Hi, welcome to today's webinar, The Changing Transportation Landscape, What Every Underwriter Should Know, hosted by Inland Marine Underwriters Association. I'm Lillian Coulson, Vice President and Secretary at Inland Marine Underwriters Association. Thanks so much for joining us today. Just a few quick technical tips. You'll find your attendee control panel on your screen where you can download a PDF of the presentations under the handout tab, or submit questions using the question box. We'll take your questions at the end of the presentation, but we encourage you to submit your questions at any time throughout the presentation. And to add a little friendly competition, and to encourage your questions, IMUA will email a $25 Amazon gift card for the most engaged and or best questions. I'd just like to thank quickly IMUA's Transportation Committee, which Pat is the chair of, and I'll be introducing him shortly. And I'd also like to thank our speaker, whom we'll introduce shortly, as well as Eileen and Ali Monreale for working behind the scenes to coordinate this webinar today. Now for our presenters. Pat Stoick is Executive Vice President, Head of U.S. Marine at ASCOT Group. He has experience in many disciplines, including underwriting and broker experience, and most recently served as Chief Risk Officer at Overhaul. From 2016 to 2019, Pat was Senior Vice President for Great American Insurance Group. He also has an extensive 27-year career at CHUBB. Pat graduated from Colorado State University with a Bachelor of Arts degree, and holds the Associate in Risk Management and the Certified Insurance Counselor designation. He is the current chair of the IMUA Transportation Committee. Daniel Murray is Senior Vice President at American Transportation Research Institute, where he is responsible for managing transportation research, testing, and evaluation activities, including on the national level at the U.S. Department of Transportation's Freight Mobility Initiative. Dan is a well-known freight subject matter expert and has more than 30 years of experience in a broad range of transportation fields, including trucking research and economics, transportation, safety technologies, and autonomous vehicles. He is actively involved in many leading industry associations, including the National Academy's Transportation Research Board as Vice Chair of the Trucking Research Committee, and presently sits on the boards of the Freight Mobility Research Institute and the Mid-America Transportation Center. Dan received his Bachelor of Arts degree from Gustavus Adolphus College, and his Master of Science degree from Northwestern University. Please welcome Pat and Dan. All right, thanks, Evelyn. Let me just kick off here with why I asked Dan to come speak to us today. I've heard Dan speak on many occasions, and I think a lot of you have heard me talk about ATRI and what they bring to the industry. I'm a big supporter of them and have, as I said, heard Dan speak many times at the Motor Carriers Insurance Education Foundation, where he speaks annually at their meetings. As we know, many things impact cargo and transit, and I believe that as cargo underwriters, we sometimes get our blinders on and just focus on the cargo and what can happen to the cargo itself. I believe that underwriters need to broaden their horizons and look at the entire transportation landscape to understand all the things that can impact cargo and our insurance that we're riding, and then how the transportation industry is addressing them. Dan and the team over at the American Transportation Research Institute does a fantastic job of researching issues and then presenting the results of that research and offering solutions and what needs to be done, and I think it's just been a very educational thing for me as an underwriter to see these different things. If you go out onto their website, which I'm sure Dan will share with you, you'll see research papers on everything from driver shortage, truck parking, hours of service, technologies etc., etc., etc. There's just a plethora of information out there on their website, and it's fascinating to start reading and then applying that to the underwriting process that we do. So that gives the explanation of why I asked Dan, and I really appreciate it, Dan, for you to come speak to this group of cargo underwriters and inland marine specialists. Dan? Thank you very much, Pat. Really appreciate the kind introduction. What Pat probably deliberately didn't tell you is I've got 600 slides, and I've got to get through them in like the next 15 minutes, so I'm going to talk really, really fast, and if I miss something along the way, or even there's a topic I'm not covering, certainly in the Q&A, let's dig into that, and somebody will come up with a $25 gift card, I guess. So as Pat indicated, we're a not-for-profit research arm of the trucking industry. All of our research is available free of charge on the website once it's published at truckingresearch.org, and if you sort of sign up on our contact database, we push all the research out to everyone in the contact database. Now, we do have a board of directors made up of presidents and COs of these companies. Derek Leathers, who's the CO of Warner, is the chairman this year, but they're not on the call with us today, so I'm going to tell you this is an equally important group to us. Our research advisory committee is federal government, state government, motor carriers, technology providers, law enforcement, driver groups, et cetera, and they get together a couple times every year virtually, but then they also get together face-to-face every single March, discuss and debate issues in the trucking industry, the freight industry, supply chains in general, and then what research problem statements should be brought to bear to address those issues. Now, we work very, very closely with the U.S. Department of Transportation, the 50 state departments of transportation, academics, et cetera. Sometimes we sponsor the research ourselves. Sometimes we work with government under research contracts, but at the end of the day, you'll see some of the many, many interesting issues that we address. One of the sort of inputs to our research process, at least certainly the identification of issues, is we go out every single year through our top industry issues report and survey thousands and thousands of trucking companies, freight stakeholders, truck drivers, and we come up with this sort of David Letterman top ten list. Now, if you're a Gen Z-er, you have no idea who David Letterman is, so we can answer that at Q&A, but this list is sort of a barometer of what's rising and falling in terms of criticality, the number in the orange is the previous year's ranking. So you'll see some of these issues are acute. Fuel prices can go up and down in the course of months, but some issues like the driver shortage, driver distraction, economy, of course, have been