Backchat readers will no doubt recall the recent story of a UK lorry targeted by illegal immigrants while in transit through Europe. Five stowaways entered the load area and, in the course of the journey, converted the consignment of malted barley into a vast en-suite facility. Such was the extent of the contamination that the load was condemned and recycled as pig feed.
No more pork scratchings for me, but a rather more serious problem for the driver, who faces a possible £10,000 fine for assisting illegal immigration. Regular trips throughout Europe will require increased vigilance to avoid a repeat incident and penalties.
The operator can also expect problems. With an expensive loss against his claims experience, he now faces the prospect of an increased premium and a further burden on his already tight operating costs. If his profit margin is 5%, the premium increase resulting from poor risk management will require him to generate additional revenue 20 times that of any premium increase.
But fleet operators wishing to apply effective risk management methods can call upon support from insurers who offer specialist assessments of the risk profile. In addition, targeted training to address specific problems and detailed claims analysis are also available, while many insurers offer financial incentives to encourage risk management, either through premium reduction or direct financial contribution towards the measures undertaken.
The fleet operator can also call upon the wide range of products now available from service providers, that not only offer high-tech solutions to improve fleet efficiency but, equally importantly, also play a vital role in supporting the fleet risk management programme. In particular, such systems offer a means of validating the effectiveness of risk management measures. For example, driver training is expensive, especially on a one-to-one basis across an entire fleet, and the fleet operator needs to be able to identify whether the training has been effective.
Most of the systems available employ Global Positioning System (GPS) technology, with a GSM mobile communication network to translate the GPS information back to the fleet operator. This is the basis on which the Tracker Communicator system works and, in the example of the barley lorry, it could have alerted the operator to the illegal opening of the vehicle doors.
Also, the fleet operator could be warned of a change to the internal temperature of a refrigerated load. Early remedial action in the course of a long journey would avoid the loss of the load.
Encouraging fleet operators to become pro-active in relation to risk management is initially difficult, but becomes easier when the fleet operator can see visible benefits from the investment in technology. Using such technology, a fleet operator is able to gather information from a typical journey by monitoring the start time, the time taken from A to B (and B to C, C to D, etc) and the eventual finish time. He would also know the amount of time spent at each stop and the distance that was covered.
Additionally, he would know exactly where all his vehicles were at selected pre-set intervals. If required, he can also obtain an instant vehicle position on demand and re-route any driver, should a sudden change to the schedule become necessary.
Exception reporting, as it is known, offers additional information from up to 30 points within a vehicle. This information is particularly relevant to risk management and, among a range of options, an operator is able to gather data relating to:
By use of a tagging system, the feedback information can be related to a particular driver, regardless of which vehicle he uses. In the event of an accident or theft, the information can be useful for the investigation. Are the times for a particular route too tight? Are drivers encouraged to speed to meet unrealistic deadlines? Were security measures adequate?
The information can be accessed from an internet connection, or, alternatively, data can be retrieved from any landline telephone or WAP enabled mobile phone if urgent feedback is required, and the system also works abroad.
The benefits of the tagging system to the risk management programme are obvious: it identifies bad driving practice and alerts to potential claims involving loads. The direct benefits to the fleet operator are also clear, he can analyse his routes, schedules and drivers' performance more closely.
Equally important to the fleet operator is the security of his vehicle. This represents a major investment and the consequences of its loss should not be underestimated. Commercial vehicles are usually the target of professional thieves and often disappear into the black market parts industry. The Road Haulage Association estimates that the theft of an HGV costs the operator £27,000 when business interruption is taken into account.
It is therefore essential that a comprehensive risk management programme includes measures to offset the effects of theft for certain vehicles within the fleet. This may include investment in such systems as Tracker Retrieve, Monitor or Horizon, which have returned over 5,000 stolen vehicles to their owners.
While it is good business practice to have an effective risk management programme, it is the potential reduction in insurance costs that is the prime motivator for the majority of hauliers.
A risk management programme that successfully addresses a poor accident record, could be completely ineffective in reducing premiums if an expensive theft occurs. Investment in vehicle security not only protects fleet operators from the commercial consequences of theft, but also complements and supports other measures.
By investing in technology, the fleet operator gains a detailed insight into where his problems and solutions lie. It also renders his risk far more attractive to insurers, leading to competitive quotations year on year.