Before patting itself on the back too hard for having one of the best safety years in company history, the management of a major private fleet took a closer look at the numbers. They came to the conclusion that despite a great year for safety, the real story allows lots of room for improvement.
Make no mistake, this fleet is plenty proud of its drivers and their safety records; celebration for a stellar year was clearly in order. But hold the champagne. When you consider what it takes to pay for those “little” accidents, you might want to stick with soda.
Uncovering the true cost of accidents is key. Further analysis indicated two things: The opportunities for continued improvement are significant — amazingly so; and accidents, however small, have a major impact on profitability. I would add a third point: Drivers end up paying, in lost bonuses, for the preventable accidents they cause.
This private fleet had more than 250 wrecks in 2002. The number of preventable collisions was low in relation to the number of miles driven, but a sizable number of “incidents” resulted in significant expenses.
Most were preventable. They usually happened when drivers lost focus. They often involved good drivers who knew better and, frankly, were embarrassed to have let their guard down, failing to provide that “ounce” of prevention that could have led to a different outcome.
Landing gears are a case in point, highlighting the high cost of so-called minor incidents. Replacing a set of landing gears runs about $550 for parts and labor, which is not a lot of money in the broad scheme of things.
But to pay for that repair, the company had to earn $550. Assuming a 5% profit on revenue, it had to do $11,000 worth of business to earn that $550. Last year the company had 17 separate landing gear repairs, averaging $550 each. That's $9,000 in repairs for landing gears alone. To pay for this, the company had to earn $187,000! In other words, it would have had to run a two-person truck hauling products over several states working 24/7 for six months.
Another example is this same fleet had 21 incidents of hitting animals, primarily deer. A typical deer collision takes out a couple of bumper sections and maybe a headlight housing. If the wreck doesn't damage fenders and grilles, the company spends about $350 for parts and labor. According to the fleet, “While $350 doesn't seem like much, a truck like the one above has to run day and night for more than four-and-a-half months” to pay for those repairs.
Back-up accidents are as common as they are preventable. A month-and-a-half into '03, the fleet had 13 back-up accidents on the books. “Doors were ripped off the hinges — the bill was $300 a wreck,” said the general manager. “We spent $3,700 fixing trailer doors — all preventable damage — before the year was two months old. And now the company has to do $78,000 in business to pay the repair bills. If you consider the average revenue per dispatch, it would take the earnings of more than 80 trips to cover the cost of those repairs.”
In addition to racking up points against driver qualification, preventable accidents hamper the company's ability to sweeten the pot for drivers. In the end, the cost of these accidents comes right out of the driver's pocket. When they're brought under control, drivers will be be rewarded financially.
Clearly, little accidents can have big consequences. That ought to be enough to get drivers' attention — and keep it!
Gary Petty is President and CEO of NPTC. His column appears monthly in FLEET OWNER.