DOT Safety Regulation Update Fast-Fax™
Week of June 20, 2011
Foley Services Your Single Source for DOT Compliance
The freight market currently favors carriers. Will your CSA scores help or hurt you during carrier contract negotiations?
A quick glance at freight indices, such as the Market Demand Index (MDI) and the Shippers’ Condition Index (SCI), shows that motor carriers continue to have the upper hand when it comes to negotiating with shippers. That’s good news for safe, reliable carriers, who are well-positioned to take advantage of the favorable market conditions. For the most part, carriers with high scores in one of more of CSA’s BASICs will be out of luck.
The MDI Advantage
For most of 2011, the Market Demand Index (MDI) has strongly favored carriers over shippers. In recent weeks, MDI has climbed back up to 14.56. Earlier this year — at the height of produce season — MDI peaked at 15.62, and then fell to below 12 before beginning a second upward climb in late May.
To understand the leverage an MDI of over 14 provides trucking companies, consider that the market equilibrium resides at an MDI of 7.0. Shippers take control when MDI dips below 7.0, and carriers have the upper hand when MDI is above 7.0. All in all, 2011 has been a good year for reliable carriers with solid CSA scores.
SCI Shows Temporary Improvement for Shippers
The Shippers’ Condition Index (SCI), another indicator of the freight market, shows short-term improvements for shippers. According to report publisher FTR Associates, the June SCI was -5.4, up from -11.4 in May. With SCI, any reading above zero suggests a favorable shipping environment. The improved SCI is being tied to a general slowdown in freight demand growth as well as delays in new Federal regulations for carriers.
The break for shippers won’t last, according to FTR. An improving economy combined with a tighter regulatory environment will push the index further down the SCI’s negative scale. Shipping costs are expected to increase through the balance of the year and into 2012. Carriers who are able to withstand the current regulatory and economic challenges should be able to capitalize on the shippers’ challenges.
Position Your Company for Success
Unfortunately, not all carriers are in a position to benefit from shippers’ woes. In fact, the high MDI can be traced to a few factors that many trucking companies are struggling to overcome — rising diesel prices and FMCSA’s Compliance, Safety, Accountability Measurement System. In particular, many carriers who had no problem landing jobs during the SafeStat era, have found themselves ineligible for work because one or more of their CSA rankings are above cut-off levels established by shippers and brokers.
Carriers should be aware that CSA cut-off levels established by shippers are often well below FMCSA’s published intervention thresholds (see below). To be eligible for work and the most competitive contracts, carriers should maintain CSA scores well below the following levels: 65% in the Unsafe Driving, Fatigued Driving (Hours-of-Service) and Crash Indicator categories, and 80% in the Driver Fitness, Controlled Substances/Alcohol, Vehicle Maintenance, Cargo-Related categories.
Know Where Your Company Stands
So, how does your company rate in this carrier market? Will you be able to take advantage of the favorable MDI? To find out, start by reviewing your CSA rankings. You can access your current report by logging into the CSA Safety Measurement System at csa.fmcsa.dot.gov. You’ll need your DOT number and current P.I.N. to access your full report. Check your scores in each BASIC to ensure that they are well below the thresholds established by your customers, and identify any areas needing improvement. Then take the necessary steps to better your poor scores and maintain and improve upon your good ones.
Improving Your CSA Scores
The Fast-Fax team has devoted quite a bit of ink and paper to helping carriers understand and improve their CSA scores. One of the most practically helpful issues was Fast-Fax #673, which discusses five FMCSA tips for improving CSA scores. Topics covered include:
- Understand Your Requirements
- Evaluate Your Safety Management
- Check and Update Your MCS-150
- Review Data, Request Corrections
- Educate At All Levels of Your Company
FMCSA Seeks Congressional Help. Last week FMCSA Administrator Anne Ferro reached out to Congress for help in her agency’s ongoing battle against unsafe motor coach operators. During a June 13th House hearing on Improving Bus Safety on our Nation’s Highways, Ferro requested enhancements to her agency’s authority that would allow it to:
- Conduct enroute bus inspections; not just at points of origin and destination;
- Establish a “successor liability” standard to charge a new company when it reincarnates from an unsafe carrier;
- Require full safety audits before a company can receive passenger carrier authority;
- Raise the penalty to $25,000 per violation for bus companies that attempt to operate illegally; and
- Regulate passenger ticket sellers, known as brokers, just like it does brokers of freight and household goods.
Editor: Roxanne Swidrak, Vice President, Operations • 1-800-253-5506 • www.FoleyServices.com • Vol. 111, No. 692 • © Foley Carrier Services, LLC. 2011