$4,923,154 Minimum Financial Responsibility Limit Proposed

7/16/2019 – A bill (H.R.3781 ) has been introduced in the House which seeks to increase the minimum levels of financial responsibility by 556% for transporting property, and would index future increases to changes in inflation relating to medical care.

At a press conference in Washington D.C., Representative Jesus Garcia (D-Ill) proclaimed “we’ve seen how victims, their families, hospitals, and our strained social safety net are forced to foot the bill for irresponsible driving.” Garcia was joined by members of the Truck Safety Coalition and accident victims to announce the bill and to introduce the Safe Roads Act. The legislation would require Automatic Emergency Braking technology as standard features on commercial vehicles.

This is not the first go-around for increasing minimum insurance limits. In April of 2014, the FMCSA examined the appropriateness of the current financial responsibility requirements. The agency concluded that catastrophic crashes involving CMVs are relatively rare occurrences. When catastrophic and severe/critical injury crashes do occur, the costs of resulting property damage, injuries, and fatalities, can far exceed the minimum levels of financial responsibility. Based on that research, the FMCSA announced a Advance Notice of Proposed Rulemaking (ANPRM). After a public comment period and hearing from its own Advisory panel (Motor Carrier Safety Advisory Committee), in November 2014 it withdrew its ANPRM due to insufficient data or information to support an increase.

The newly proposed legislation does not point to any new data to further support its cause. According to Section 2 of the legislation’s text, it finds that increasing financial responsibility is to encourage the carriers to engage in practices and procedures that will enhance the safety of their equipment so as to afford the best protection to the public. Accordingly, it also states that the $750,000 minimum amount set in 1980 equates to $4,923,154 in today’s dollars.

On this subject, the American Trucking Association previously revealed data (through 2012) obtained from the Insurance Services Office (ISO), under nondisclosure agreements, from two of the 10 largest trucking insurers covering all their large truck (over 26,000 lbs) policies. That data showed that only 6.5% of insurance policies for those trucks are written at limits under $1 million, while 83% are written at $1 million, and the remaining 10.5% are written over $1 million. Analyzing the data further, it was found that there is a 1.40% chance of a claim exceeding $500,000, a 0.73% chance of a claim exceeding $1 million, and a 0.31% chance of a claim exceeding $2 million.


Rough waters ahead!

Currently, modern commercial ships run on fossil fuels which have a high content of sulphur (3.5%) – known to be harmful to humans and the environment. Beginning January 1, 2020 low-sulfur fuel (0.5%) is required for those ships that are not equipped with air scrubbers. The added cost of the new fuel could have serious implications for all modes of delivery around the world. Here in the U.S., the East Coast vs West Coast battle for business is about to heat up.
In 2016, the International Maritime Organization (IMO), the regulatory authority for international shipping, set January 1, 2020 as the compliance date for the reduction in the sulphur content of shipping fuel oil.
Roughly 90% of international trade is carried by the shipping industry where it is delivered by commercial ships to a port of choice (the “long mile”). Once off the ship, that delivery continues over land to long distance destinations often through rail (“middle mile” 15.5% of goods). Shorter distances finish the delivery through the use of trucking (“final mile” 65.5% of goods).
A whole slew of factors go into choosing a port for delivery i.e., the route(s), the direct port cost(s), the size of the ship vs the port, the costs of fuel, rail and truck, and labor issues, etc. Currently, the cost of shipping fuel is estimated around 3% of the value of the cargo. The new low-sulfur fuel is projected to nearly double that cost.
For certain areas of the world e.g. China (the largest importer to the U.S.), delivering to the U.S. West Coast is closer by half than the East Coast. The burn on fuel to the East, as some analysts claim, makes West an easier choice and will divert shipments West. However, considering recent tariff increases on Chinese goods as well as a doubling of the fuel cost, no stone will be left unturned in finding the best routes, modes and efficiencies to complete those shipments. Alternate ports of origin that deliver to the East coast are likely options.
Enter into the equation the Panama Canal.
The Panama Canal benefits when ships choose their locks to travel to the Eastern U.S. and beyond and they are not sitting idly by losing that business. Beginning January 1, 2020, a new set of transit tolls will take place for shippers traversing the Canal’s locks which will incentivize carriers based on the amount of containers they bring.
For container shippers that transit between 1.5-2 million TEU of total capacity in a 12-month period, they will receive a $3 per TEU reduction in tariffs for one month; those with 2-3,000,000 TEU receive a $3.25 reduction; and those exceeding 3 million TEU, a $5 reduction.
While some analysts are adamant that West ports will continue their dominance over East, in spite of the tariff war, Deutsche Bank’s transportation analyst Amit Mehrotra believes otherwise. In April, Deutsche Bank downgraded JB Hunt (JBHT – NasdaqGS) from Buy to Sell based on their research that U.S. import volumes will shift east, shrinking the middle mile and forcing the company to compete with trucking. Mehrotra highlights year-over-year declines in the length of haul for the “middle mile”, substantial infrastructure investments by eastern ports, statistics from companies like JB Hunt and the simple fact that the majority of the U.S. population resides in the East to support his opinion. Mehrotra believes the reduction in middle-mile distance is a trend that will not only send ships east, but favor trucking over rail as it remains a better fit for shorter distances.

