You'd be hard pressed to find a fleet that doesn't think installing more safety systems on trucks would be a good thing. And most would also agree that the Achilles heel of safety technology is finding a way to make it pay for itself.
A 2003 Federal Motor Carrier Safety Administration (FMCSA) survey of private and for-hire fleets starkly illustrates this conundrum. FMCSA determined that in terms of safety technology systems, fleets were most concerned about three things: accuracy and reliability; cost of installation and maintenance; and effectiveness.
Calculating a return on investment (ROI), in particular, was uppermost in their minds. “ROI is a factor unique to carriers, but almost all carriers emphasized its importance in their deciding to adopt on-board safety technology,” the agency reported. “They want quantifiable data on costs and benefits.”
“One carrier presented the following scenario: To install an $800 item into a fleet of 3,000 vehicles, at a total cost of $2.4 million, requires breakeven payback in six to eight months — and there must be ongoing payback as well. Other carriers stated that they looked for payback in the 12- to 18-month timeframe. None indicated a payback greater than 24 months as being acceptable.”
According to Jeffrey Barylak, global marketing manager for Eaton's Vorad radar-based collision avoidance systems, payback is the key to fleet acceptance of safety technology. “Having the ability to substantiate the money-saving benefits of any technology is a highly effective marketing tool,” he says. “That's what the decision makers at fleets…want to hear. When you can demonstrate those benefits by also confirming accident reductions…you have the attention of not only the safety director, but also the CEO or CFO.”
Accidents costs, which are getting steeper every year, are at the heart of any payback analysis. “If you are…getting involved in several accidents per year, safety technology is really going to help, and help you quickly,” says Bob Inderbitzen, vp-safety for the National Private Truck Council (NPTC).
Preventing accidents — big and small — can help a fleet save big money, usually more than enough to pay for the cost of buying, installing and maintaining a high-tech safety system.
NPTC analyzed the costs of so-called minor accidents to calculate the impact on a fleet's bottom line over the long term. For example, the group found replacing a set of landing gears is about $550. Assuming a 5% profit margin, a fleet must generate revenue of $11,000 to net the $550 needed for the landing gear repair.
One fleet needed 17 separate landing gear repairs, each the result of a “minor” accident. The company had to earn $187,000 just to cover the repairs. That's the equivalent of operating a two-person truck hauling products 24/7 for six months.
Then there are the big accidents, such as rollovers. To help prevent rollovers,Trucks North America made Bendix's Electronic Stability Program (ESP) a standard feature on all of its VN and VT Class 8 tractors last year, which added about $995 to the base price.
ESP works by selectively applying the brakes on individual wheel ends — based on driving conditions, vehicle speed and other inputs from onboard sensors — so that engine power is reduced automatically, says Kevin Romachock, director of electronics at Bendix.
“This assists the driver to reduce speed, keep the vehicle in proper alignment and reduce the tendency for the truck and trailer to slide, jackknife or roll over,” he explains. “Rollover stability is a safety advantage in high friction conditions involving curves, sudden lane changes and obstacle avoidance maneuvers.”
In terms of dollars, what is that $995 for an ESP system really buying? Volvo crunched the numbers and the results are pretty compelling. The average cost of a single rollover is $109,000: $50,000 to repair the vehicle, $20,000 in cargo claims, $10,000 for towing, $10,000 for clean-up, $10,000 in down time, and $10,000 for higher insurance premiums
“At a 5% profit margin, a fleet would have to generate $2 million in revenue to pay for one rollover accident,” says Rob Simpson, Volvo's marketing product manager. “Studies show that providing just one extra second of braking time can reduce the rate of rear-end collisions 90%. Just two extra seconds may be all that it takes to prevent a rollover from occurring.”
Although looking at the reduction in accident costs is perhaps the most straightforward way to calculate safety payback, it can also be the most misleading, says David Melton, director of transportation technical services for Liberty Mutual.
“Payback analysis in terms of [truck] safety systems isn't so much a science but an art form,” he explains. “That's because the biggest problem is that payback analysis misses the entire point. To calculate payback by traditional means, you look only at crash costs. These are ‘lagging indicators,’ i.e., you're waiting for something bad to happen so you can justify the investment.”
