Safety Regulations: The Cost of Non-Compliance
posted in Alerts by Brian Gray
Safety Regulations: The Cost of Non-Compliance
Anyone working in the trucking industry knows just how regulated it is. From driver logs, to safety equipment, to fuel taxes, to inspections, the regulations are many and cover all aspects of operating a truck. Most know the costs associated with being in regulatory compliance. What is the cost for not complying?
Calculating the cost of noncompliance is difficult at best. There are many variables that can enter into the equation. Fleet size, types of trucks, truckload vs. less than truckload, regional or long haul all can have an impact. Some recent research has been able to put some numbers to quantifiable noncompliance.
Fines
In 2011, DOT regulated companies paid $30,674,218 in fines for failure to comply with Federal Motor Carrier Safety Regulations (FMCSRs). The average fine per case was $5,050. The most costly violation was falsification of a driver log where carriers paid an average fine of $9,394. Another costly violation was the transportation of hazardous materials (HazMat) without the appropriate paperwork. HazMat fines averaged $8,578.
Out-of-Service
Lost revenue from drivers and vehicles being placed out of service for noncompliance is another large cost to carriers. Each hour of down time can cost up to $87.50 when you consider an average speed of 50 mph and revenue of $1.75 per mile. Being placed out of service for 10 hours due to a driver log violation can cost upwards of $870.00.
Costs for out of service roadside vehicle violation repairs can be three to five times the cost of the repair being performed at the home terminal. Add to this cost the lost driving time with the driver having to use on duty time to complete these repairs. Finally, out of service delivery delays may make the noncompliance violation costs skyrocket, especially with time sensitive loads like produce.
Lawsuits
According to Rob Moseley, head of the transportation department at Smith, Moore, and Leatherwood, “juries are relatively accepting of truck drivers who make mistakes. Juries are much less forgiving when safety issues are ignored.” He added, “A trucking company gets to explain two problems or inconsistencies to the jury. After that, the jury doesn’t listen and will punish the trucking company with damages.”
Not only will the carrier pay for damages but the costs associated with the legal defense. Attorneys, additional experts, and depositions can add tens of thousands of dollars to the cost of noncompliance.
Additional Costs
Other costs associated with noncompliance:
- Increase in number of inspections
- More detailed inspections
- Impact on insurance rates
- Loss of business due to poor CSA scores
- Reduction in contracted rates because of poor CSA scores
Carriers need to invest in compliance. Spending money on log auditing, drug and alcohol testing and training drivers is costly but, the bottom line is, it’s cheaper than non-compliance!