with us for years, sometimes decades. If you sort of separate out truck drivers from motor carriers, though, the list becomes very, very interesting. This 23 list is a bit of an anomaly because, interestingly enough, truck drivers had truck parking as their number one issue three years in a row up until this survey. Driver shortage on the fleet side had been a number one issue for five years in a row until this list. A lot of strange things are happening in 23 between economics and politics that change things up a bit, but I think we'll go back to some of those stable issues, really problems. One thing we can probably say is we're not doing a very good job, at least in trucking, of resolving these issues. You'll see a lot of similarities between the two lists. So as much as I hate cliches, I think we're going to have to sort of think outside the box and change the paradigms and look for opportunities to do things new and different if we're going to resolve some of these issues. Again, truck driver issue, huge. Truck driver shortage, number one issue five years in a row for the trucking companies. We're not going to be able to make a lot of progress in some areas of this, but I will talk to you about some opportunities for us. But at the end of the day, when you look at the census data, we have the oldest labor sector in the economy and the smallest percentage of young people coming in. And as you know, a big part of that problem is you can't even get a commercial driver's license, at least drive interstate with one, until you're 21 years old. So we did a study that looked at how to get people into trucking in general and then maybe move them into a truck driver position. So we did some research, worked very closely with the trucking industry, driver recruiters, truck driver training schools. And one interesting thing we found is some companies are very successful in getting younger people into the industry, working them from 18 to 20 year old in jock jobs, dispatching jobs, bookkeepers. And then when they turn 21 and they've gotten to know the industry and they've gotten to like the industry, then they may go through some kind of driver training program and become an over the road driver. Some of them are driving intrastate 18 to 20, which is legal, and then moving into interstate when they turn 21. But at the end of the day, what we did learn, particularly among the younger generations, is pay isn't everything. Life work balance is very, very important. And as you can see here, you know, 60% of the surveys, the respondents said that, you know, there are things equal to or greater than pay when it comes to job consideration. So we have to start to think more holistically as an industry to say, if we're going to get people in, it's not just pay. It's things like culture and stay at home opportunities on weekends and a series of other things that again, we have to roll up our sleeves and start to investigate. Now the driver issue I mentioned, truck parking, AFRI's been involved now and I believe it's 38 state DOT truck parking studies. People in Washington DC are like, are you kidding me? Truck parking, number one issue for truck drivers. They don't understand that it's not just hours of service compliance. It's not just fatigue management. All this e-commerce is requiring staging in congested urban areas, creates great stress, great angst. Our research shows that truck drivers spend on average about 56 minutes a day, non-revenue time, out of route time, looking for truck parking. That equates to almost $5,400 a year in lost wages. That's like a 10% cut and I don't think many of us will take a 10% salary cut just to look for truck parking, which is what the drivers are doing today. Fortunately, the Congress is starting to take this seriously. We have almost a million trucks worth of GPS data and we can see anywhere in the country where there's overcapacity and rarely oversupply. You can see here, the largest truck stop in the United States on I-80 in Iowa. It's full and so all those red dots are trucks color-coded to spot speed parked on exit and entrance ramps. It's equally bad at public rest stops, which you can see here on the left because it's at overcapacity. Way over on the right on the exit entrance ramps, you'll see trucks parked. Now, when you look at the insurance industry data, which we collect, rear-end crashes are one of the most costly crashes there are in the trucking industry and so it's a huge safety issue for trucks to be struggling to find parking. Consequently, FMCSA is working closely on this issue and Congress is at least debating a $755 million dedicated truck parking funding bill. It's moved out of the House T&I Committee and at some point soon, we hope it'll get a full vote. That would be an awesome opportunity to address this huge, huge issue in trucking. One of the other reports that I think you'll really want to grab, although Pat said it's much more holistic than just cargo, but we collect up financial data from hundreds and hundreds of trucking companies, from owner-operators up through the biggest of the big and we have been doing this for well over a decade. What you'll see here are line item cost centers and what happens over time. Insurance, as you know, has skyrocketed, particularly in the last five to six years. It still goes up and down. It's very volatile. The only really good news in the fact that our latest report has documented the highest costs we've ever recorded in the trucking industry, the good news there is driver wages. With driver retention and driver shortage being so prominent, increasing driver wages, bonus and benefits does help retain drivers. We're now down in the trucking industry, at least for large motor carriers, we're down to about 65% to 70% annual driver turnover, which is nothing compared to 2004, 5 and 6 when J.B. Hunt, for example, sent out a press release saying they had hit 132% annual truck driver turnover. So again, the wages are going up and the drivers are staying in the seats much more than they used to. When you do look at that data though, you'll see that pay is not a one size fits all. Interestingly enough, the bigger the fleets, the more they typically pay the truck drivers, but believe it or not, driver shortage, driver retention, driver churning, it's much better at small fleets. They keep drivers who are paid less because really those drivers are big fish in a small sea. They're human. They're not just a number. So we're trying to learn from the small fleets, what do you do so well and transfer that information to the larger fleets, again, to reduce some of the turnover that we're experiencing? One of the ways we are offsetting those huge increases in costs is we're essentially looking at things like reducing our deadhead miles, getting drivers home more often. To some degree, fuel economy is on the rise, not dramatically, but yeah, I need a little bit help. So again, if you grab that report, I