Transportation
Driving success in transportation requires diversification.
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What to Expect in 2024
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What to Expect in 2024
Shifting economic conditions and explosive growth in certain segments of the transportation industry have led many transportation companies to merge into new lanes of business. The industry’s embrace of technology and willingness to diversify into other types of transport will boost fleet resiliency, though driver shortages will remain an obstacle. Transportation companies adept at managing risk will gain the greatest mileage.
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Key to fleet profitability will require a gear shift.
In the past few years, the Canadian transportation industry appeared to be on a slow and steady upswing, but declining freight rates, fewer shipments, rising inflation and worker shortages will threaten profitability. However, flattening insurance rates and a government funding boost will cushion the effects. Companies ready and willing to diversify and better assess how their fleet assets — both equipment and drivers — are best deployed will derive rewards.
Changing border requirements and a shifting economic environment in the past two years have the transportation industry in a state of flux. Although the high fuel costs of 2021 and 2022 have tempered somewhat, signs of waning demand for freight and elevated insurance rates over the past year squeezed margins.
The economic uncertainty is a significant concern for 65% of transportation companies that responded to the HUB International 2024 Outlook Executive Survey, and nearly 60% cited changing customer demands as a notable business challenge.
To combat these threats to profitability, more transportation companies have embraced shared freight and added last mile delivery (LMD) to their mix. Others are transitioning from flatbed to intermodal freight.
And some are making equipment modifications to be more energy efficient, winning business from shippers wanting their carriers to curb emissions and improve sustainability.
While these efforts will improve profits, they also bring operational challenges, affecting risk management and insurance buying decisions. Changing freight patterns, differing procurement procedures of transportation partners, sharing freight and more may fall under different regulatory rules and legislation, require different permits and licenses and could lead to new exposures.
To protect their companies from these new exposures, transportation business owners need to embrace analytics and create a plan for reducing risks. This should include analyzing critical data on the cost of risk, reviewing contracts and securing the right insurance. They can further reduce risks from business expansions by leveraging technology — linking critical dispatch and operations to compliance, risk and claims.
For example, a trucking firm moving into the LMD segment may not realize the increased risk of theft and delivery failures, and the impact weather, traffic and less experienced drivers can have on the company’s overall risk management program.
Transportation companies that engage in strategic risk financing and implement technology and tools to identify, measure and reduce exposures will be in the best position to ride out a difficult renewal and preserve their profitability.
Vitality
Resiliency
Analytic Optimization
Analytic Optimization
Resiliency
Profitability
Driver wellbeing will be a differentiator in 2024.
The transportation industry may be poised for growth, but the persistent driver shortage — with more than 20,000 driver vacancies and a shortage of 30,000 drivers predicted in the coming years — threatens the industry’s very livelihood.
This challenging labour market has intensified the focus on offering employee benefits that matter and are tailored to individual needs. In fact, nearly 40% of HUB’s Canadian transportation industry survey respondents said lifestyle and insurance options were important elements of their comprehensive benefits strategy, and companies reported that drivers are increasingly seeking financial advisory support.
More companies are taking a data-driven approach to benefits, using HUB Workforce Persona Analysis to identify what is most important to their drivers and providing a quality employee experience (QEX). In-demand benefits may include connecting drivers to health insurance or personal coverages via online platforms, offering same-day advances on pay, providing financial wellness education and retirement savings plans or adding personal wellness and weight loss programs.
Compared with the general population, Canadian truck drivers have significantly higher rates of cardiovascular disease and obesity and double the rate of depression — making interventional opportunities from employers imperative to maintaining a healthy workforce. Emerging artificial intelligence (AI) technologies and mobile apps in the marketplace can help drivers track critical health signals, which can improve their ability to pass biennial medical evaluations and increase overall health and retention rates.
Analytic Optimization
Vitality
Profitability
Improve risk preparedness with technology.
The transportation industry has endured a decade of annual commercial auto rate increases, fewer insurance options and serious disruptions due to extreme weather events, pandemic lockdowns and changing border requirements. Those events will test transportation companies’ resiliency throughout 2024.
Yet insurance renewals at the beginning of 2024 are expected to improve for fleets, with rates holding steady for both best-in-class companies and second-tier companies. Individually rated commercial auto companies will see rate increases of 5% to 10%.
Several auto insurers have exited the transportation space — particularly in Alberta, where a rate freeze was introduced in January. But provincial rate adjustments over the past few years have stabilized the market. As a result, transportation companies can expect overall rate increases of 10% or less in 2024, which will help the industry keep up with inflationary cost increases. Best-in-class businesses with favourable loss history and a solid risk management plan may see much smaller increases for the first time in years.
Market innovations and the increasing investment in technology are helping make insurance more affordable and available, while reducing the number and severity of accidents that lead to major claims.
The use of cameras and telematics is increasing, with 63% of trucking companies using technology to monitor driver behaviour. Dashcams and telematics data help reduce the number of accidents, injuries and deaths. They can also improve retention when high-scoring drivers are recognized for their performance.
Resiliency
Vitality
Profitability
Build a stronger, safer driver base through analytics.
Transportation companies’ widespread adoption of data and analytics shows no sign of slowing down, with the global transportation analytics market expected to reach US$37.4 billion by 2028, compared with US$11.5 billion in 2021.
