Safety and risk management in the transportation industry

The logistics and transport industry is the backbone of an economy and the driving force behind numerous areas from manufacturing to agriculture and even services. But like all other sectors, it has been confronted with great change over the years (driven by stringent regulations, client expectations, and tech innovation). Even if the Global Connected Logistics Market is expected to hit a CAGR of 17% between 2021 and 2026, the industry faces numerous challenges, mainly because of the extensive list of risks it’s exposed to. Like an iceberg, many risks transportation organisations are exposed to are hidden or invisible, and fleet operators aren’t ready to accept and mitigate them without solid evidence. The financial impact of factor risks as road accidents for fleets can be significant and challenging to pin down. This is why fleet managers must identify their companies’ needs and determine the right solution for them. For example, truck fleet managers should do evidence-based risk profiling and decide whether they need a bobtail or non-trucking liability insurance policy because they serve different purposes. Smaller and medium-sized companies with less internal resources find it more challenging to manage fleets at top efficiency and therefore fail to mitigate the risks.

This article lists the most common risks that threaten logistics businesses and some solutions to manage them. 

Accident risk

While safety technology is continually evolving, and there is an increased focus on safety training and awareness, the number of vehicles involved in accidents continues to spike. Multinational logistics companies use different transportation means from ships to cars and even trains, which means that they need to develop risk management plans that cover accidents involving all kinds of vehicles. The corporations transporting goods through the water should be aware that the process comes with greater risk than traditional methods and most incidents result in a total loss of cargo. Considering the large amounts of goods that can be transported with the help of a cargo ship and the financial loss associated with an incident, it’s wise to have marine insurance that works as a backup plan in case of natural disasters, piracy or other types of accidents. 

Another solid solution for improving accident management is to perform evidence-based risk profiling, using the fleet-related data they already have. This method reduces the likelihood of accidents occurring and manages the aftermath when they occur. 

Regulatory oversight

Department of Transportation agencies regulate transportation safety in each state. The safety of logistics workers falls under OSHA, except the safety of the professionals working in the airline industry that falls under the jurisdiction of the FAA. The focus in transportation safety has been on driver fatigue lately because the number of accidents resulting from drowsy driving surged to 100,000 annually, with 71,000 injuries and 1,550 fatalities. Since April 2018, transportation companies using trucks have to equip their vehicles with devices that track the number of hours the vehicle spends moving daily. The rule of hours of service prohibits drivers from driving more than 11 hours in 14 hours. They also have to rest for 10 hours after each 11-hour shift. Flight crews are also restricted to 10 hours of flying daily and train operators to 12 hours before having a rest period. Besides respecting the standards and regulations, logistics businesses should also acquire insurance to cover traffic accidents involving their trucks to protect themselves from liability. 

Cyberattacks

Cyber liability is probably one of the risks all industries deal with, but unfortunately, not the first a company operating in the transportation sector would check. However, with the number of cyber-attacks increasing in the last months, this may be the perfect time to employ some cybersecurity methods to protect data. The logistics industry experienced some tremendous technological advancements over the last couple of years, but sadly, their role in supply chains and automation poses a high risk of digital attacks. The risk is spread to all collaborators and clients because everyone in the transportation chain uses technology to improve processes’ efficiency. 

Hackers are searching for any vulnerability to steal data. Hackers can cause system failure that prevents the business from receiving or shipping orders, tamper with customer orders, or change cargo destinations. Cybercriminals can even break into systems and steal sensitive information from third parties. WThere are many risks to consider within the field of digital threats, and companies need a prevention and response plan in place for all scenarios. By knowing the security requirements for the area where they operate, they can minimise the risk.  

Deteriorating infrastructure

For companies relying on trucks and vehicles to transport cargo, this risk factor has a huge impact on operations, performance, and budget. Outdated and failing infrastructure can prove extremely dangerous for trucks and drivers. Infrastructure issues can include incorrect or missing traffic signs, construction, road destruction such as cracks and potholes. The American Society of Civil Engineers released a report including some alarming statistics for the logistics industry that highly relies on the national infrastructure to complete operations. Only in 2020, a gross domestic product of $897 billion was lost together with 1.8 billion hours due to congestion on highways. 

The deteriorating infrastructure is an extra risk added to the already exhausted drivers and scarce business resources. Besides accidents, they also trigger financial losses due to the additional expenses logistics companies register because they have to repair and replace their vehicles more often. 

Weather 

Alongside the above challenges, we should also mention weather conditions that can also affect transportation operations. When transporting goods across state or overseas, the weather conditions can vary drastically, and the driver and vehicle must adapt. Ship, flight, railroad, and driving conditions can sometimes become unsafe and trigger unexpected delays or even accidents. While it’s impossible to predict the weather, transportation companies should try to prepare their fleet to buffer any conditions they may meet. 

ConclusionGiver the mentioned risks, can logistics businesses manage them while meeting the rising market expectations? The answer is yes, provided they adopt the proper measures.