think you'll see a lot of good information in there organized by sector and fleet size. Here's just a quick slide on deadhead miles. It is interesting that certain sectors of the trucking industry do much, much better on eliminating empty miles. You can't send out a fuel tank truck in one direction and bring milk back in the other direction, but with dry vans and a lot of other sort of trailer configurations, there are going to be new and better ways of applying technology to find those loads wherever they may be so that I'm not returning empty. This is a really big, let's call it a budget sucker for the trucking industry. Now here's something interesting I'm going to guess you might not even be aware of. There's a bill in California, it's not even a bill anymore, it's a law, AB5. They literally passed a law that makes it extremely difficult in the state of California to classify an independent contractor as an independent contractor. It's such a hard litmus test that if they automatically become employees, if you don't meet this very, very difficult litmus test. We did do a study on owner operators and independent contractors in the supply chain to understand why are ICs ICs and why are employee drivers employee drivers? By the way, the AB5 was challenged by the trucking industry. The trucking industry lost an appellate court and then took it to the US Supreme Court who declined to hear it, which means it is a law in California now. So we asked company drivers, what do you like and how important is it to you? And believe it or not, company drivers are very, very happy being company drivers because of things like job security, income, schedule, flexibility, et cetera. So they're sort of focused on the financial strengths of an employee job. When you ask ICs and owner operators, not surprisingly, it's that sort of free to be you and me. I like the independence. I like not having a boss. I like choosing my routes, my jobs, my cargo. And so it's a very different reason, but they're equally happy. So when you convert these folks to employee drivers, aside from the fact that everyone's going to come looking for back taxes, we're going to see some serious dissatisfaction and quite possibly a big jump in the driver shortage, at least in California. However, Oregon, Washington, and Minnesota are now researching this conversion and we may see other states follow. One of the things, and certainly Pat and your industry knows well, is the impact of trial lawyers and the impact of litigation. So we have seen some dramatic increases in nuclear verdicts. My own board chair, Derek Leathers of Werner, two, three years ago in Texas, they were driving down the road. The road was somewhat inclement, but professional truck drivers are taught to drive in different weather conditions. Ten miles an hour below posted speed limit because of the weather. Another vehicle, children in it, shouldn't have been out there, hit black ice, crossed the median, hit the Werner head on. There was one fatality, one catastrophic injury, and a jury came back against Werner for $90 million, and we see that almost as a starting point these days. So we went out and collected over 600 cases, litigation cases, court filings, where a truck crash was involved. Initially what we saw with $1 million verdicts, which is almost jump change today, is over a 300% increase from the start of the database to the second part of the database. Where you get into nuclear, which is often defined as $10 million or more, you see almost a 100% increase in nuclear verdicts. And to be candid with you, when you start to read what's going on in the marketplace of nuclear verdicts and litigation, anybody who gets a $10 million slap on the hand is getting off pretty lucky. We already saw a $1 billion case come out of Florida just a year and a half ago. So things are getting pretty crazy. What's the impact to the trucking industry? Well, we studied the impact of rising insurance costs and how do trucking companies respond to those. So we did an analysis of insurance costs. We worked closely with the insurance industry. That would be commercial transportation primarily, looked at a lot of documentation from both defense and trial attorneys. Came up with a few interesting tidbits that I'm just going to share with you today as a teaser. But again, grab the report. You'll see some interesting things. When you look at insurance on a per mile basis, the chart on the left shows a pretty steep trend line. And yet in reality, when you look at safety in the United States based on NHTSA data, National Highway Traffic Safety Administration, safety in terms of fatal crashes and injury crashes are pretty stable. I wouldn't say they're stagnant. The last couple of years, and I haven't carried this out far enough for you to see, we have seen some increases, but not anywhere on the scale of insurance cost increases. So what is industry doing about that? Well, I'm quite nervous to tell you we're scaling back our excess coverage. So I'm trying to save pennies and exposing myself to many dollars down the road. We see pretty dramatic increases, decreases, excuse me, in excess insurance, except for medium-sized fleets. And we can't really explain that. But at the end of the day, I'm cutting my excess insurance, but I'm still seeing pretty substantial increases in my premiums. So then I raise my deductibles and my self-insurance levels, further sort of stretching my capital, stretching my financial health. And at the end of the day, the auto liability costs on a fleet basis are going up for everybody still. So I'm exposed, less coverage, less capital in the bank, and I'm still going to get sued probably for amounts well beyond, as you can see here, what my total coverage levels are. It's really also challenging the smaller you are in terms of fleet size. On a per mile basis, small folks don't have the flexibility and the dynamism to raise deductibles more, even move into self-insurance, reduce their excess much more than they already have. And so the smaller guys are paying considerably more on a per mile basis than the large fleets, which does pose the question, how much economic pressure are we going to see on small fleets and will they survive, particularly on the owner-operator scale? The only good news in that research is we discovered that the trucking industry and all fleet sizes in particular are buying safety technologies in large numbers. I'm just going to point out really quickly, road-facing cameras are the second most preferred technology among truck drivers. Very interesting, because 30 years ago, a driver would be, in no way you're putting a camera in my cab. Now they love them, because it exonerates them on the road. Interesting though, driver facing cameras are the second most hated technology among truck drivers. I'm gonna talk very briefly about active technologies in trucking. Now, any of you who are at least intrigued, if not following