Dirty Diesel

Dirty Diesel
Dirty Diesel

Rising levels of carbon dioxide and other greenhouse gases such as methane and nitrous oxides, are fueling the pace of climate change legislation around the world. Those efforts in the U.S. continue to heat up and right now, the trucking industry is directly in the cross hairs.
California is aggressively targeting greenhouse gas emissions from all sources throughout the state, and at the moment the trucking industry’s primary fuel source, diesel, is being labeled “Dirty”.

Senate Bill 44, also known as the Ditching Dirty Diesel bill, is designed to phase out the use of diesel-fueled medium- and heavy-duty trucks and buses in the state over the next three decades. The bill would mandate that the California Air Resources Board (CARB) come up with a plan to reduce greenhouse gas emissions in commercial trucks by 40% in 2030 and 80% by 2050. The bill also requires CARB to develop their strategy for targeted trucks by Jan. 1, 2021. The proposed legislation has far reaching consequences that would include trucks entering California from other states.

The state of Oregon has initiated similar legislation (HB2007) which declares an emergency related to diesel emissions. The bill would require the Environmental Quality Commission to adopt federal diesel engine emission standards for medium-duty and heavy-duty trucks. It would also require truck owners entering into the state to maintain evidence that their engines meet those standards. Taking it a step further, HB2007 would also require certain public improvement contracts to require the use of 2010 model year or newer diesel engines in performance of the contract. The bill would be effective January 1, 2020. But wait, Oregon is not done yet. The state is doubling down on their emergency declaration by simultaneously introducing a greenhouse gas cap and trade program as a compliance mechanism. That legislation would take effect January 1, 2021.

On the other side of the country, a coalition of nine states (Connecticut, Delaware, Maryland, Massachusetts, New Jersey, Pennsylvania, Rhode Island, Vermont, Virginia, and Washington, D.C.) announced their intent to design a low-carbon transportation policy proposal. The proposal would cap and reduce carbon emissions from the combustion of transportation fuels, and invest proceeds from the program into the transportation infrastructure. It also sets a goal of completing the policy design process within one year, after which each jurisdiction will decide whether to adopt and implement the policy.


Another welcomed alert from your claims professionals

According to our claims experts, a growing number of claims are turning up with an equipment’s stated value either over/under estimated compared to the current local market price.

What this means is that when you insure your truck/trailer for physical damage coverage, you are asked to provide a value for that piece of equipment (stated value). The insurance company does not determine that value, you do. However, if/when you have a need to use this coverage, this value is the maximum amount that the equipment is covered for in a total loss, but not necessarily the amount that will be paid out.

