation, workman's compensation, higher insurance premiums, etc. An accident rate of 2.16 translates into a minimum of $10,800 in added costs for every million miles a fleet logs in.
With its lower accident rate, however, the $370-million LTL subsidiary of FDX Corp. comes in at just $2,200 per million miles in accident-related costs, a saving of $8,600 per million miles over the industry average. If you do the math, you can see that Viking saved $722,400 in physical damage expenses alone over the 84-million miles it clocked last year. In addition, Viking's costs per accident are almost half the industry average, saving the fleet even more money.
"We make a big investment in safety, and we also see a clear payback," says Scot Bishop, director of training and safety for Viking. Enough, in fact, to cover most of the $500,000 to $800,000 a year it spends on recognition and other programs that relate directly to safety.
Bishop also emphasizes that setting high safety standards is not just a dollars-and-cents proposition. For Bishop and his fleet, it's a moral issue. "Yo u can say you're saving on assets or workman's compensation, but our top reason for focusing on safety is because it's the right thing to do," he says. "We don't want injuries to our drivers or the public."
Viking has also received public recognition for its safety efforts. Last year the fleet was honored with two of the industry's biggest safety awards: the American Trucking Assns. President's Trophy and first place in the California Trucking Assn.'s Fleet Safety Contest.
In reality, though, it's the cost of accidents and workplace injuries that is driving businesses of every shape and size, not just trucking, to take a closer look at safety issues.
The National Safety Council reports that over 5,000 employees lose their lives and 4 million more are injured every year on the job in the U.S., costing companies $127 billion annually in lost wages, reduced productivity, and medical expenses. On America's roads and highways - where trucking companies earn their bread and butter - the losses are even more staggering. Some 40,000 Americans were killed and 2.2 million injured just last year in highway accidents, at a cost of over $192 billion in medical expenses, lost wages, and vehicle damage.
According to David Hopps, group director of safety, health and security at Ryder System Inc., "Those numbers have convinced many companies to re-examine and beef up their safety programs. Safety and health management can be part of your company's philosophy and used as a competitive advantage, or it can be part of the problem," he says.
Hopps' comments are echoed by Jim Noble, director of safety programs for the National Private Truck Council. "One of the things I tell safety professionals who have a hard time selling their programs is that they have as much revenue responsibility as the sales department," he says. "The sales department brings the money in the front door, while the safety department keeps it from going out the back door."
A greater emphasis on safety at trucking companies can pay off in several ways, Noble adds. "You spend money to recruit drivers, so why not spend money on rigorous training and road tests to reduce accident costs?" he asks. Preventing accidents also means increasing on-time delivery rates, which improves customer service and, ultimately, revenues.
Finally, there's the image factor. "Your company's name is on the side of that truck," says Noble. "Talk to any large fleet, and it will tell you that one of the first things drivers are told is that they're behind the wheel of a traveling billboard. If you have a bad encounter with a passenger vehicle on the highway, everyone will know who you are."
Beyond compliance Both Hopps and Noble stress, however, that trucking companies must look beyond complying with federal and state safety regulations to gain significant bottom-line benefits. "The cost of compliance is just a cost of doing business," says Hopps. "Once you get past that, you get into making safety a competitive advantage."
Noble explains that by getting your fleet into compliance, you've really only established minimums. "You really need to develop a safety culture. A safety program is a slogan, something you come up with to address a specific problem. But a safety culture affects the way a company thinks and the way it does business."
Hopps says that means using what he calls a process approach, rather than relying on short-term programs. "'Programs have a start and a finish. Your employees and managers are ... expecting it to stop one day," he says. "With a process, you take a continuous improvement standpoint. It doesn't end."
Another difference, explains Hopps, is that programs are reactive in nature; they typically measure performance by injury costs alone. A safety process, on the other hand, seeks to proactively change workplace habits before accidents and injuries happen.
Noble uses the CDL requirement as an example of how fleets can go a step beyond compliance to take a more proactive approach to accident prevention. "The regulations state that you can use the CDL as proof of a driver's competency to operate a commercial vehicle," he points out. "But if you have a true safety culture, you would use the CDL requirement as a first step and then ask, 'Can this driver truly operate this equipment in the environment we're going to put him in?' Then you'd put them through a thorough road test based on the types of driving situations they'll encounter."
To create safer fleet operations, several trucking companies are investing in collision-warning technology to give their drivers an extra edge on the road.
For example, Reading, Pa.-based Textile Chemical Co. uses Eaton's EVT-300 VORAD collision warning system so drivers can "see" what's ahead of them farther down the road, especially in poor weather conditions.
"You don't usually know you're following too closely until it's too late," says Denny Eisenhofer, Textile Chemical's fleet manager. "A collision warning system like this gives our drivers time to react. That's priceless when you're going over mountains in the middle of the night in a blizzard."
Eisenhofer manages a fleet of 40daycabs and sleepers, a variety of steel box and tanker trailers, and 39 drivers. Textile Chemical's drivers have the unenviable job of hauling a host of hazardous goods throughout Ohio and Pennsylvania, as far north as upstate New York, and as far south as Virginia.