autonomous trucks in the United States, do not put your 401k into autonomous truck vendors, because they are going bankrupt left and right. There's basically four companies left out of three dozen, who have previously filed bankruptcy over the last four or five years. We're not gonna see level four and level five technologies for many, many years. First of all, there's FMCSA regulations. You have to be able to put out warning placards. You have to be able to do daily vehicle inspections. You can't do that when there's no human involved. I did watch this famous Colorado beer run in Colorado in 2016, where the driver got up onto I-25 and drove for three hours, while he sat back in the sleeper berth and the truck driver did, excuse me, the truck did everything on its own, very autonomous. But the technology is not the issue. The technology is the least of our problems. It's the trial lawyers. It's the state regulations that change when I cross a border. It's the lack of federal regulations. And if any of you on the Northern Hemisphere, and I happen to be in Minneapolis, St. Paul, we use LIDAR, radar, and video optics on most of these systems. And anything from an inconsequential snowstorm to fog and rain is gonna put people in the ditch very quickly. The lower right corner here, which line am I supposed to be following? The paint stripe, the cement seam, or the snowplow line? And the answer is, we don't know yet. The technology's not that good. But I am excited that the trucking industry is moving pretty aggressively into active safety systems, which we call maybe level two, level three. Many of you have these technologies in your car today. Active lane assist, active lane centering, automated emergency braking, excuse me. So we now have a program with FMCSA to try to promote those same technologies in the trucking industry. These technologies exist by the hundreds of thousands to millions in cars, but we're very slow in trucking to adopt these systems. So this program is gonna be starting phase two this coming January. Believe it or not, we're working with groups like the Owner Operator Independent Driver Association, the American Trucking Association, and other groups to identify the pros and cons, develop ROI calculators so that every unique fleet can sort of plug in their own data and see what the benefits might be along with the costs. And so the TechCelerate program, we're hoping, jumpstarts a lot of safety technology initiatives that ultimately reduce crashes no matter who's responsible. The car driver can be extremely negligent, and these technologies will just mitigate the crashes no matter what. So we now have, coming out of Congress, a new $100 billion infrastructure bill in the United States. And that's great, that's good news. That's twice what the last highway transportation bill was. So that's the good news. And we know it's good news because, frankly, truck bottlenecks in this country are some of the biggest impediments, as you know, to efficient supply chains. So we use our truck GPS data to identify where the major bottlenecks are in the country, and hopefully the $100 billion will be used to target the most impactful reconstruction opportunities and speed supply chains up. We want our e-commerce garbage that we buy today, we don't want it tomorrow morning, we want it this afternoon. So we have to keep the supply chains nimble and reduce truck bottlenecks. When people say, and I don't blame them for saying this, well, you can't build your way out of congestion, you can't build your way out of bottlenecks. I want to show you the number six bottleneck here in Chicago, Illinois. They had been the number one bottleneck three years in a row, $700 million reconstruction three years ago, and they dropped to number six. So you literally can build your way down the AFRI bottleneck list if you try. I'm going to speed up a bit now. Predicting truck crash involvement. We've been doing this study every few years for, again, over a decade. We have unique access to over 500,000 truck driver records, and running these somewhat painful linear regressions and chi-square analyses, we can tell you, based on historical data on a truck driver's motor vehicle record, crashes, violations, et cetera, what the statistical probability is of a future crash if you have these behaviors on a motor vehicle record. Now, it doesn't mean you right away just terminate the driver to reduce your crash probability. Through remedial training, you can focus on these very specific behaviors instead of doing general safety training and dramatically reduce future crash probability. So we urge everyone to take a close look at the crash predictor report because it does tell you what's going to make a difference in safety. U.S. DOT has over 700 federal motor carrier safety regulations, and at the end of the day, maybe only 50 of them really matter when it comes to safety. When you look at all of our past crash predictor reports, these five things show up across all five of them, telling us they probably are the five single most important things to focus on if you want to reduce truck crashes. Of course, I don't tell my wife this, but it turns out female truck drivers outperform men in every statistically significant category. Previously, women just had 20% fewer crashes. It dropped slightly to 14%, but at the end of the day, women are only about 5% to 6% of the truck driver population, even less when you look at over the road, and yet they're the safest population out there. So we really need to focus our truck driver shortage, our truck driver recruitment activities on women truck drivers so we reduce the driver shortage and improve safety overall. I'm going to speed up and get into what I think a lot of people, whether you're talking about cars or trucks, are definitely interested in now. Zero emission vehicles, they're not all battery electric. Elon Musk wasn't the first to come up with a battery electric truck, but certainly it's one of the most prominent. And so I'm going to walk you through some research we did where we used a Department of Energy model, so the government's own model developed by Argonne National Lab to assess in life cycle carbon production, where do diesel trucks fit relative to battery electric and other forms of energy? Well, so the internal combustion engine on the left there, that's today, and so the battery electric vehicle to the right is only 30% cleaner. What's really interesting, second to last there is renewable diesel. That's taking a truck we drive today, instead of using regular diesel, you use renewable diesel produced from garbage oil, from McDonald's french fries, agricultural crop remnants, et cetera, and you can turn it into renewable and it's the second cleanest vehicle out there. So we're advocating to folks, don't assume just because you buy battery electric that you're saving the world. One of the things we discover is you're oftentimes pushing the social and environmental issues to other countries. 