Motor Truck Cargo: Things to Know in 2021
Motor truck cargo insurance is important for any trucker or cargo transportation business owner to have. It protects drivers from liability for losses and damages in the event of an accident or theft, along with a number of other hazards. For-hire truckers, including freight forwarders, couriers, and home movers, are required in many states to carry motor truck cargo insurance to mitigate the risks associated with transporting high-volume and high-value goods. In recent years, the trucking industry has undergone major changes in terms of the way it operates and amount of demand. Read on for more on what you need to know about motor truck cargo insurance and the trucking industry in 2021.
Increasing driver turnover
As the economy recovers from the many lasting impacts of 2020, freight volumes are likely to rise, and drivers will become a more precious commodity. In recent months, the trucking industry has seen a substantial increase in driver turnover, which is exacerbated by low CDL school enrollment. Traditionally, driver turnover rates decrease when freight demand is relatively low, as it has been in recent years, but the evolution of supply chains in response to rising consumer expectations for delivery goods is changing that.
However, increasing driver turnover seems to be attributable to factors such as lowering wages and the average age of the driver pool. Due to high turnover rates, the trucking industry is expected to see a shortage of as much as 105,000 drivers by 2023. Motor truck cargo coverage, accordingly, is critical for drivers to maintain in order to be able to fill the continually opening commercial truck operator positions. This is an issue that the American Trucking Association will likely continue to monitor in the coming year as turnover continues to increase.
Drug and Alcohol Clearinghouse
Instituted by the Federal Motor Carrier Safety Administration (FMCSA), the Drug and Alcohol Clearinghouse enables employers to identify drivers who commit drug and alcohol program violations while working for an employer and fail to inform other employers, as is required by current regulations. The Clearinghouse provides employers the ability to be highly selective about which drivers they choose to operate their commercial motor vehicles and ensure that drivers who have committed violations receive the necessary evaluation and treatment. The program was launched in 2020, and has shown encouraging results throughout the year towards improving highway safety. Carriers must be registered with the Clearinghouse in 2021 and remain compliant with its regulations as required by the FMCSA. The following members of the commercial trucking industry must be registered with the Clearinghouse:
- Employers of drivers operating commercial motor vehicles
- Medical review officers
- Substance abuse professionals
- Enforcement personnel
- Third-party administrators
Drivers are not required to register, but because they must provide electronic consent in the Clearinghouse if a current or future employer needs to conduct a query, registration is highly encouraged.
Rising load volumes
Tender volumes are considerably higher than they were a year ago. The pandemic has resulted in an absence of volume seasonality. Freight continues to flow at unprecedented levels. According to Eric Fuller, president and CEO of U.S Xpress, “It’s become increasingly clear that high tide conditions will persist for a long while, so shippers and carriers will have to plan – and act – accordingly.” Many industries are expected to see elevated freight volumes throughout 2021, further underscoring the need for operators to have comprehensive motor truck cargo insurance in order to safeguard large amounts of potentially costly cargo.
Increase in demand
According to Bob Costello, chief economist for the American Trucking Associations (ATA), the economy is shifting from consumers spending money on services, like hotels and restaurants, to purchasing goods. “What are you going to buy if you are not buying services? You’re going to buy goods,” he is quoted as saying. “All of that helped trucking.” According to FTR Transportation Intelligence predictions, truck freight will grow 6% in 2021, which is a strong growth rate that will create more demand for reliable drivers with motor truck cargo insurance. The influence of eCommerce and the increase in demand for home delivery services will certainly continue into 2021.
Effects of COVID-19 lockdowns
With the coronavirus pandemic has come a worldwide amplification of consumer desire for convenience and immediacy when it comes to shopping for things like groceries and home goods. Trucking companies, therefore, have had to adjust in order to get goods to consumers faster and more efficiently. Since the pandemic has continued into 2021, it is expected that this demand will continue as well. Many companies now offer fast, free shipping options in order to compete with large corporations, and fulfillment services will continue to need to adapt. 67% of U.S. consumers now expect either same-, next-, or two-day delivery. Accordingly, the trucking industry is expected to continue to expand into the future. This upwards trends in shopping means the need for drivers to balance out the rising demand for freight will continue to grow.
Truckload pricing surge
Due to high demand and tight supply situations, truckload pricing is likely to surge in 2021. According to FTR estimates, total truck loadings were down about 4% and truckload rates were up about 2% in 2020. For 2021, they forecast an increase in truck loadings of about 5% and an increase in rates of about 8%. The first half of 2021 is expected to see an increase in volumes and prices that will continue to grow into the second half, which was the case in 2020. Eric Masotti of Trailer Bridge Inc. predicts that the following will occur in 2021:
- Class 8 truck orders will peak at 45,000 per month
- Peak monthly van rate per mile will be $2.56
- Cass freight index will peak at 1.278
- Pricing will drop off in late 2021 as capacity increases
If you are looking for comprehensive motor truck cargo insurance coverage, Call 888-9OSPREY or request a free online quote today. OspreyWatch, powered by Osprey Underwriters will match you with the best insurance products to suit your specific needs.