The real key to payback analysis, says Melton, is to measure changes in driver behavior: What is and what is not happening behind the wheel? “You do not get the bottom line figures business owners want to see, but you are doing something far more important — you are lowering your level of risk,” he explains.
“As the level of safe driver behaviors goes up — slower speeds, greater following distance, less aggressive braking — the severity and frequency of crashes go down,” he says. “That must [also] be included in your payback analysis.”
Fleets should widen their ROI calculations to include such soft benefits because of what Melton calls a heavy dose of “confounder” factors in the safety arena. “Not only is it difficult to pinpoint if a specific technology is directly responsible for fewer crashes, a number of confounders can come into play,” he says. “Devices don't work properly if they are not used properly. So if drivers think stability control systems, for example, will bail them out of trouble, they may actually drive more aggressively, leading to more, not fewer, accidents.”
That's why payback analysis can be so difficult. “You're at the whim of accident rates, and many factors contributing to accidents are well outside of any one technology's ability to control,” says NPTC's Inderbitzen.
“If a specific technology doesn't change your accident statistics, does that discount wider investment in it?” he asks. Not ncessarily. "You need to figure out what goals you want to attain with it, then look at what benefits it will give you — monetary and otherwise.”
According to Del Lisk, vp-safety services for DriveCam, drivers may actually be the biggest hurdle fleets face in their efforts to put safety devices on trucks — especially devices that can record information. “You can stick these cameras on a truck, but if people don't use them, they won't work in terms of safety benefits,” he says. “Typically, when we do an install for a fleet, we find that half of the drivers reluctantly agree to give the technology a try, while the other half feel management is out to get them and won't touch it.”
DriveCam's system uses a digital video camera affixed to the window of the vehicle to record what's going on in front of the truck, in the cab and off to the sides. Although the system is recording all the time, it doesn't save any video until it's triggered by an incident such as hard braking or a sudden steering maneuver. The 10 seconds before a crash, the crash itself, and the 10 seconds afterward are recorded video, Lisk explains.
TOOL FOR DRIVERS
“It's very important to position any safety device as a tool to improve driving, not to change driver policies,” he emphasizes. “You have to tell drivers why you are doing it and train them on how to use the technology. Showing them video of non-crash incidents, such as sudden stops from following too close, can be a huge tool in improving driver awareness and skill levels.”
Somewhere down the pike, there's going to be a collision. “Two things happen then,” says Lisk. “First, the video may show the fleet's driver wasn't at fault…All of a sudden, the ‘hardliners’ against the technology are going to swing in favor of it, [so now] the system becomes a retention tool. Second, the video may show [that] the driver did make a mistake and caused the accident. You go straight to settlement, which …avoids expensive litigation.”
Alan Korn, chief engineer for Meritor Wabco, also stresses that it's important for drivers to understand what advanced safety technology can and cannot do. “Take stability control. It extends the safety window and aids the driver, but it doesn't replace driving decisions,” he says. “If a curve has a speed limit of 33 mph and a tractor-trailer takes it at 35 or 36 mph, the stability system will more than likely bail the driver out. But if it takes that curve at 60 mph, it's going to roll over whether it has stability control or not.”
Korn adds that stability control, like collision or lane departure warning devices, doesn't address every crash scenario or driver behavior. “You must have the proper data on your fleet's crash history and be very, very careful in analyzing it,” he says. “There's never a guarantee you can eliminate accidents entirely unless you have a lot of data characteristics in hand about the kinds of accidents your fleet has suffered from.”
Driving acceptability is a key component of how Iteris markets its lane departure warning (LDW) system, says Bill Patrolia, the company's director of truck sales. If it's simple to use and doesn't become a distraction, then LDW is accepted and used effectively by drivers.
“In addition to saving lives, the more you improve safety, the more you benefit from the economic benefits,” says Eaton's Barylak. “On top of that, systems like Vorad also have proven to be effective in helping a driver learn how to be a safer driver. That learning process will then result in additional accident reductions. Benefits like that will transcend what you…find on a money-making profit and loss statement.”
When calculating the an advanced safety system's payback, fleets should also include hard numbers like insurance discounts and reduced legal entanglements, as well as softer items such as the impact on driver retention, improvement in driver skills, reduced maintenance and fuel savings.