85% of the world's cobalt, critical element in lithium ion batteries is produced in the Congo. So the Chinese now own 80% of the Congo mines and the United Nations estimates up to 40,000 children are used in those mines to mine cobalt. So we might sleep well at night in the US, but we're not really looking at sort of the holistic picture. The other thing is this motivation to turn the entire country into electric vehicles comes with a lot of unexpected consequences. We're gonna have to increase US production of electricity by over 40% to accommodate the charging. Some states are really bad off relative to others. California needs 57% more electricity generation if they were to go all electric. This is gonna be problematic when you look at the amount of electricity we produce today versus what's needed. Interestingly enough, from a capitalism standpoint, these battery electric trucks are not gonna do much for the bottom line. A lithium ion battery for a battery electric trucks about 12 to 15,000 pounds, which means I'm gonna lose 12 to 15,000 pounds of revenue. If I reduce the battery size, I don't travel as far. Right now, we're only getting ranges of two to 300 miles at best, where a diesel engine will take me a thousand miles. We have to figure out, are we gonna maybe increase the limits, 80,000 pound limits on the national highway system, or are we gonna have many more trucks needed to move the same tonnage a la a whole lot of new traffic congestion? Again, we have to think these things through a little bit better. At the end of the day, when you talk to the truck OEMs, you're gonna be forking out close to $450,000 for just one truck tractor. The battery life, like you know from your cell phone, it slowly wears down in terms of capacity. It's four to seven years. And when you replace it, it's 85 to $120,000 per battery pack. If you live in the North, the AAA Foundation found out that you're gonna lose up to 40% of the capacity when you hit 32 degrees or colder, which in Minnesota seems to be 11 months of the year, I swear. And again, as I mentioned, a lot of this stuff comes from other countries that are not necessarily allies and partners with the US and our goals and objectives. I get a kick out of anybody in California because California has just passed a law this fall that starting in 2036, you cannot sell any more internal combustion engines, cars or trucks. And yet they have so many brownouts from air conditioning today that Governor Newsom released this past summer a four point voluntary request, which includes don't charge your electric vehicle. So I'm not sure what we're gonna do going forward in the future. I think it'll be interesting. Driver facing cameras really quickly. I told you they're not liked much by truck drivers. When you put it on a scale of zero to 10, even the most favorable responses on the truck driver side are still below two and a half on a scale of 10. So we did study what it would take to increase awareness and even satisfaction with these by truck drivers, given that they do seem to play an important role in exonerating truck drivers when there's a crash. Why is that twofold? One, if I can prove my driver was not distracted, was focused on the road, it's gonna be very difficult for a plaintiff attorney to win a court case. Alternatively, if I quickly look at the driver facing camera feed and discover there was distraction or some negligence on the part of the driver, I quickly settle and save a lot of money in defense litigation costs. So we did confirm in the data working with the defense bar and insurance companies that the majority of times these cameras both exonerate the driver. So majority of time, these cameras are beneficial from a safety and from a financial standpoint. When there is litigation and negligence, we still can document either that we're not negligent or we quickly settle because we were. In each case, the financial benefits are greatest. Real problem for us though is, oops, real problem for us though is a trust issue among truck drivers. We documented so many cases where the light was red, which means the camera's off, but a dispatcher might still say, hey, I like that shirt you're using, wearing. Or women truck drivers in particular had numerous stories about the camera being on when they didn't feel it should be. So again, if we come up with standardized policies, I think we can increase the likelihood that driver-facing cameras are adopted. Marijuana, huge problem. 23 states now, whoa, 24, Ohio just passed it. 24 states legal for recreational, 40 states legal for medical. This genie is not going back in the bottle. In fact, all of Canada is legal. Problem is a lot of truck drivers don't understand that it's still illegal in the federal government size. It's on the Schedule I drug list. And so you discover that truck drivers who find their own state has legalized it, they start eating their brownies or smoking their joints, and then they test positive. Problem with testing positive now, as you know, is there's a federal drug and alcohol clearinghouse requiring you to post positive results. We're up to 130,000 truck drivers on that database who tested positive for THC and have not started the return to duty process. And they're not coming back. They're ditching their CDL, they're driving local, they're delivering your e-commerce packages this afternoon, and they're smoking pot till the cows come home. I don't think that's going to change. And the trucking industry in particular is very, very nervous about what this is going to mean for crashes and insurance rates. So what we see as a likely scenario is that we ultimately down the road, not too far, I'm guessing three to five years, will come up with new technologies that allow us to identify marijuana impairment. You can't just look for positive THC because I might've smoked it two weeks ago and I'm totally fine today, but THC two weeks ago is still going to show up in the test. We need to find tools to identify impairment on the roadside. Obviously I'm going to be green when I blow into the breathalyzer. So these are going to be new and different technologies that are not well known today. And when we do that, when we have those tools at the roadside, that's when I think the feds will release THC from the schedule one. I'll just give you a side note, by the way, so many drivers are buying CBD gummies and they end up testing positive for THC. And that's because the FDA has no quality assurance standards because they're not going to develop quality assurance standards on a drug that's illegal. So again, when they legalize it, quality assurance standards will come into play and we won't have truck drivers testing positive inadvertently. I'm wrapping up now, Pat and Lillian. I just want to let you know that our 23 research priorities from last March, we're looking at expanding truck parking at public rest