Many Carriers Feel The Problem Can Only Be Solved Though Tort Reform To Limit Damage Awards

fhwa.dot.gov, Jun 27, 2005

The U.S. commercial motor carrier industry is facing a number of challenges that threaten to erode its productivity and compromise the high level of service currently provided to shippers. Heightened security presents a challenge, particularly for carriers of hazardous materials. Marketplace shifts and deteriorating transportation system performance can contribute to difficult operating conditions for motor carriers. Other challenges include regulatory actions concerning safety and the environment that could potentially impose significant cost and service disruptions on trucking companies. Because the motor carrier industry is so vital to the U.S. economy, these challenges demand attention. The purpose of this study is to identify and assess the challenges, and to discuss possible public and private sectors strategies to mitigate their negative effects.The remainder of this section presents an overview of the study findings, focusing on possible solutions. Section 2 presents an overview of the commercial motor carrier industry, including a description of the industry’s principal segments, their basic operating characteristics, and some data on the size and level of activity of the various segments. Section 3 describes the study methodology, including the selection of issues for analysis and the characteristics of the organizations that were interviewed as part of this work. Sections 4 – 11 discuss each of the major challenges and issues assessed in the study, including the causes of the issue and its effects on the motor carrier industry, possible solutions, and needs for additional research. The last section is a complete summary of the study findings. According to the motor carrier industry experts interviewed for this study, the issues that pose the greatest threat to trucking productivity1 and service quality are: rising insurance costs, changes to the hours of service rule, and fuel price volatility. Nearly all interviewees placed these three issues near the top of the list in terms of importance. Interviewees identified three other issues as being somewhat less pressing but potentially having significant negative effects: urban congestion, new emissions and fuel standards, and driver waiting and loading times. Two other issues assessed in this study, security concerns and delays at port terminals, were not considered important by most interviewees, the former because major new security regulations have yet to be implemented, and the latter because the issue affects only a small segment of the motor carrier industry. A summary of the findings for each major issue studied is provided below. Rising Insurance Costs – Rising insurance premiums are caused by two factors: poor performance of insurance company investments and an increase in expected pay-outs due to rising damage awards and the effects of 9/11. Many carriers feel the problem can only be solved though tort reform to limit damage awards. Carriers have responded to rising insurance premiums by relying more on self-insurance and forming risk retention groups. Many have also sought to bring down insurance rates by reducing their accident risk though driver safety programs. There may be a government role in promoting the expansion of existing industry safety programs to share information and voluntarily achieve higher safety standards.