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SkyBitz recently caught up with Tom McLeod, President and CEO of McLeod Software, regarding the impact of CSA 2010 on the trucking industry.  Since 1985, McLeod Software has been providing powerful transportation management software tools to the trucking industry. McLeod Software is a leading provider of dispatch, accounting, operations, freight brokerage and document management software systems for the trucking and brokerage industry. They have more than 20 years of experience installing its software at hundreds of carriers of all sizes, and have established a base of more than 500 active carrier and brokerage customers throughout North America.

Q: What will the immediate impact of the new CSA regulations be on the trucking industry?

A: I know that CSA has already caused a great deal of fear and uncertainty, but I think the actual impact will be less than the feared impact. I don’t think the doom-and-gloom scenarios we’re hearing now are any more credible than the Y2K ones we heard over a decade ago as we approached the year 2000. You will remember that everything turned out okay.

In the short term there’s going to be some confusion until it becomes clear what the roadside inspectors are going to do differently, how the scoring systems will work, and what the auditors will do, if and when they come calling. This uncertainty makes it more difficult to plan your next business move. I expect many companies to freeze their processes, to hold back from expansion plans, and to wait on hiring new drivers. If enough companies take this cautious stance, in the short term, it will act as a real constraint on trucking capacity, which will increase the upward pressure on driver pay and freight rates.

I happen to think being cautious is not necessarily the right posture. I see this as a time where there are some opportunities for the companies that are willing to be proactive. Those companies that have been reasonably well-managed in the past will discover that it’s not so hard to comply with the new regulations. And while economic conditions may not indicate a lot of market opportunity for broad expansion, it may be possible to find ways to expand your business with key customers. Or you may find opportunities to expand precisely in those areas where your competitors are showing reticence.

Q: How will trucking companies have to begin to manage differently?

A: Several things come to mind. The first is recordkeeping and this will come into play in several ways. Companies have to do a better job of keeping records up to date. CSA data will come from roadside inspections. You’re going to need to be sure that your drivers hand in every report and that they do it promptly. Then there’s the issue of documenting your actions if you’re required to take some sort of remedial actions in response to an inspection report. You have to have documentation. It’s critical to understand that, from the government’s point of view, if it doesn’t get documented, it didn’t happen. If you can’t prove you’ve done what was expected, you’re inviting an audit on down the road.

The next thing to notice is how CSA affects drivers. Carriers will need to pay more attention to individual drivers in terms of their safety performance. It’s the individual driver’s scores from these roadside inspections that roll up into the total company score. CSA categorizes work activities into seven areas. If your scores are over the line in any area, you can be in trouble. You may have to terminate a driver who has poor performance in one specific category in order to protect the company’s ratings in that category.

The smart move is to intensify training. This is a burden that all carriers will have to shoulder. Drivers must be trained immediately. You have to explain to them how this new scoring system works and help them understand what they need to do differently under the new system. Fleet managers also need to come up to speed on how to coach the drivers, how to help them comply with the new regulations, and how to ensure that the freight is being dispatched in a way that keeps everything within compliance.

Finally we have to consider how CSA will affect costs, and here there is good news and bad news. The bad news is that complying with the regulations will increase costs in several ways. To start with there will be the cost of systems for electronic driver logs and the costs that come from making the trucks safer, such as lane departure warning systems and in-cab video monitoring. There will be increased maintenance costs because drivers who are worried about passing roadside inspections will insist on having some marginal items replaced. Other costs include higher training costs and the cost of software to manage information more effectively. The good news is that these costs should be offset somewhat by savings in other areas, such as lower insurance rates, fewer lawsuits to defend, and savings on crash and claims costs.

Q: What are the things your company, McLeod Software, is doing to help your customers cope with the new CSA regulations?

A: We have some very powerful tools that are perfectly suited to the requirements of responding to CSA. One of the most essential capabilities for a carrier to have is the ability to capture data. We are rolling out a new module that will allow the customer to capture all of the CSA roadside inspection data. You’ll be able to download it from the CSA site. You’ll also be able to key it in ahead of time if you have the data through inspection reports. This will come in handy if the CSA site gets behind and fails to post new data in a timely manner.

You could say that CSA all comes down to scores, and our Driver Scorecard module will make it easy for you to compute both your company’s score and scores for individual drivers. Having access to this data will allow the fleet manager to coach the drivers in the right directions—pat them on the back for the areas where they’re doing well or showing improvement and bring them in for extra training in the areas where they haven’t scored as well. In this way, the Driver Scorecard supports your efforts to be proactive about complying with the regulations.

As everyone knows, documentation is a huge part of the trucking business. Our document management system will provide the ability to document that everything is being done as required in response to a particular roadside inspection. All of the documents can be easily attached to the inspection report. And our workflow tool will allow the companies to stay on top of the status of any required action without creating an undue administrative burden on the company.

I should also point out that there are several features that have been part of our dispatch system for years which will support the potentially stricter oversight that we may see in terms of hours of service. We’re already interfaced with the automated logbook capability that comes from the mobile communication providers.

Q: How will the trucking industry change over the longer term and what will things look like under the CSA regulations in the years ahead?

A: I think we’re going to see overall management and safety improvements in the industry over time. In the past, a trucking company could get by just fine with an average safety performance record, which might mean the company is great in a couple of areas, and poor in a couple of others. “Average” won’t be good enough anymore. You’re going to have to be good in all facets of the operation. This will force the slightly sloppy management teams to be more systematic. This will gradually improve the whole safety situation in general and the way trucking companies manage for safety. Most of the people in the trucking industry that I’ve heard speak about it also agree with me. That’s also their consensus.

No one can predict the future, but I’ll offer one possible scenario about how CSA might affect the industry in some other ways beyond safety. The safety regulations are good for safety, but one consequence is that there will be tighter constraints on moving freight. Too many carriers have cut corners in the past and could get away with it. That’s about to end. If I’m right about increasing constraints on moving freight, that means rates will go up. If capacity gets too low and freight rates are up, many companies will buy a few more trucks so that they can haul the same amount of freight. It’s ironic that the regulations that may make things safer could put more trucks on the road.

Q: Who will these regulations ultimately benefit? Will there be winners and losers in the trucking industry? 

A: I think general consensus is that everyone will benefit from CSA, and those benefits will come in a variety of ways. Here’s one example. There’s a good chance that insurance rates will come down as safety improves. That certainly would be good news.

Most trucking companies think this will be a good thing for the industry, because it will help trucking companies be more organized in the way they approach their training and safety. It will help bring problems to light more quickly. It will help the drivers drive more safely. It will also be another step in elevating the job of a commercial truck driver to a more professional level. In short, most people agree that it will have the desired effect, which is to improve safety records.

I suppose the only people who stand to lose from CSA are the bad drivers and the companies who employ them, and maybe the plaintiff‘s attorneys that like to sue trucking companies. Certainly everyone who’s out driving up and down the highways should be a little safer. And after all, who can argue with improved safety?