Risk Management

[layoutshooter]

OK, at the "risk" of staring one of those I know better than you do finger pointers, I need some input on risk management.

When you go into business for you self you accept a certain amount of risk. After all, is that not the game itself? You take on all of the responsibility and certain levels of risk in the hopes of a high return. Your goal is to get a better return on you lifes efforts by assuming more risk than the guy who just takes a job, goes to work, and let's the employer assume the risk. A bit of an over simplification to be sure but that is the general ideal, is it not?

My question is, just how much risk are you willing to accept above and beyond that normal every day risks of traffic, bad forklift drivers etc? Do you self-insure? Do you have enough cash in reserve to ride out a prolonged outage? How much insurance is enough? Not enough or too much?

Are there loads out there that you feel are too risky to handle? Like maybe a certain type of hazmat? High value that have a greater risk of a highjacking? What about loads that increase your chance of greater physical damage? Like going into areas where a hurricane is about to strike? Flooded areas? What about control of your truck? Are you willing to accept loads that you lose control of your truck to another agency? Loads where you are required by the contract on the load to stay at a point until released, reguardless of the potential for damage?

I am "spinning my wheels" on this. I cannot afford a repeat of last year. I am looking for the thoughts and ideas of others. Anyone got some for me?

Layoutshooter

 

[Scuba]

My question is, just how much risk are you willing to accept above and beyond that normal every day risks of traffic, bad forklift drivers etc? Do you self-insure? Do you have enough cash in reserve to ride out a prolonged outage? How much insurance is enough? Not enough or too much?

Are there loads out there that you feel are too risky to handle? Like maybe a certain type of hazmat? High value that have a greater risk of a highjacking? What about loads that increase your chance of greater physical damage? Like going into areas where a hurricane is about to strike? Flooded areas? What about control of your truck? Are you willing to accept loads that you lose control of your truck to another agency? Loads where you are required by the contract on the load to stay at a point until released, reguardless of the potential for damage?

I am "spinning my wheels" on this. I cannot afford a repeat of last year. I am looking for the thoughts and ideas of others. Anyone got some for me?

Layoutshooter

The amount of risk that I am willing to take depends on the amount of money I am being paid for each risk. The issue as for loosing controll of my truck to someone else well if they give me a check for the payoff figure they can take it but no other reason

 

[dabluzman1]

This thread could run the path of what is a succesful expediter.
So many variables that differ from person to person.
If you are talking about being a one truck owner, you will be letting an awful lot hang out
with the chance of something getting cut off. Your exposure, as say a five truck fleet owner, while having a larger capital expense, would not in my opinion be as likely to go
down in one fell swoop, unless all the trucks were on a ferry going to Martha Vineyard and the boat sank.
A good business plan will let you know the required exposure. A good accountant will let you know your acceptable exposure, your lawyer will let you know the legal exposure.
Your gut will let you know if youre willing to risk/expose it all.
Here is a web site with some good info on preparing a business plan. This will take you right to a workbook that helps you setup your plan. You can download and print it. A lot of good info.
Good luck.

http://www.businessfinance.com/books/Workbook.pdf

 

[greg334]

I don't know about this risk thing, it is like Luck....

Seriously I have to divide up risk in two main categories, things I can control and things I can't.

The things I can control are a given but the ones I can't like the risk of getting into an accident, or run over in the fuel isles or even getting hit by a old man who was driving the wrong way on I80.

I tell people this is a dangerous job, it only takes one accident to ruin one's day. Others who make this as a great job to see the country miss that fact.

The point is that dealing with the risks you can control should be something we all do and the stuff we can't control has to have us working to mitigate it but again that's what being a professional is all about.

 

[layoutshooter]

By control of the truck I did NOT mean drivng it. I meant being unable to leave an area until the controlling authority releases you.

I will check out that web site.

Any in here self insure? What about cash reserves? Is anyone aware of down time insurance policies that are separate from the truck insurance?

Layoutshooter

 

[TeamCaffee]

Layout you bring up a lot of interesting thoughts. What happens when in a safe haven for a DoD load and a storm comes through and you sustain damage? My first thoughts are this is an act of god and as such we are the ones responsible to repair our truck. The base is not at fault as they provided a safe place to park and cannot control the weather, the carrier is not responsible as they told you about the safe haven and they cannot control the weather.

If we decide a load pays well enough to go into a hurricane or disaster area or we not then taking on the responsibility ourselves? One of the reasons we have become so picky about going into New York City and across the GW Bridge is because of damage to our truck. We are tired of our mirrors getting knocking into and the risk of having an accident. We will go across the GW Bridge for less than a load has to pay to go to New York City. So our risk management strategy is the load has to pay an astronomical sum before we will accept another load into the city. Now others that we know go into and out of the city weekly and do very well and have few problems.

Each of us has to have our own risk management plan. If we see a great paying load and we accept it and we know the risks then the burden lies on us as far as I can see it.

I think that if you are going to take the high risk loads and the great pay you need a pretty high emergency fund. You guys got hit hard with what happened. If I was in your shoes my level of risk would be very low as we could not afford to be down again. I am not a gambler so I would play on the safe side of many loads till my reserves could get built back up.

Just being in this business is risky and so an emergency fund for us is a must.

You remind us of how fast we can lose all of our emergency fund.

 

[OntarioVanMan]

TeamC said...

What happens when in a safe haven for a DoD load and a storm comes through and you sustain damage? My first thoughts are this is an act of god and as such we are the ones responsible to repair our truck. The base is not at fault as they provided a safe place to park and cannot control the weather, the carrier is not responsible as they told you about the safe haven and they cannot control the weather.