stops. By the way, something, again, I'm guessing most people don't know. So there's a little known federal law that's 45 years old saying you cannot commercialize public rest areas, which means at least according to the National Associated Truck Stop operators who has a legal brief on this, they believe you're not allowed to build charging stations for cars or trucks at public rest stops. So until Congress and the White House figure out that one, nobody's going to be charging cars and trucks at public rest stops. So we're going to be studying both truck parking capacity and what it would take to bring charging stations to public rest stops. As I mentioned, we're studying the role of women drivers in the industry. What are the big concerns, safety concerns, security concerns, ergonomics, you name it. We'll figure out what those barriers are and develop recommendations to sort of offset those barriers. I won't say much about complete streets, but some of you know that there's a huge movement among smart cities, complete streets. It's revisiting urban planning to make streets and cities more user-friendly, pedestrian-friendly, bicycle-friendly, banning trucks, but then trying to figure out why the store shelves aren't getting stocked. So we're going to work with a lot of American Planning Association planners to say, okay, how can you have your cake and eat it too? How can you have more livable communities, but still have the cargo and the freight needed to keep those people happy? Second to the driver shortage, diesel technician shortage. It's bad now, and when we have autonomous technologies, there's not a school out there today that's training technicians how to fix laser, radar, and video optics, so we'll study that. And then the cost of driver detention. We're moving forward very quickly on this because FMCSA is studying right now, what's the role of truck driver detention at shipper receiver facilities on safety? If they're sitting there not getting paid at shipper ABC, and then I finally hit the road, am I going to drive a lot faster? Am I going to be more distracted, more reckless? So we're studying that also because we have better industry data than the FMCSA does. So our hope is to finish this study, get it to FMCSA, and then ultimately work with shipper receivers to reduce driver detention. I think that's it. Mostly for my comments here, there's dozens of studies, dozens of issues that I didn't cover today. They're on our website, again, truckingresearch.org. Feel free to download them. And Pat and Lillian, I'm available for questions. Any other comments, agreement, disagreement? I'd love to hear it. Yeah, thank you. Great, thanks so much, Dan. Lillian, I'll let you facilitate the Q&A, and then I can do a wrap-up. Yes, absolutely, thanks. Thank you, Dan. So we have a question from Colleen. Is the parking bill part of the infrastructure bill that is looking to be passed? No, the infrastructure laws, the IIJA Infrastructure Investment Jobs Act, that's passed, that's law, that money's available. Believe it or not, when that was being debated in both the House and the Senate, there was a $1 billion dedicated truck parking funding program in there. It got kicked out. The bill went to conference, got added back in, went back, got kicked out. And so there was nothing there for truck parking in the original infrastructure bill. This is a new park, Safe Park Act that came out of Congress last spring. Again, it's passed out of the Transportation and Infrastructure Committee of the House. It'll hopefully go to the full House vote in the next two to three months, in a perfect world, and then the Senate will have to pick it up. $755 billion, and it's dedicated to new capacity. At the end of the day, believe it or not, as big as that number sounds, that's not a lot of new parking capacity, but it's better than zero. So we're very, very happy with the direction it's going. Thank you so much, Dan. And also on truck parking, how is expanding, this is from Maya, how is expanding truck parking spaces going to be funded without cutting driver wages? Oh, it's a great question. It's funded by public sector funding, which of course is tax dollars going into the Federal Highway Trust Fund and the state trust funds. What's interesting, if you look at total tax receipts collected by the trucking industry, the trucking industry contributes 37% of all the money in the Federal Trust Fund, substantially more than the cars. Why is that? Well, number one, diesel is way more expensive these days than gasoline. 30 years ago, that wasn't the case. Number two, we're up to, and this is tongue in cheek, but it's the accurate number, we're up to an average of 6.9 miles to the gallon. So when you're burning that much fuel, you're contributing a lot of money to the federal fuel tax. So it would come out of public sector funds, mostly federal, but I'm glad you asked that because there is new momentum by private truck stops to have reservation systems that you pay for. Now, it seems logical, we pay for reservations all the time everywhere. The big argument the truck drivers would make, though, is if this is truly a safety issue, if we're trying to get trucks off of shoulders and ramps, the last thing you want to do when they're running out of federal hours of service law, as in I'm about to be in violation of federal law if I don't find parking quickly, you're going to turn around and make them pay out of their pocket. And then you go to the trucking companies, so maybe you should pay for the truck drivers. Well, they do make 10 and $12 sort of, call it a per diem available to truck drivers, but now the private truck stops are charging anywhere from 20 to $40 overnight for a space. And that space doesn't come with any amenities, it's just space. So I'm a little bit pushing back on reservation for fee systems, at least until we get the capacity and safety issues resolved. I don't think it should be about economics out of the truck driver's pocket. Thank you, Dan. Another question from Colleen. I just lost it. Here we go. I don't know what the winning lottery numbers are, I get that question all the time. I wish I knew that too. What is meant by deadhead miles? Okay, great. I apologize, there's so many acronyms in trucking and in government, there's so many sort of jargon, quite candidly. A deadhead mile is an empty mile. So I'm running a truck, I just dropped off a load of Frito-Lay potato chips at Walmart. Now I have to drive all the way back home, maybe 1,000 miles, 500 miles. I'm paying the driver, I'm paying insurance, I'm paying fuel, my tires are wearing out, and there's not a darn thing in the back of that trailer in terms of revenue load. So empty miles, deadhead miles are a big hit in terms of a trucking industry's viability. Average profit margins in trucking are up slightly now, but only up to seven and 8%. That's seven and 8 cents on the dollar of profit. So when I'm running deadhead