Growth is often associated with progress, but is sudden and rapid growth for motor carriers always the ticket to success?
Brian Runnels, VP of safety at Reliance Partners, a freight insurance agency, doesn’t think so.
Because of the slim margins carriers face, they must keep trucks constantly moving in order to turn profits. Operating costs, however, reached $2.25 per mile last year, the highest the American Transportation Research Institute ever recorded. So while the desire for growth is understandable — larger fleets usually have greater earning potential — scaling also means staff must work harder to ensure those trucks are constantly filled with profitable freight that arrives when it’s supposed to. Staff also need to be concerned with making truck and insurance payments for all of those vehicles and dealing with unexpected breakdowns, among other daily operational considerations.
Many businesses experienced growth as freight boomed during 2020 and 2021, attracting new entrants to the industry and feeding the need for more capacity to fulfill demand. Runnels argues that sudden expansion, though, can actually cause problems.
“When you see fleets double in size in a very short period of time, typically they haven’t grown on the inside as well as the outside, and that’s a very dangerous combination,” he said.
As staff prioritize keeping trucks filled and compliant, things like maintenance and safety can fall by the wayside, Runnels has observed.
“When your safety department is strictly reactionary, the damage is already done when a bad inspection, a crash, a complaint or equipment issues occur. You’re handling everything on the backside instead of trying to be out in front of it,” he explained.
More vehicle and driver violations found during inspections can eventually impact safety scores and a company’s safety rating. Safety ratings are publicly available, so customers, shippers, and receivers know if a trucking company’s safety standards are below par. This can affect the company’s ability to keep and attract clients.
Further, Runnels warned, rapid growth may scare away insurance companies if infrastructure doesn’t support it. They will notice when a company suddenly doubles in size or otherwise sees significant expansion in a short period of time.
The key to successful scaling, then, is steady and intentional growth.
“Everybody wants to grow. Everyone wants to be successful. But doing it in a way that allows you to manage that growth is a much more realistic expectation,” Runnels said.
Hiring new safety personnel or operations team members to keep up with the work created by additional trucks and drivers is one way to scale in a healthy way. However, companies can also consider looking at other methods to make processes easier and faster. This includes adding system integrations and digitizing compliance management processes like driver files, expirations, and drug and alcohol management. This can help streamline processes, freeing up employees’ time and allowing them to use those efforts to get ahead of other safety issues.
“Get a third party involved, get automation done, and now you can focus on the proactive safety side of things instead of just being a compliance person,” Runnels said.
Reliance Partners’ safety experts can give carriers the tools to build a successful safety program. By taking a holistic, safety-focused approach to growth, businesses can ensure a strong safety culture that will add to their success.
Click here to learn more about Reliance Partners.
The post Growth vs. stability: Is it time to rethink your approach? appeared first on FreightWaves.
