Motor carrier selection can be challenging under typical conditions. As regulations regarding the motor carrier industry change, where there are both motor carrier safety ratings and basic safety data available, shippers are right to ask questions about risk. Shippers worry about being included in a lawsuit under claims of negligent hire or vicarious liability. These are some of the questions I hear from companies that regularly ship freight:
- How liable are you if a motor carrier you hire has an accident?
- Should you only accept motor carriers with Satisfactory safety ratings?
- How can you structure your motor carrier qualification process to prevent lawsuits?
- Is there a comprehensive way to manage risks?
The reality is that shippers have risks today and that these risks cannot be eliminated. Despite an increasingly safe industry, tragic accidents still occur. Real-life events like hazardous weather, traffic congestion, weigh station lines, and equipment issues delay shipments every day and add to the risk profile in transporting goods over the road. Increasingly, parties besides the motor carrier and injured party are becoming involved in lawsuits. However, companies can take steps to mitigate risks when hiring motor carriers.
But where to begin? Consider starting with how Goldilocks would approach the problem. The main character in the classic fairy tale would look for a solution that’s “just right.” So how can you find a balanced approach that is “just right” for your company?
When using the safety ratings to choose motor carriers, is it practical to try to eliminate your risk through very stringent policies? For example, what happens if a company decides to apply a more stringent standard beyond U.S. government standards and only chooses motor carriers with a Satisfactory rating? This type of risk mitigation strategy narrows the field to such an extent that capacity shrinks significantly and costs could rise.
A balanced approach may mean defining processes for using motor carriers with Unrated and Conditional ratings. One option is to only develop a new relationship with a motor carrier if they have a Satisfactory safety rating. But if an already existing motor carrier gets a Conditional rating, a shipper could require a copy of their cooperative safety plan they file with FMCSA.
We recently published a white paper addressing the complexities, risks, and best practices in developing a carrier qualification process. The white paper includes a list of 7 items to consider when balancing shipping risks with reasonable motor carrier selection policies.
- Only set policies that will be followed every time, as inconsistent or unenforced policies are both ineffective and difficult to explain.
- Make sure a motor carrier’s DOT authority is valid and up to date, request proof of insurance, check their safety rating, require a contract, and ensure they are not “out of service” on the motor carrier (not the driver or truck) level. Not only will these practices help with risk mitigation, but they are a cornerstone of due diligence and corporate responsibility.
- Review your motor carrier retention practices with a team of attorneys, insurance providers, and risk managers skilled in transportation matters to ensure that you are comfortable with the safety profile of the motor carriers with which you contract.
- Subscribe to motor carrier monitoring services with real time results on any change to a motor carrier’s safety rating. Consider using a transportation management system (TMS) to more easily monitor and enforce your motor carrier qualification process.
- Shippers should use standard shipment loading procedures on their end. Proper blocking and bracing prevents loads from shifting unexpectedly in transit.
- Develop a contingency plan if you become involved in a transportation-related lawsuit. Proactively network and communicate with companies who have navigated these issues.
- Consider hiring a third party logistics provider that has experience with managing the dynamic risk assessment climate and is up to date on the latest requirements for shipper and broker due diligence requirements.
In the end, while you can’t eliminate risks, you can make changes in business practices to help mitigate your overall risks in freight transportation.
Do you watch legal and regulatory developments closely? How do you assess your company’s risk? Where do you go for assistance in tracking these trends?
Bryan Foe is a vice president and a member of the executive team for C.H. Robinson. He is also president of T-Chek Systems, Inc., a wholly owned subsidiary of C.H. Robinson. Bryan has been with C.H. Robinson since 1990, where his previously held positions include manager of the Valley Forge, PA and Grand Rapids, MI branches. Read Bryan’s Transportfolio blog post, Honoring Truck Drivers. Subscribe to Transportfolio and join the supply chain conversation.