miles, that might be up to 20% of all the miles I run in the United States. One in five might be an empty mile where nobody's paying me anything, but I'm still incurring all the costs. That's a huge opportunity for us. So what you see is a lot of online load boards, and a lot of truck drivers, particularly owner operators and five truck companies, they use these load boards, they drop off marshmallows in Chicago, they go to the electronic load board, and they quick look in terms of who in Chicago wants me to take something, anything, back to Denver or Los Angeles. So C.H. Robinson, you've heard that name, the largest freight broker in the United States, happens to be based right in Minneapolis, St. Paul. They do a lot of that. They try to match empty trucks and drivers with loads and shippers, and when they do that, it's a complete win-win for both the shippers and the truck drivers. Thank you. And so this question is from Ryan. He said, we're now seeing the large verdicts affecting even the freight brokers. Do you think this will push the broker industry for better tools and qualifying who they use to broker loads to? Another good question. FMCSA is looking at this, Congress is looking at this. Double brokering is a huge problem. It just compresses wages and profits dramatically. And one of the problems, though, where I do feel sorry for freight brokers is a C.H. Robinson story. It's probably seven, eight years old now. I legitimately hire at C.H. Robinson, a trucking company, to move goods, and they qualify, they meet all the safety requirements, CSA scores, whatever. They turn around and hire another trucking company, and they have just slightly lower standards for safety, and that trucking company hires a driver who has a suspended license. It's three contracts away from C.H. Robinson, but when that driver hits and kills somebody, as they did in Illinois five, six years ago, C.H. Robinson gets dinged in court for $21 million. I don't know what the easy solution to that is. And we either hire a lot more contractors and lawyers, but the brokers are definitely under the microscope. They're doing what they can, most of them, the good ones, absolutely, and they're not all good. They're doing what they can to lock up good carriers, good drivers, and then manage that paperwork closely. But it's really the contractual issues and the plaintiff attorneys, and then the few bad eggs out there in terms of trucking companies, brokers, and drivers that are causing a lot of these nuclear verdicts. Let me give you one more example that involves a large trucking company on my attree board. They were involved in a crash a couple years ago. They just settled $150 million case where there was so little negligence to no negligence that when the cop showed up, he didn't issue any tickets. He didn't issue a single ticket at this crash site, and Werner realized, partially because of our attree nuclear verdict research, that juries, trial juries, are totally chaotic and they're zealous and excessive. They thought, we can't even trust a jury with this. We should win. There's no negligence. The police will come to court and tell us that, but you can't trust the juries anymore. So they settled for $150 million when they were probably in the right. So that just gives you a flavor of the chaos. Now, the good news is states, Florida, Louisiana, Texas, have all recently passed some civil litigation reform, also called tort reform. So at a state level, we're starting to try to push back, but it's still gonna be a long, hard fight for the trucking industry. Hey, Dan, I've heard you speak also about, because everybody talks about nuclear verdicts, obviously, but the phenomena of the lawyers that have shifted to a volume approach, in other words, the smaller $750 settlements, million-dollar settlements, and then try to do a ton of them. Could you maybe speak to that as well? Yeah, that's good. So when we were doing the nuclear verdict study, we discovered that entirely different business model. The nuclear verdict attorneys, they just have two or three cases. They're all in. They go get litigation financing, and if you don't know that, go Google that. We won't have time for that today. But there are giant venture capital companies that are pouring money into lawsuits to strengthen the lawsuit, and then taking big chunks of it, almost like a 401k or a mutual fund. So they're going out and getting litigation financing. They're winning their cases, and they move on to one or two others. But as you just heard, in doing that, we discovered that there's an entirely different model. And a lot of times, the billboard lawyers, they'll have two or three dozen of these cases. They go right to the insurance company. They tap the federally designated $750,000 required insurance policy, and then they move on very quickly. It's not dramatic. It's not sexy. So it stays below the radar screen of the media and government. And so it's equally costly, but nobody is sort of well aware of it because of, again, low profile, quick settlements. Oftentimes, there's not even litigation involved. What's interesting about the data that we discovered in that is the settlements are coming in at higher levels than if we had gone to court. And again, it's the jury trust issue. I'd rather settle a broken leg at 200,000 instead of the 5,000 it should be because who knows what that jury will come back with. It's just not worth the risk. So yeah, the Small Settlement Verdict Report, again, is on our website. Similar data and similar scary stories, frankly. Are you seeing the impact of cameras and other technology that's been coming in? Are you seeing an impact for the trucking companies to be able to successfully defend and get out of some of these brutal lawsuits and or to avoid crashes altogether? Yeah, they're most beneficial. So the avoiding crashes piece is when we use the video streams for driver training. We see these hard breaks in the technologies. We look at the video, the driver facing, discover, you know, he's texting, he's doing something he shouldn't. So remedial training with the driver is an important safety opportunity for us, but mostly it documents that we were not negligent in the first place. So if you get our driver facing camera report, which also has a lot on road facing cameras, you'll see huge strategies, beneficial strategies for how to use those. But I'll tell you, the defense attorneys are not all big fans of these. You better have very strict policies. You keep the video feed for 30 days and then delete all of it, but make sure that's a formal policy. So you're not cherry picking which ones you save and which ones you delete. If the plaintiff attorneys, you know, they'll look at the crash video stream and they'll say, well, you weren't distracted there. So I want the last six months of that driver's video feed. And then four and a half months ago, they see him look down at his phone and then boom, you're