“We believe safety gives us a competitive advantage in many areas,” notes Max Fuller, co-chairman of U.S. Xpress Enterprises. He estimates that investment in radar-based collision avoidance technology has helped his fleet cut frontal crashes by 75% over the past few years.
Fuller doesn't hesitate to use that statistic when courting new customers. “By equipping our tractors with collision avoidance systems, anti-lock disk brakes, auto-shift transmissions and traction control-to name just a few — we're not only taking extra steps in protecting our highways, but the customer's freight as well,” he points out. “If we're safer, we're more productive, and thus bring more value to our customers.”
On a less dramatic scale, there can be incremental operational benefits that add up to cost savings as well, notes NPTC's Inderbitzen. “Just slowing down your drivers and reducing aggressive braking incidents can save money in terms of fuel and maintenance expenses,” he says.
Reduced insurance premiums are a tangential benefit that's a little more difficult to obtain. “That's where you need years of historical data to support your position,” says Inderbitzen. “You [must be] able to show your insurance company improved driver behaviors, which translates into lower risk factors, and that you've prevented accidents.”
But it's only a possibility, emphasizes Liberty Mutual's Melton. And it relies entirely on the amount of detailed safety data a fleet can generate. “Insurance companies don't use intuition to calculate premiums; they use facts,” he says. “Fleets need to understand that the data is the most valuable part. People can run a stop sign many, many times before an actual crash occurs. That's why you use data to measure the extremes of driving behavior and how you've reduced them. That's the kind of data that allows for actuarial calculations of risk exposure and can lead to reduced insurance costs.”
Issues driving advanced safety systems
Through information gathered from carriers, drivers, suppliers and insurance companies, the Federal Motor Carrier Safety Administration has identified some of the issues shaping decisions about advanced safety technology.
RETURN ON INVESTMENT (ROI).
One of the most significant factors for carriers when deciding whether or not to purchase onboard safety technology.
Carriers must be convinced that the technology produces results. They're often skeptical of manufacturer's claims, especially when they feel test situations do not accurately mirror operating conditions.
RELIABILITY AND MAINTAINABILITY
Carriers and suppliers want technology that is user-friendly, accurate, reliable and easy to maintain.
The nature of the data stored by some onboard safety devices had led to concerns over liability. Some carriers are also afraid that they will be held liable in a crash if drivers have failed to use/activate safety systems. Concerns in this area are enough to keep some carriers from purchasing advanced safety technology.
In addition to factors listed above, awareness and acceptance of new technology impacts demand.
Carriers said an initial cost ceiling for safety systems is $1,000 to $1,500 per truck. However, even when they realize that benefits outweigh costs, they sometimes just don't have the capital to make the investment.
Like any other business, carriers compete for customers. Running a state-of-the-art fleet with advanced safety technology can only help its image.
They need to be convinced that safety technologies are effective and user-friendly, and that data will not be used to violate their privacy. Some carriers are concerned that onboard safety technologies could be a distraction for drivers, while others worry drivers could become too dependent on them.
The American Transportation Research Institute (ATRI) surveyed fleets to find out what safety technologies they were most interested in. Here are the top five:
Automatic collision notification/mayday systems
Remote diagnostic systems that detect vehicle malfunctions and automatically notify the driver, fleet, and/or repair station
Load stability sensors/roll over stability
Radar-based collision warning system/forward radar
Lane departure warning/lane change aid
The price tag
Businesses suffer a stinging economic jolt when workers are involved in crashes. And the numbers jump precipitously if someone is injured or killed.
According to NHTSA, the average cost to an employer when an employee is involved in a vehicular accident is $16,500; if the employee is injured, that cost rises to $76,000; if they are killed, it skyrockets past $500,000. The cost of even one accident can be enough to bankrupt a fleet.
The Pacific Institute for Research and Evaluation found that truck accidents cost the industry roughly $24 billion a year: $8.7 billion in productivity losses; $2.5 billion in resources; and $13.1 billion in quality of life losses.
Indiana Mills & Manufacturing Inc. (IMMI), which makes commercial vehicle safety restraint systems, dug a little deeper into the Pacific Institute study to determine the costs related to driver injuries and fatalities.
IMMI determined that the cost to a fleet averages about $183,000 per injury and $2.7 million per fatality. Those costs include medical expenses, emergency services, lost driver productivity and quality of life losses.