The job can be especially nerve-wracking in the winter when drivers have to negotiate mountain passes at night in blizzards and ice storms.
Eaton's EVT-300 uses a monopulse radar beam to detect targets in front of a tractor-trailer in a 12-degree field of view. The system can also be equipped with side-viewing radar to detect vehicles in a tractor-trailer's blind spots.
Textile Chemical equipped its collision warning devices with Eaton's Vehicle Information Management System (VIMS) to collect data on driver habits. In addition, the system contains an accident reconstruction feature that provides a second-by-second analysis of the speeds, braking, and trajectory of all vehicles involved in an accident.
"That type of data is an intangible benefit; it's difficult to measure in terms of payback, but just about anyone in trucking will pay dearly to get it," says Eisenhofer. "Because we can show drivers on paper what they're doing right and wrong, they can improve their driving. That is something you can measure."
The danger posed by hazardous-materials transportation brings much closer scrutiny from law enforcement, making safety violations an extremely expensive proposition. Violations - even those involving training lapses - are dealt with severely. The Hazardous Material Transportation Law stipulates a civil penalty of up to $27,500 for each violation; in "appropriate" cases, criminal penalties of up to $500,000 can be assessed, along with imprisonment of up to five years.
L&H Trucking, a Hanover, Pa.-based dry van TL carrier, has also invested in collision-warning systems. "With a $150,000 investment in equipment - which can top $200,000 with a full load of cargo - it's imperative that accidents be kept to a minimum," says president Glenn Longstreth. "Eliminating the unnecessary costs of accidents has a direct impact on your bottom line.
"Litigation for an accident can go on for years and cost hundreds of thousands of dollars," he continues. "Compare that to the $2,700-$2,900 we spent to install a collision-warning device in each truck. If we prevent just one accident with these systems, we've paid for all of them."
Longstreth also uses the VIMS option to bolster his fleet's driver training efforts and turn his good drivers into great ones. "This technology has given us the ability to monitor drivers more closely, looking at hard braking, idle time, and following distance," he says. "We get a snapshot of how they're performing on the road and what areas may need improvement."
Each time a truck is brought in for service, the safety manager downloads the VIMS information and uses it as part of a follow-up discussion with the driver. The meeting takes place whether the feedback is positive or negative. Drivers need to know when they're doing a good job, as well as when they're not.
Training works, too Old-fashioned training programs can also help reduce accidents. At Viking, Bishop oversees a wide range of training programs for drivers, dockworkers, mechanics, and others. "We cover driver training and equipment inspection, how to load and unload freight, haz-mat rules and regulations, claims, and customer service rules - something for everyone," he says.
Viking's supervisors and managers are deeply involved as well. That's a key ingredient in successful safety management, says Hopps. "If they're not involved and supportive, the programs won't work," he adds. "Your senior managers must visibly demonstrate commitment to leadership in safety, health, and risk management. You can't do it by voice mail or memo; only by being out there and being involved."
That's certainly true at Viking, where Douglas G. Duncan, president and CEO, monitors safety programs closely. "Good safety practices protect the motoring public and our valued employees, as well as the freight entrusted to us by our customers," he says. "In transportation, safety is synonymous with quality and has a huge impact on our business."
Bishop adds that Viking doesn't rely on a rigid set of rules for its safety initiatives. Local managers and personnel have a role in adding or modifying procedures to fit the needs of specific operating areas.
"We need the flexibility to make adjustments," Bishop says. "We need good communication between headquarters and local areas so we can take advantage of everyone's experience."
Putting a meaningful safety process in place requires a long-term commitment from both the company and the employees, says Hopps. "It can be a three-, four-, or even five-year process. You can't just say, 'Alright, we're going to finish this by December 31, 2000,' " Hopps adds. "If you try to do it too fast, you'll fail because you won't get all the necessary people involved." Forcing something new on people at the expense of everything else that needs to be done won't work, no matter how valuable it is.
Whether you improve your fleet's safety record by taking advantage of the latest technology or by instituting more training, you'll find it can also be a valuable tool in increasing profitability.
"Transportation costs keep going up but rates cannot, because we're in such a competitive industry," Longstreth points out. "We need to find other ways to reduce costs."
Want to improve the safety programs at your company? David Hopps, Ryder's group director for safety, health and security, suggests six things to keep in mind.
* Senior and middle management must be involved. It starts at the top or it doesn't start at all.
* Visible support is a necessity. Senior management must support safety efforts by physically going out on the shop floor and going into warehouses and terminals. In terms of budgeting and staffing, safety efforts must be supported on an ongoing basis.
* Supervisors are responsible for what happens on their watch. They must be held accountable, just as they are with profit and loss statements.
* There must be a high level of participation, from the newest hires to senior managers. All employees need to be part of the process. If everything comes from headquarters, it won't work.
* A cookie-cutter approach won't work. If you build in flexibility, you get increased participation.
* It's important for employees to feel positive about what the company's doing in terms of fleet safety.