An experienced claims adjuster will take in consideration a number of factors to determine the value of a vehicle and the first on that list is what other equipment like it is selling for on the local open market. If you think your truck is worth $75,000 and list that amount as the stated value, but similar trucks are selling on the market for $62,000… you’re value is a bit high. Conversely, if your truck’s stated value is $55,000, but similar trucks are selling on the market for $62,000… you’re value is a bit low. Consider that a physical damage policy rate can be around 4% of the stated value (this rate varies). The difference between $75,000 and $62,000 is $13,000. $13,000 multiplied by a 4% rate is $520 extra (per truck) that you paid for that policy. The difference between $62,000 and $55,000 is $7,000 that will not be paid to you upon a total loss. If your value was at $62,000 your rate would have been $280 more in this instance. (Above figures are intended for illustration purposes only).
We understand that there might be some upgrades an extras that you feel make it worth more, so if you do have those upgrades maintain receipts for those items e.g., rims, new paint, specials kits and engines, etc. Regular maintenance does not increase the market value. So, before you give a stated value for your equipment, check your local markets to determine the value of the unit. The market value should be based on the zip code in which the vehicle is registered.

Your physical damage policy is normally an annual policy which means it cancels and renews on an annual basis. Your stated value should do the same. Make sure to make appropriate adjustments to the stated value each policy renewal to ensure the appropriate stated value.

Ports require 2014 model year or newer beginning Oct 1, 2018

If you’re planning on upgrading your truck to service the port, register it quick or it will have to be a 2014 model year or newer.

New trucks entering service at the Ports of Long Beach and Los Angeles as of Oct. 1, 2018, must be model year 2014 or newer, as the ports move forward with efforts to improve air quality and reduce the health impacts of air pollution. The new requirement applies only to trucks registering in the PDTR for the first time. All trucks in port service are currently required to be 2007 model year or newer through 2023.

As part of the Ports’ Clean Trucks Program, all trucks going into marine terminals in the two ports must be on the Port Drayage Truck Registry (PDTR). Trucks that are already registered as of Sept. 30 will be allowed to continue operating at the ports, as long as they are current on their annual dues and compliant with emission regulations set by the California Air Resources Board.

New strategies seek to phase out older trucks, with a goal of transitioning to zero-emission trucks by 2035.



A broken ELD is not a valid excuse to avoid a violation

Inspectors across the country began enforcing the electronic logging device (ELD) mandate requirements on Dec. 18, 2017. However, enforcement of the out-of-service criteria (OOSC) associated with the ELD mandate was kicked into high gear on April 1, 2018. So, it’s extremely important to know what to do in the event your ELD malfunctions.

An ELD must monitor its compliance with the ELD technical requirements and detect malfunctions and data inconsistencies. Typically, a driver can follow the ELD provider’s and the motor carrier’s recommendations to resolve the data inconsistencies that generate a diagnostic event. The motor carrier still must correct the malfunction. However, if you’re unable to correct the malfunction on the spot, you are still mandated to keep logs.
If/when an ELD malfunctions, a driver must:

  1. Note the malfunction of the ELD and provide written notice of the malfunction to the motor carrier within 24 hours;
  2. Reconstruct the record of duty status (RODS) for the current 24-hour period and the previous 7 consecutive days;
  3. record RODS on graph-grid paper logs that comply with 49 CFR 395.8, unless the driver already has the records or retrieves them from the ELD; and
  4. Continue to manually prepare RODS in accordance with 49 CFR 395.8 until the ELD is serviced and back in compliance. The recording of the driver’s hours of service on a paper log cannot continue for more than 8 days after the malfunction; doing so would put the driver at risk of being placed out of service.

