Looking Beyond Satisfactory Safety Ratings

Looking Beyond Satisfactory Safety Ratings

by Darren Brewer

Carrier411 Services, Inc.

Protecting against negligent hiring of carriers and reducing exposure to associated liability claims are in the forefront of today's issues troubling brokers and shippers.

The days of qualifying carriers based on insurance and authority alone are long gone, because of the Schramm v. Foster case in 2004 involving C.H. Robinson Worldwide. The Schramm case has since proven to be an unparalleled catalyst for conscientious brokers and shippers to evaluate, establish and/or modify their documented company guidelines for qualifying and hiring carriers with due diligence.

Now emerging at the top of most carrier qualification checklists are important safety considerations, such as carrier safety ratings (unsatisfactory, conditional, satisfactory) and numeric SafeStat scores (based on a scale of 0-100) for driver safety (DRSEA), vehicle safety (VHSEA) and safety management (SMSEA).

The Schramm case has imposed certain legal duties for brokers and shippers to uphold, particularly the need to use "reasonable care" when qualifying and selecting motor carriers. This includes the prescribed duty to check safety statistics for carriers and "maintain internal records" for your "stable of carriers".

Despite acknowledgment of these duties, understanding how to qualify carriers based on safety is commonly a grey area to most brokers and shippers, especially as far as determining practical standards are concerned.

Fortunately, the Transportation Intermediaries Association (TIA) has taken an important first step to improve industry understanding by introducing its new Carrier Qualification Guidelines document, which was designed by a committee over the course of a year to help companies create and document their own motor carrier qualification procedures.

According to its document, TIA takes the position that the DOT carrier safety rating system "takes precedence in assessing safety and outweighs the SafeStat program and/or individual stand-alone (SafeStat) SEA scores."

The document also explains that in the absence of a satisfactory DOT safety rating, "TIA believes [SafeStat] SEA scores can be one of several determining factors when qualifying a motor carrier." In addition, committee members and those TIA members polled during a survey "overwhelmingly reported that they do not knowingly use a carrier with an unsatisfactory [carrier safety] rating from the DOT."

Carriers with conditional safety ratings are also being turned away by a growing number of conservative, more risk-adverse brokers and shippers, without even giving consideration to their SafeStat scores. However, some are willing to use conditional rated carriers, assuming the carriers do not have deficient SafeStat scores greater than or equal to 74 or 75. Some actually draw the line lower at 70 or 71.

If you are unfamiliar with SafeStat SEA scores, please read Analyzing Safety Ratings and SafeStat Scores. SafeStat SEA scores are especially meaningful, because they are actually based on a carrier's safety performance over the last 30 months. Carrier safety ratings, on the other hand, are not always an indicator of recent safety performance, as you will see.

So what about carriers that have a satisfactory carrier safety rating?

One commonly accepted guideline among brokers and shippers is to approve a carrier that has a satisfactory safety rating, believing the carrier meets the required safety standard for due diligence. Assuming you agree, consider these questions:

What if a carrier's satisfactory safety rating was issued so long ago that it's outdated and doesn't accurately reflect the carrier's safety performance within the last couple years?

What if a carrier with a satisfactory carrier safety rating has two or three SafeStat scores greater than 75?

Did you use "reasonable care" if you hired a carrier on the face value of its satisfactory safety rating alone, without considering the carrier's SafeStat scores?

As of March 28, 2007, the bar chart below was constructed from data for 30,013 active carriers that currently have a satisfactory carrier safety rating.

Move your mouse across each bar. You will see that each bar (from 1980 through March 2007) shows the specific number of carriers that were issued their satisfactory carrier safety rating that particular year.

Each of the carriers that was issued their satisfactory safety rating that year has not received a new safety rating since the date it was issued. In other words, the satisfactory safety rating is still in effect today. As an example, today there are 810 active motor carriers that currently have a satisfactory carrier safety rating that was issued back in 1999.

You are probably wondering how or why these carriers have not had their carrier safety ratings revaluated and updated in so many years? First, the problem is not exclusive to these carriers. Second, it is due to FMCSA backlog and lack of agency resources.

Statistics for 30,013 active carriers with satisfactory carrier safety rating as of March 28, 2007

• • They represent 18% of the 169,480 carriers with active operating authority.
• • 7,383 (24%) have no SafeStat DRSEA, VHSEA or SMSEA scores at all.
• • 9,049 (30%) have one or more SafeStat scores greater than or equal to 75.
• • 4,918 (16%) have SafeStat driver safety scores greater than or equal to 75.
• • 4,997 (16%) have SafeStat vehicle safety scores greater than or equal to 75.
• • 1,653 (5%) have SafeStat safety management scores greater than or equal to 75.

The most intriguing statistic is that 268 of the 30,013 carriers with satisfactory safety ratings have all three SafeStat scores greater than or equal to 75.

Remember, when it comes to SafeStat SEA scores, the higher the number, the worse the score. Scores greater than or equal to 75 are considered deficient. For instance, a carrier with a Driver SEA score of 88 indicates that approximately 88% of the carriers with sufficient data had better driver performance than that carrier, with respect to driver-related safety and compliance. The remaining 12% of carriers with a Driver SEA had a worse safety performance.

In his article Protecting Against Negligent Hiring of Carriers, Ronald H. Usem, Esq. explains that "The most important step to help shield your brokerage from negligent hiring claims is to establish, implement and maintain a sound carrier qualification process that fits your business. Document the procedures and adhere to them consistently."

William J. Augello, Esq. (1924-2006), renowned for countless accomplishments during his 50-plus-year career in transportation law, furthered this point in Negligent Hiring: Not Just a Broker/3PL Problem by explaining that "A good first step for shippers is to have transportation attorneys, insurers, and risk managers review their truck-hiring operations. In addition, shippers can benefit from carrier monitoring services, which keep subscribers informed of every change made to carriers' insurance, operating authorities, safety and accident record, and driver compliance. These services can save shippers millions in damages if they are sued, and will prove that they monitor their truckers daily."

As a matter of due diligence, we suggest you consider all available carrier safety data (a combined analysis of carrier safety ratings and SafeStat SEA scores) to mitigate the possibility of negligent hiring and help protect your company. We also recommend evaluating SafeStat scores for all motor carriers you use, even those with satisfactory carrier safety ratings. It should be documented as part of your company guidelines for qualifying and hiring carriers with due diligence.

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