Most motor carriers know about the DOT’s Federal Motor Carrier Safety Administration and their mandate to keep public roadways safe, but how many have really considered all the potential costs and penalties of remaining noncompliant with the regulations?
Listed below are the eight critical reasons to get and stay compliant with the DOT. From hard costs to hard time, this list will convince anyone that having a strong compliance program in place is critical to success in the transportation industry.
Fines are just a cost of doing business, right? Not so fast. Most state and federal fines are completely avoidable with the right safety management controls in place. In 2015 alone, motor carriers paid over $33 million in fines to the FMCSA, nearly all of which could have been avoided. No program is perfect, but a company that puts compliance first will save a significant amount in lost revenue, particularly in high-cost categories like Vehicle Maintenance and Hours-of-Service Compliance.
2. Insurance Rate Hikes
Your customers are not the only ones looking at that public data. Insurance companies are even more diligent in reviewing all your safety performance metrics before agreeing to insure you. Have a conditional rating or a high Crash Indicator BASIC? Expect to pay a good deal more for that coverage, if they cover you at all.
3. Safety Rating
Your safety rating is set by the FMCSA following a compliance review and should be protected at all costs. The three rating options available to federal safety inspectors are:
A Satisfactory rating means the DOT has found you to be near or at full compliance with federal regulations. You have strong safety management controls in place and can expect to see fewer random roadside inspections than the average motor carrier.
If you are awarded a Conditional rating following a compliance review, the safety investigator has found your safety program lacking in at least one critical area, though more often, several compliance areas are deficient. A conditional rating is an indicator to law enforcement personnel that your trucks and drivers need more focused attention, so expect to see an increase in the number of roadside inspections, and consequently, more fines. A conditional rating also increases the chances of another audit and further corrective action from the DOT.
In the event your company is downgraded to an Unsatisfactory rating, consider this the first in a series of steps taken by the FMCSA to remove your operating authority and effectively put you out of business. An unsatisfactory rating is not irreversible, but it should be taken very seriously, as it is a final warning to establish sufficient safety management controls. Further noncompliance will result in drastic action, up to and including a federal shutdown order.
Think you only have to worry about the DOT when it comes to compliance? Think again. If any of your drivers are ever involved in an accident that leads to injuries or fatalities, expect to spend some time in court defending your safety program. All your compliance policies and procedures will be examined closely by the plaintiff’s attorneys, as well as your company’s consistency in following them. Any discovered deficiencies could result in a sizeable settlement that cripples your company for years or closes your doors permanently. Truck accident lawsuits involving a single tractor-trailer cost over $334,000 when an injury occurs. For a fatality, that cost jumps to $7.2 million.
5. Criminal Charges
The DOT’s Office of Inspector General (OIG) is responsible for conducting criminal investigations when motor carriers are suspected of violating regulations that have a significant public safety impact. Falsifying hours-of-service logs or violating a Hazmat out-of-service order are common areas of focus for the OIG, but it is difficult to predict where or how it will find indictable offenses. That is why a robust and consistent compliance program is the best guarantee that your drivers, your managers, and your executives have to avoid federal imprisonment.
6. Time Delays
Any time your trucks are put out-of-service on the side of the road or are involved in an accident, you are losing money. If you end up having to tow it in, you could be looking at major costs on top of whatever you lose in the delay. The best defense against this? You guessed it: compliance. Ensuring that your trucks are in good working order and your drivers are legally fit to drive can save big bucks in delay prevention.
7. Lost Business
The FMCSA makes most of your safety and compliance performance data publically available, which means anyone can see how well you manage your program, including your customers. Keeping your safety rating and BASIC scores in good shape can mean the difference between winning that new contract and losing out to a less risky competitor.
8. Company Culture
Certainly, any one of the reasons listed above is motivation enough to take compliance seriously, but this one is a little less obvious. As a company, what are your core values? What behavior or ethic would you like all your employees to exhibit on a daily basis? At its core, safety is about integrity. Foster a sense of integrity at every level of your company, and all the pitfalls listed above will be much easier to navigate and master.
To be sure, there are many other reasons to have a strong safety and compliance program in place at your company. These eight, however, will persuade even the most operations-focused managers that compliance cannot be an afterthought in the transportation industry. On the contrary, the biggest names in the business have made it their guiding principle. Their success proves that investing in the right processes and procedures now pays dividends down the road and for years to come.