Mandatory Items to keep in your truck are: ELD User’s Manual; Instruction sheet for transferring HOS records to safety officials; Instruction sheet on reporting ELD malfunctions & recordkeeping procedures during ELD malfunctions; A supply of paper tracking forms (grid graphs) for at least 8 days, in case of ELD malfunction

Roadside inspectors ask that you know your device. There are hundreds of devices being used, so don’t expect every inspector to be familiar with yours. Inspectors also warn that if you find yourself in the catch 22 area of a few minutes this way or that way on your HOS, not to switch into personal conveyance mode in an effort to elude detection of an HOS violation. If caught, there is a more severe penalty. Drivers who indicate a special driving category on their ELD when not involved in that activity will be cited for having false driving logs.

Trying to get a good night’s sleep

sleep1In the trucking industry where there is a need for long periods of acute mental awareness during long stretches of physical inactivity, quality sleep is vitally important. From time to time we hear of incidents where sleep was related to a crash and we must not glaze over the seriousness of proper rest.

Most adults need 7-8 hours of sleep per night, although some need more or less sleep to be adequately rested. And when you have not gotten the right amount for your body, “oh boy” does it let you know. Well, sorry to say that there isn’t much that can take the place of a good night’s sleep to keep you alert. So, let’s first discuss what a good night’s sleep is and along the way talk about things to keep your alert level as high as possible while you’re awake.

Located in the brain is your body’s biological clock that tells it when it’s time to sleep and when to be awake. Your clock runs on a 24 hour cycle and regulates body temperature, alertness and the daily hormone cycles which stimulate cells into action. Disruption to any of the phases of the clock can cause physical and mental-related issues.

There are two main types of sleep, rapid-eye-movement (REM), and non-rapid-eye-movement (NREM). In most adults, sleep begins with the NREM phase. NREM sleep has three main stages. NREM begins with the 1st stage of gently dozing off until reaching the 3rd stage which is the “couldn’t wake you up with a bullhorn” stage of the NREM phase. In the progression from stage 1 to stage 3, brain waves slow and become more synchronized, and the eyes remain still. In the 3rd stage, the brain becomes less responsive to external stimuli, blood pressure and body temperature drop and muscles relax. The 3rd stage is where scientists believe physical and mental recuperation occur like protein building and hormone release. The NREM phase then reverses stages to a more awake stage 2 then stage 1 at which point the REM phase begins.

During REM sleep (aka “active sleep” state), muscles in the arms and legs are temporarily paralyzed, the slow brain wave sleep of NREM quickens as does your heart beat and breathing. The blood pressure rises and the eyes move around in all directions. Scientists believe these eye movements are related to dreams. REM can last from 5 to 30 minutes. NREM sleep and REM sleep continue to alternate throughout the night with the length of NREM stage 3 declining during each cycle. The average length of the NREM-REM sleep cycles are between 70 and 120 minutes.
Many of us have awake times that do not match our internal sleep clock which wants to be awake during the day and asleep at night. For those that do, you’ll have to work extra hard to get the sleep your body needs.

There are a lot of factors that affect the quality and quantity of sleep which include stress, what we eat and drink, medical conditions and the medications we take, the environment in which we sleep and the times at which we finally get to sleep. Any one of these can disrupt the depth of sleep we need so badly.

STRESS: Stress can stimulate an arousal response making restful sleep more difficult to achieve. Search out ways to help decompress e.g., exercise, yoga, music, deep breathing techniques, etc.

ALCOHOL: Alcohol can cause a person to fall asleep more quickly, but the quality of sleep will be compromised. Ingesting alcohol before bedtime has shown to cause increased awakenings due to the arousal effect the alcohol has as it is metabolized throughout the night.

CAFFEINE: A chemical called adenosine, which naturally builds in the brain during awake times is believed to inhibit brain cells that promote alertness. Hence, the longer we’re awake, the more sleepy we become. Interestingly, caffeine works to block the adenosine receptors of the brain allowing nerve cells to maintain activity. However, the more caffeine we ingest the longer it will take for the affects to wear off which can interfere with sleep cycles.

LIGHT: Exposure to light in the evening tends to delay the phase of our internal clock and leads us to prefer later sleep times. Bright light bulbs and electronic devices are common examples and should be minimized before bedtime.

