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Transportation Outlook 2023: Economic Headwinds Create Challenging Conditions for Fleet

This post is part of a series sponsored by the IAT Insurance Group.

Historically high inflation, a looming recession and severe supply chain woes move 72% of U.S. freight and continue to plague the backbone of our economy, fleet owners and owner-operators.

Consumer spending is showing signs of slowing and a recession or full-blown recession will have a significant impact on freight demand and margins.[1] Lower demand may help alleviate some of the pressure of the fleet driver shortage, but smaller fleets may feel more pain.

Larger fleets with shipper contracts are usually able to weather the economic storm, but some are forced to park their trucks and cut staff. With an estimated 80,000 driver shortage,[2] Some fleets have an opportunity to expand as there is less competition for quality drivers.

While these strong economic headwinds are significant, they are only a small part of the challenges facing the industry heading into 2023. Fleet carriers should also note four of his trends:

1. California Legislative Bill 5 (AB 5)

Passing AB 5 in California It threatened to change the game for many industries and reclassify drivers from independent contractors (ICs) to employees statewide. Unfortunately for commercial vehicles and moving and storage companies, California was only the first state to adopt such a law. The National Labor Relations Board endorsed the rule, and other states are considering similar legislation.[3] Although the potential outcome is not ideal, fleet operators must understand the law and adapt their business models to comply with the new law.

Take action! Vehicle, movement and storage operators of all sizes need to keep up with and anticipate changes happening at the federal and state levels. Joining a state trucking or moving and storage association is a great way to stay up to date and challenge laws as they surface. Operators wishing to retain their IC model should consult a knowledgeable attorney to discuss their options.

2. Claims costs continue to rise

Personal injury lawyers continue to attack the truck industry, with hostile advertising everywhere, especially for commercial vehicles, trying to convince injured people to file lawsuits. Jurors have sided with plaintiffs, with average verdicts skyrocketing from about $2.3 million in 2010 to $22.3 million in 2018.[4] A tougher tort environment has also led to higher insurance premiums.

Inflation will continue to put pressure on commodity costs, third-party property damage, labor and repair costs, estimated costs, medical costs, and push up insurance rates.Additionally, equipment theft remains a growing threat, with telematics or Other equipment removed from the cab Left in a sketchy location on a dangerous route.

Take action! New technology enables fleets to file claims faster and provide evidence and data in the event of an incident. Cameras and telematics are positively impacting the speed with which claims are resolved and the results of identifying those responsible for causing an accident.

However, fleets shouldn’t just have cameras on their trucks so they can record. They should regularly analyze data and use it to coach drivers on inappropriate behavior and even encourage them to engage and retain quality drivers. Additionally, route management can be enhanced to keep drivers and equipment safe and fleet owned.

3. Tight market for new and used equipment

Operators should not expect relief from a tight market for new and used fleet equipment. California Truck Emission Regulations January will hit this segment of the industry again. On January 1, 2023, heavy equipment weighing 26,000 pounds or more with engine model years 2007-2009 will be required to upgrade their engines to his 2010 or newer model to remain compliant.

Meanwhile, the used-car market remains reeling from the pandemic, which has cut production volumes. The recession may lead to prolonged equipment supply shortages, and even if the economy recovers, the market is expected to remain tight as fewer used cars are available for purchase.

Take action! To prolong the life of your equipment, perform regular maintenance. Protect the trucks, trailers, moving and storage equipment you have on hand, as lost vehicles and equipment can be much more expensive to repair or replace than before.

Also, check your coverage and make sure your equipment is insured to its current value to protect against those losses. You can take a look at the seller’s market and get a good selling value for your used car.

4. Ensuring safety based on monetary tightening

Safety should always be a priority, regardless of economic trends. However, when margins are squeezed and cash flows are tight, fleets may be tempted to reduce or eliminate safety programs, training, maintenance, and more. The pressure to run harder and faster to make money makes it harder to stay safe, but it has long-term consequences if it’s seen as an unsafe career.

Take action! In the long run, maintain safety programs and measures despite economic pressures. Shippers and brokers shy away from carriers without a good safety record, leading to lost revenue. Plaintiffs’ attorneys use publicly available inspection data against shipping companies in court. Giving up safety during hard times impacts a fleet’s ability to win business and leads to high hidden costs.

looking to the future

The evolution of self-driving cars and the development of electric trucks are two fantastic ideas that are closer than some might think. The issue of insurance pricing for self-driving trucks will be a major hurdle to overcome in the future. As the industry hits the roads with fully automated driverless trucks, insurance coverage and exposure issues will have to be addressed. For example, if an accident occurs and the driver is not involved, who is responsible for the accident? There are also many hurdles to use that must be overcome before hitting the road. Battery life and reliability in cold weather is one of the interesting hurdles currently being analyzed.

Nonetheless, these future trends are on the long-term radar for fleet operators looking to stay ahead of an ever-changing economy and combat the headwinds that will blow the industry through a more challenging time in 2023. There should be.
For guidance on how to manage fleet risk in 2023, visit Contact IAT Insurance.

Peter Matthews and Tom McCallum

[1] Reuters, “Analysis: U.S. trucking slowdown foreshadows possible economic downturn” April 25, 2022

[2] At, “ATA’s chief economist forecasts record driver shortage.” October 2022.

[3] Connecticut Motor Transport AssociationState bill to classify gig workers as employees could affect how independent contracts work in truck industry,” March 3, 2022.

[4] American Transportation Research InstituteUnderstanding the Impact of the Nuclear Verdict on the Trucking Industry,” June 2020.


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