Rising insurance rates affecting delivery rates
Like any business or industry, the logistics and transportation industries must always be aware of the costs associated with business and adjust their rates and policies accordingly. In the last two years or so, insurance has been a major cost concern as its risen exponentially, even doubling in many cases.
This forces logistics companies to examine their rates and whether or not to absorb the costs or pass them on to the customer. For most, the biggest increase came about 18 months ago and the rates have stabilized. Other trucking companies in North America report that rates are still going up and they struggle to find insurance carriers that will even provide trucking insurance, which is for trucks over 10,000 pounds.
We’ve also seen increases in hired and non-owned insurance, which is what we must purchase to cover us if a contract courier is in an accident and their insurance runs out. The claims then hit our hired and non-owned insurance.
What’s going on with trucking insurance?
We’ve seen several factors that contribute to rising insurance. Many factors can be at least partly attributed to the Amazon Effect.
More trucks on the road—For one, there’s simply more trucks on the road, therefore increasing the probability of an accident.
Driver shortage—As the demand for faster, and higher volume of deliveries grows, the driver shortage keeps widening. The industry has struggled to find experienced, or quickly trainable drivers as many drivers age out and younger counterparts are taking their place. It’s only natural to realize that inexperienced drivers are more likely to have an accident, especially maneuvering such a large vehicle.
Unrealistic expectations—We know this may not be a popular opinion, but the “I want it now” mindset that has been fostered in last mile delivery is a big contributor to the problem. Amazon and its competitors have created unrealistic expectations to the public that the industry now struggles to fulfill every time. There is no such thing as “free shipping.” It’s being paid for somewhere and eventually, that will hit everyone in the pocket.
At On Time Logistics, we are always looking for new and better ways to keep our services safe and affordable. Here’s what we’ve done to manage the insurance increases:
Pricing right—In our 12 years in business, we’ve learned to price our rates right so we can pay our bills but also stay affordable for most, even if this means we’ve had to absorb some of the rising insurance costs.
Education—We provide continual education for all drivers on safety and good driving skills
Truck cameras—We want to know if our drivers are staying focused so we recently installed cameras in all our trucks to monitor activity. This protects both our drivers and others, including the end customer.
Continual learning—We are attending yet another safety conference next month to learn the latest in truck and road safety.
Are you seeing higher rates from your logistics provider? We are the premiere last mile delivery provider in Northwest Arkansas and Little Rock. Give us a call and let’s see how we can help you get better, more affordable service!