PAIN: Pain and discomfort limit the depth of sleep we get. Those with chronic and acute pain should limit caffeine and alcohol consumption and practice stress reliving techniques. Use of pain killers and/or sleeping pills, while effective, should only be used under the supervision of a physician.

DRUGS: Many medications contain alpha and beta blockers used to control heart rhythms and reduce blood pressure both of which affect sleep. Talk to your doctor about the affects they may cause.

SLEEP ENVIRONMENT: Increase your chances of better sleep by controlling your sleep environment. 1) Use no/low lighting such as nightlights to minimize the effects on the internal clock; 2) Reduce noise that can prevent transitions to the deeper stages of sleep, and; 3) Maintain a comfortable temperature to avoid disruptive sleep; 4) Invest in quality bedding.

Driving without the proper amount of quality sleep makes it harder to pay attention to the road and dramatically impacts your reactions. Signs of drowsy driving are trouble focusing, heavy eyelids, an inability to remember the last stretch of road that you just drove, yawning constantly, bobbing your head, and drifting from your lane. If this starts to happen while you’re driving, find a safe place to pull over and take a quick nap or stretch, breath deeply and take a short walk, or buy a cup of caffeinated coffee to help keep you alert. STAY SAFE AND GET SOME REST!

EPA proposes to remove gliders from regulations

Greenhouse Gas Emissions and Fuel Efficiency Standards Phase 2

The Environmental Protection Agency (EPA) is proposing to repeal emission standards under its Phase 2 Greenhouse Gas Emissions and Fuel Efficiency Standards that apply to glider vehicles, glider engines, and glider kits. The proposed repeal is based on the interpretation that glider vehicles would not be considered “new motor vehicles”, glider engines would not be considered “new motor vehicle engines”, and glider kits would not be treated as “incomplete” new motor vehicles. Under this proposed interpretation, EPA would lack authority to regulate glider vehicles, glider engines, and glider kits under the Clean Air Act.

Opposition to the proposed changes is fierce. Environmentalists and large trucking associations have commented strongly against the change stating that the EPA has clear authority to regulate rebuilt engines and that creating such a loophole could potentially upend the agency’s ability to regulate emissions from the trucking sector. Considering language used in their comments, the American Trucking Association appears to see this as a slap in the face from the EPA. The association commented, “ATA members buy a tremendous amount of new equipment and pay a premium price investing in clean engine technologies.”, and “The Continued Growth of Gliders Creates a Competitive Disadvantage to Fleets Purchasing New Equipment”.

The comment period ended January 5, 2018. You can view comments and actions at www.regulations.gov, RIN 2060–AT79.
A glider kit is a new truck chassis, special ordered from the factory, without engine or transmission. This allows for a customized powertrain to be added that better meets the needs of the consumer.

Cummins unveils electric truck ahead of TESLA’s November reveal date

Cummins AEOS Electric Truck

Aug. 29, 2017 — Indiana based Cummins, Inc., a leading maker of engines and engine components has unveiled an all-electric, 18,000 lb, Class 7 semi truck called AEOS. AEOS with its 100-mile range and 20-ton payload capacity is designed for local hauling. It is equipped with a 140 kWh battery pack that — at present — takes an hour to charge. However, Cummins says that by 2020, improvements in battery technologies are expected to reduce that time to 20 minutes. Additionally, technologies such as regenerative braking and the potential for solar panels on the trailer roof can extend its range by sending energy to the battery pack. Along with the expertise of Roush Industries, AEOS is expected to be ready for market by 2019.

In August of 2016, electric car maker Tesla said it expected to unveil an electric semi-truck in the following six to nine months and then enter production in less than five years. Most recently, the company has set a November 16 date for the unveiling and test ride of that truck in Hawthorne, CA.

In his “Master Plan” released last year, CEO Elon Musk wrote, “We believe the Tesla Semi will deliver a substantial reduction in the cost of cargo transport, while increasing safety and making it really fun to operate”. Along with the tentative October date, Musk tweeted “Worth seeing this beast in person. It’s unreal.