You are under load or under D Time to be loaded whatever, you are on the clock....
I would argue "Safe Haven" would be safe from ALL perils...especially a FEMA load in a hurricane...You should be covered by insurance because you are being paid...not like being empty

 

[TeamCaffee]

A safe haven is a term generally applied to government loads and you are not in a safe haven from all perils you are only is safe area that you can sleep and the military will patrol and keep the load safe from an outside person. The term safe haven does not mean we are safe from any peril only that we can relax from the Dual Driver protection. We are safe from a robber or a terrorist not from an act of god.

FEMA has you sit at a staging area because it is handy not because it is safe. You know when you accept a load into a hurricane that you might become involved with the hurricane. So who do you think should have to pay for the damage to your truck? What is the difference between driving into a city of driving into a hurricane? When you accept the load you accept take risk.
We know when we accept a military load and our “panic button” is activated that we have put ourselves at risk. That is our decision to do this if something happens on this load who are we to blame?

 

[x06col]

Seems that's the problem ya got when you are contracted to the larger "self insured" types. You end up carrying the empty bag as far as insurance goes.

We always provided trucking liability insurance to our contractors, and required our contractors to secure their own coverage for the equipment, with the opportunity to use our insurance company if they chose. IF they chose to "screw the pooch" as far as adequate coverage for themselves goes, all I could do is advise not to go that route.

I can't really understand how a simple cargo box changout needs to take over a couple days, and testing a couple days longer (if required) if things are properly planned, and some time off agenda wasn't programed in there somewhere. If the equipment was not acceptable for the intended purpose after damage i'd be looking to run jes freight for someone while all things were being built. Steada sitting on my hands.

Ya gotta manage the risk, steada letting the risk manage you. Like some seem to do.

 

[MentalGiant]

Here is our situation. Our owner requires his contract drivers to put up a $1000 security. It covers the deductible for damage to the truck or freight that we are carrying. In the contract we signed, it is our responsibility to make sure no damage comes to the truck or freight. So, we have to make day to day decisions on what we do to make sure none of this happen. For example, we will not take loads into New York City. Simple fact is, that city has a very high accident rate, especially for professional drivers.

As for covering yourself, that all depends on what your life is worth on the life policy and how much your down time is worth, depending on the situation. If you are in a accident, you might want to figure in a certain amount of time you are down while the truck is being repaired. Say it took 4 to 8 weeks to repair the truck. How much would you need to live on for that period of time?

As for a life policy, you need think what would it take for your family, if you have someone you want to make sure they are taken care of in case of your death.

Other risk involved is depending on what risk you are willing to deal with. To give an example. We were delivery a load to New Jersey. We was going to be there 4hrs before they were open. I thought to myself, will it be a safe area to wait in or even sleep until it was time for the company to wake? Instead of taking a chance, I found a truck stop I was comfortable with and felt some what safe at, took a snooze and woke up at a certain time to make sure I had enough time to get there right before they opened. Which I'm glad I did. Parking at the company wouldn't of been a problem, but from what I saw driving in, it wasn't one of the best neighborhoods that I have been in.

You can prepare for certain risk factors, but at other times you just have to use your common sense.

 

[OntarioVanMan]

One could argue...a rock or debris that breaks your windshield is an act of God as well...it could very well miss you or devine intervention it hits you?
And our comprehensive covers this...That tree branch or flying debris could have missed you ...why wouldn't insurance cover your truck or box damage, especially under load or during D-Time?

 

[MentalGiant]

Stuff like that is considered road hazard or a act of God. Which we can not be held responsible for. The owner would take care of that, which basically falls into the insurance if you have a policy for that certain situation.

 

[layoutshooter]

We did wait until the last moment on the box replacement. There were other repairs to be done and then, as was our luck went last year, everything that could go wrong did. Just the way it goes sometimes. We ran non-tval freight until it was time to start on the work.

We have a 3 month reserve for both truck and house expenses. 3 months reserve, down 3 months, money is tight.

Insurance paid for the box and other truck repairs and 30 days down time at $150 per day maximum.

Where the problem and gray areas came in on this load was who exactly was in control of the truck. We were not allowed to leave, we asked too and we were held by FEMA. We were told where to park. The "lead driver" told both LSU and FEMA officials that the area they told us we had to park was not safe and suggested a safer place. They said no, park next to that building, the roof came off, 9 trucks were damaged, two with heavy damage. No injuries. Had we parked in the alternate area we requested nothing more than paper would have hit the truck. We were NOT in the truck but in the shelter.

We learned that we were happy we had set aside money for a "rainy day" We learned that our down time insurance is NOT addiquate and are looking at other options.

It is very unlikely we will work these kinds of loads again unless there are changes to the "rules". We would want to power to leave when we feel it is nesessary, OR, the authority that wants to control the truck takes responsibility for all damage while they are in control.

We did nothing wrong, other than take the load. We fullfilled our contract to the letter. We parked where instructed to park and sheltered when asked too. The only way we could had avoided this was to either not take the load or leave and not complete the contract.

The U.S. government does not have the resources, trucks, reefers etc to get these jobs done. They must hire private contractors. Sooner or later enough drivers will have problems and then it will become difficult to get this work done. The people who live in those areas and need the shelters will be the ones hurt.

It is kind of asking a lot for insurance companies to foot these large repair bills as well.

It is just my opinion, for what ever that is worth, that IF FEMA or other government agencies wish to take control of our trucks for an extended period of time and in an area where damage is likely and can be forseen that two things should happen. 1. They listen to owners/drivers etc and let them park where they feel safe or allow them to leave and come back after the storm passes. or 2. Assume all liability for the trucks while they are in control.

One thing is certain, you should all be sure you have as big a "rainy day fund" as you can manage and you all should be reviewing your own "risk management" and insurance plans on a regular basis.

You don't want to have to go through this. It has NOT been fun.

Layoutshooter