Organizations that learn to effectively leverage their data and analytics will reap significant rewards.
Extreme weather events cause nearly a quarter of all trucking delays. As severe weather events increase, companies are embracing data and analytics to better manage and anticipate these risks. Tracking systems linked to weather telematics notify both the company and driver of serious weather events and map alternate, safer routes.
Fleet vehicle tracking systems such as GPS, telematics, audio and video tracking and dashcams have become critical to asset management. Linking tracking to traditional risk management systems can help companies monitor the location of large-value shipments, alert drivers and dispatch of roadblocks en route, optimize routes and schedules, identify maintenance issues and waste, track claims by shipper and signal first notice of loss to reduce claims costs. Tracking systems linked to weather telematics notify both the company and driver of serious weather events and map alternate, safer routes.
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HUB transportation insurance, risk management and employee benefits specialists will work with you to develop a tailored strategy that will protect the bottom line, support your workforce and build resiliency for 2024. Here are some initial considerations:
Share your data.
Forget fears of Big Brother — transportation companies that share their data and analytics with their broker will reap the benefits of not only having additional information to mitigate risk but also being able to tell their safety story to negotiate better terms and conditions with their carrier.
Listen to your drivers.
Invest in technology.
Be transparent with your broker.
Invest in technology.
Be transparent with your broker.
Share your data.
Offering benefits tailored to the needs of your drivers can help you increase recruitment and retention. Find ways to connect them to benefits beyond paramedical insurance and incentivize good driving through rewards programs.
Listen to your drivers.
Embracing cameras and telematics — and making the most of your data and analytics to reduce risk — will improve your company’s resiliency for years to come. For the best results, integrate your new technologies with traditional claims and first notice of loss system data. This will increase roadside safety and the company’s efficiency.
Invest in technology.
Share your data.
Listen to your drivers.
Be transparent with your broker.
Consistent communication with your broker will help you identify and mitigate issues in advance of your next renewal and position your organization in the best light. Review exposures and insurance needs at least 90 days prior to policy renewal to allow your broker to find the optimal mix of coverage for your organization’s needs.
Be transparent with your broker.
Share your data.
Listen to your drivers.
Invest in technology.
Transportation
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Download our 2024 Transportation Outlook and Insurance Market Rate Report to see what to expect in the coming year.
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When you partner with HUB, you’re at the centre of a vast network of experts who will help you improve your profitability, enhance the vitality of your workforce and remain resilient into the future. For more information on how to manage your insurance costs, reduce your risk and take care of your employees, talk to a HUB transportation advisor. We’re here to help.
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1. CTV News, “‘No profit right now’: Trucking industry facing leaner times as consumer demand drops,” August 24, 2023.
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Other newer technologies, such as biometric sensors that measure driver alertness, have the capacity to reduce accidents — many of which are caused by driver fatigue.
Despite their obvious benefits, transportation companies remain resistant to sharing such information with brokers and insurance partners. Roughly 30% of Canadian HUB survey respondents in transportation are willing to share the data necessary to access data-driven insurtech programs, captives or alternative risk financing.
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of trucking companies use technology to monitor driver behaviour.
2. Canadian General Freight Index, “Total Freight Costs Continue to Decline in July,” accessed September 27, 2023.
3. HUB’s 2024 Outlook Executive Survey polled 900 C-Suite and VP-level executives on the issues facing them on profitability, employee vitality and organizational resilience.
4. Food, Health & Consumer Products of Canada, “Canada’s truck driver shortage will soon grow to 30,000 vacancies; immediate action needed,” September 14, 2023.
7. Canadian Underwriter, “Insurer backs away from Alberta auto – could others follow suit?” July 19, 2023
8. Made in Canada, “Dashcam Statistics in Canada,” accessed October 10, 2023.
9. Canadian Underwriter, “Insurers urge trucking fleets to use telematics data more productively,” November 17, 2022.
10. Research and Markets, “Global Transportation Analytics Market,” January 2023.
5. National Library of Medicine, “Health Comparisons between Truck Drivers and the General Population Using the Canadian Community Health Survey,” October 2, 2023.
6. Truck News, “Truck driver mental health a victim of ‘toxic masculinity,’” December 16, 2021.
11. New York Times, “Wearable Tech That Tells Drowsy Truckers It’s Time to Pull Over,” February 11, 2020.
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One of HUB’s clients, an aggregate hauler, invested in two-camera systems in its trucks on the advice of its broker. When an accident occurred, the company avoided an expensive claim when a recording of the incident revealed its driver wasn’t at fault. This prevented litigation, ultimately providing the company with a 700% return on its investment.
Transportation companies with a positive track record and the data to prove it should take advantage of the opportunity to tell their story through analytics — they can secure better terms and rates.
One HUB trucking client added a new telematics program to monitor aggressive and distracted driving and other undesirable driver behaviours. After three quarters of continuous monitoring and intervention, the company reduced accidents and speeding events by 42% and 10%, respectively, and reduced its riskiest driver average score by nearly nine points.
The transportation industry has more than 20,000 driver vacancies.
Transportation businesses are also finding creative ways to boost morale and camaraderie, such as investing in driver incentive programs. By creating a program that rewards drivers based on performance, transportation businesses can reinforce their safety culture and more effectively recruit and retain top drivers.
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