Unreal is just what a pair of researchers at Carnegie Mellon University believe. In a paper they wrote, the two found that the heavy-duty truck that Musk is looking to produce would need a 14 ton battery for 600 miles of non-stop driving at a cost exceeding $250,000. Taking into account the limits on truck weights and the room needed for the battery, cargo capacity would be reduced by one third. Compounding the problem would be the lack of infrastructure and regeneration times. However, the researches did agree that a next generation “beyond lithium battery pack” could produce a 600-900 mile range and increased cargo capacity, but that 300 to 350 miles is probably the limit of what the vehicle could be designed for with current technology.

Climate change is a big driver of aggressive electrified technologies with China and California leading the way. If it were up to California Governor Jerry Brown, the success of these two companies couldn’t come sooner. According to Mary Nichols, chairman of the California Air Resources Board, the Governor has expressed serious interest in barring the sale of vehicles powered by internal-combustion engines. A ban on sales would help both company’s interests and would assist the state in meeting its aggressive 2050 emissions target of an 80% reduction. “The governor has certainly indicated an interest in why China can do this and not California,” Nichols stated.

It appears that electrification has some serious business allies in a very large market. Electric vehicles around the world are increasing rapidly and electric trucks… well they’re gaining momentum and are here for the short haul, but how long before engineers find a way to build a better battery for the long haul? Stay tuned!

FMCSA to review/remove crashes from CSA data

In an effort to right the ship in regards to its Compliance, Safety, Accountability (CSA) program, the FMCSA has launched a new pilot program that allows a review of crashes for potential removal from CSA records.

The Agency has stated that its “Stakeholders”, referring to those that commented during a 2016 notice of proposed rulemaking, have expressed concern that their Safety Measurement System (SMS) may not identify the highest-risk motor carriers and that the listing of crashes on its public website without an indication of preventability can give a misleading impression of a company’s safety.

As of August 1, Requests for Data Review (RDRs) are being accepted into the FMCSA’s Crash Preventability Demonstration Program for crashes that occurred on or after June 1, 2017. Motor carriers and drivers can submit RDRs through the Agency’s website at: dataqs.fmcsa.dot.gov.

It’s important to note that not all types of crashes are reviewable. Following are the eight crash types that qualify for a review:
• When the commercial motor vehicle (CMV) was struck by a motorist
driving under the influence (or related offense);
• When the CMV was struck by a motorist driving the wrong direction;
• When the CMV was struck in the rear;
• When the CMV was struck while it was legally stopped or parked, including
when the vehicle was unattended;
• When the CMV struck an individual committing, or attempting to commit,
suicide by stepping or driving in front of the CMV;
• When the CMV sustained disabling damage after striking an animal;
• When the crash was the result of an infrastructure failure, falling trees,
rocks, or other debris; or
• When the CMV was struck by cargo or equipment from another vehicle.

The Agency says that carriers/drivers must submit compelling information and documentation to show that the crash was Not Preventable. Suggested documentation/evidence includes, but is not limited to: Crash reports; Police Accident Reports; Insurance documents; Videos; Media reports; Affidavits; or Transcripts.

Once FMCSA completes its review of the crash, the Agency will post results to SMS within 60 days. FMCSA says it will continue to list Not Preventable crashes on the SMS website, but that the crash will appear with a notation that reads, “FMCSA reviewed this crash and determined that it was not preventable.”

Editorial — The FMCSA tells us that their studies show crash involvement is a strong indicator of future crash risk. Common sense tells us that a crash that was NOT preventable (e.g., when the CMV was struck while it was legally stopped or parked) would NOT aide in determining a carrier’s crash risk. Yet, here we are seven years later only now discussing that as a possibility. Stakes are high for motor carriers as the Agency’s “public risk calculator” is used by a number of industries to determine rates and even whether or not to do business with a carrier. Is it a step in the right direction? Yes, but it is both unfortunate and disappointing that it has taken this much time to only be at this point. Get involved and stay involved.