From the Rear View Mirror and the Driver’s Seat
CAB ANNUAL TRANSPORTATION INSURANCE RESUMẺ
2012 to 2013
There is no doubt that 2012 seemed like a long year. The year began with a country focused on economics and politics, as we headed into what was expected to be a long and hard fought battle for the presidency. In so many ways that feels like it occurred in a different year. The events of the fourth quarter have clearly overshadowed the earlier part of the year. Recovery efforts following Hurricane Sandy, the ramifications of the Newtown massacre and the fiscal cliff were foremost on everyone’s mind as the year ended and we moved into 2013.
With the reelection of President Barack Obama the fork in the road that the country would take was chosen. As a second term President, he has announced his agenda and appears determined to see his mandates through Congress. The Fourth Quarter Business Expectations Survey conducted by Transport Capital Partners (TIP) reports that 93% of surveyed trucking executives were not happy with the reelection and are concerned over how the second term of President Obama will impact the trucking industry.
President Obama’s new cabinet is in the process of being formed. At this time whether DOT Secretary Ray LaHood will remain at the helm of the DOT is unclear. Mr. LaHood had indicated earlier in the year that he would be returning to private business after the election, although in the post election months it did appear that he was reconsidering this position. As a generally well liked member of the cabinet he still may be back, depending on who is selected to fill other posts.
Once again, forces of nature played its part in the overall stability of the trucking industry. As much as economists and analysts try to anticipate the future, Mother Nature often throws a monkey wrench into the best laid plans of men. Droughts in parts of the country curtailed the transport of agricultural commodities. Hurricane Sandy saw widespread devastation throughout the Northeast which resulted in a huge hiccup in transportation operations. Numerous trucking companies and distribution/warehousing facilities were damaged and millions of dollars in freight lost. However, post Sandy saw an upswing in freight movement as more freight and construction materials needed to be moved into the region to repair and replace. In addition, while most carriers/warehouseman bear no liability for this Act of God, tremendous pressure is placed on those businesses by customers who did not anticipate these losses and who are looking to the carrier/warehouseman to make good the damages, something generally not covered by the liability insurance carried by motor carriers/warehouseman. Will these climatic events change the way the industry operates? 2013 may see substantial changes in business operations and insurance risks in these industries as carriers/warehouseman and customers look to realign the business risk for natural disasters.
For the first time in a long time, we have a multi-year federal highway bill in place. The Moving Ahead for Progress in the 21st Century Act (MAP-21) was signed into law, effective October 12, 2012, as a funding and authorization bill to govern United States federal surface transportation spending. This is the first multi-year transportation legislation since 2005. The law mandates required changes to truck and bus safety programs and requires 15 studies on transportation operations. Among the anticipated actions include a new EOBR rule, a proposed safety fitness determination rule that will explain how the Compliance, Safety, Accountability (CSA) program’s safety measurement system scores will be used to assign ratings to carriers, as well as a final unified registration system rule that will combine three databases to better identify reincarnated carriers, a proposed drug and alcohol clearinghouse rule, and a “patterns of safety violations” proposal aimed at increasing enforcement for truck and bus executives who turn a blind eye to unsafe business practices. The FMCSA has also indicated that they are in the process of implementing provisions which reduce the safety review of new-entrant trucking companies to 12 months from 18 months, increase enforcement penalties, improve standards for states seeking commercial vehicle safety grants, simplify steps for carriers to apply for waivers, exemptions and pilot programs by eliminating a formal requirement for a Federal Register announcement and granting additional authority to order the return of household goods held hostage by movers, as well as developing rules that will expand its authority over the operations of brokers and freight forwarders, and finally to require a new written proficiency exam for carriers seeking operating authority.
