Input from agents, MGAs and carriers is invaluable when assessing the current conditions in any insurance line. We can gauge the attitude of markets and see what the major issues are affecting pricing, underwriting, and capacity for the future.
However, the insured's viewpoint can add valuable insight as to why a particular market may be experiencing a certain degree of softness or hardness, as well as letting us know how well the industry can handle rate changes. In the case of the trucking market, this is especially true as rising fuel costs are having an impact across the board.
The exchange of information within the insurance community is very useful, but if we don't get an insured's perspective, it would be like a doctor diagnosing an illness without talking to the patient, or a field commander dismissing intelligence reports.
The insured perspective
We went to the home office of Celadon Trucking Services in Indianapolis to get their perspective on the issues facing the trucking market. Started in 1985,Celadon now is the largest transporter of truckload freight between Canada and Mexico. It has terminals in Michigan, Illinois, and Texas; employs more than 3,500 people; and runs over 7,200 trailers. It has handled more than two million crossings between the United States, Canada and Mexico since 1985. The vast majority of Celadon's drivers are employees.
Celadon's top management addressed the major transportation issues, such as driver shortages, safety, technology, and recruiting. According to Brett Terchila, director of recruiting for Celadon, he's not aware of a shortage of drivers. He said that it's more likely to be a "churning" of drivers. Some companies may be losing drivers to other companies that provide better working conditions. Terchila said that the over-55 drivers are used to staying on the road for periods of weeks, even months. The younger drivers who are coming into the market will not work those hours. Terchila noted that Celadon pays well and offers more time at home for its drivers. The time away from home is 10 to 17 days and their drivers receive one week's pay for every 30,000 miles driven. Celadon has a saying that they have two customers, the driver and the client.
According to a recent article in the Indianapolis Star, a report by Little Rock, Arkansas-based Stephens Investment Banking, drivers ranked "respect from management" second only to pay, more important than health care benefits, pension plans, and time away from home. Almost 40% said they left their last trucking job because of a lack of recognition and respect.
According to Terchila, Celadon offers some of the best driver benefits in the industry, in addition to continuous training.
William Osborn, vice president of safety for Celadon, said, "When you hire drivers, you bring in the best and support the drivers by being interactive with them." The corporate emphasis needs to be on the long view, not the short view. He said that everyone must be involved-including drivers and dispatchers.
All trucking operations have to comply with new, stricter federal regulations regarding drug and alcohol abuse. In addition, Homeland Security has affected the time that drivers must wait in checkpoint lines and at border crossings, and time equals money in transportation.
Celadon, with its more than 2,000 border crossing per week in and out of Canada and Mexico, stands to be affected more than most.
Kenneth Core, vice president of risk management for Celadon, said that the delays over the last 24 months rose more than 50%, but crossings into Canada have been better in the last year.
All delays, whether at border crossings or elsewhere, also have an impact on the bottom line because of fuel consumption while waiting.
In order to operate more efficiently, today's transportation operation needs to rely on technology. The expenditure of thousands of dollars in the systems for base operations and mobile equipment ultimately can be offset by fewer delays.
Thomas Glaser, president and COO for Celadon, said, "We track where the pick up is to made or delivered, monitor drivers' hours to see if we need to slow them down or even take them off the road if they are in danger of exceeding their maximum. We can reroute them if an overpass clearance is too low, map out the best way to get from point A to point B, and find street addresses." Glaser said that some new technology-such as electronic logbooks-has been in testing for some time but all the bugs have not been worked out.
The August 2004 Specialty Lines article on trucking stated: "The trucking market is very stable
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