back in court. So have very strict policies on how you use driver facing and road facing cameras. But if you have stable policies and you abide by them very closely, cameras are a win-win for sure. All right, thank you. So this question is from Isabel. Can you please elaborate on what a limit test is and what makes this test privy to California versus other states? Oh, I think if you're talking about the independent contractor bill, AB5, I think I used the term litmus test. So there is a IRS test for what defines an employee driver, frankly, an employee from an independent contractor well outside of trucking. And to meet that litmus test in California, it becomes very, very difficult. An independent contractor, you can't tell them to wear a particular uniform. You can't tell them to drive particular vehicles, use technologies. You can't even require that they check in per se. There's a lot of challenges. So I'd urge you to go look up AB5 and look up the litmus test for what an employee driver is versus an independent contractor. I'll give you the greatest irony in the world of AB5. The assembly bill is what the AB stands for. They started that bill deliberately and exclusively targeting Uber and Lyft drivers. By the time the bill was passed, Uber and Lyft drivers were exempt and it was focused exclusively on trucking and freight. So I don't know what kind of lobbying the Uber and Lyft folks do, but they did a great job in California. Thank you. And another question from Isabel, with AI technology becoming more advanced, does it impact the motor truck industry? For example, helping with mitigating use error perhaps? So the question is, how will it be used in the industry? Yeah, is it becoming, yeah, yep. So artificial intelligence, I'm going to give you my spin on it. It's a buzzword. Everyone grabs it. If you're not talking about AI, you're passe and you're out of touch. So everyone's talking AI. And really what it is, is it just the next evolution in machine learning, which we've seen in the last decade, but it's the next evolution in machine learning, which we've been doing for a decade. You know, computers get smart, they learn their mistakes, they collect up lots and lots of historical information so they can predict things forward. So AI is not something that just happened back, you know, June 26th, 2022. It's just the evolution of sophisticated computing and machine learning. And they put words like neural networks and all kinds of stuff on it. There's no question that these active safety systems I mentioned earlier are extremely sophisticated. In fact, some of the cameras have quote unquote AI in them, but really what they are, is they're learning to document identical behaviors, redundant behaviors, and then correlate those behaviors like the driver looks down at his lap. And the correlation between looking down at your lap and having a crash is, you know, 180%. Every time you look down at your lap, you get a warning. So AI, if you wanna call it that, is starting to permeate. I will tell you, I'm a little nervous because even with autonomous trucks, according to US government data, 89% of all crashes are associated with human behavior, 11% technology in vehicles. We're gonna see a big flip-flop of that. You know, thanks to error codes and sensors that are out of calibration, you know, the driver is gonna be completely immune. He'll be asleep in the back, the truck's gonna crash, and instead of suing the driver and the trucking company, we're gonna sue the computer chip manufacturer. So nothing's perfect, and we have to keep that in mind when we apply AI and active technologies, in my opinion. Thank you. This question is from Tim. How is the industry reacting to California's proposed ban on allowing out-of-state internal combustion engine vehicles from entering the state for more than 72 hours? Can the feds overturn this since it will disrupt interstate commerce? It's another great question. You know, there's a clause in the US Constitution, the Interstate Commerce Clause, that everyone's sort of scared to leverage today. They're scared to say you can't preempt federal law, you can't preempt the US Constitution, but everyone's scared to take on California, so we're letting them do this sort of thing. Secretly, with great apologies to people on this call from California, I hope the trucking industry dramatically raises the rates, or in some cases, we've seen trucking companies say, I'm not gonna operate in California anymore, which will drive up costs. And I think when they get a taste of the consequence of that, they'll come up with some more moderating strategies. The trucking industry, we're huge advocates of improved air quality, reduced carbon production, et cetera, but we just want an objective. Tell us that we have to meet some goal and let us come up with a creative, strategic way of doing that rather than mandating very clear technologies and approaches. I'll give you one last story because we're almost out of time. Derek Leathers of Warner Transportation went to Peoria, Illinois to build a new truck terminal. He submitted his blueprint to the city, and just to be sort of proactive, he added 50, five, zero, 50 truck charging stations to the blueprint. Peoria came back to him and said, what the heck are you building? He said, a truck terminal. They said, what's this electrical infrastructure in here? He said, charging stations for 50 trucks. They rejected the blueprint because it was a greater daily electricity draw than the entire city of Peoria, Illinois for 50 trucks. They have four and a half million large trucks, 20 million commercial trucks. This country's not quite ready, and so we need to slow down and take an incremental approach, in which case we can all work together and figure it out. All right, thank you. And of course, I don't think we could have this presentation without discussing the topic of CBD and illegal marijuana. With the driver shortage issue, lack of driver experience, new generation of drivers, how should companies handle the drivers who are using CBD or even legal marijuana recreational use? From Chris, and he's like, just terminate them? Well, first of all, if they test positive for THC, they have to go on the drug and alcohol clearinghouse. That's federal law. Now, if I were a trucking company, the first thing I'd do is I'd warn the drivers, particularly drivers who love their job, to be very careful of CBD because nobody is manufacturing with clear standards between THC and CBD. It's such a gray area. You could accidentally come up positive and then boom, you're out of a job. I would work as an industry and work with government to come up with impairment standards. And then, well, this doesn't reflect my personal beliefs. I think we need to manage THC and do that by taking it off of schedule one and developing impairment strategies. Beyond THC, I think it's insane that folks like Oregon and Washington are looking at thrumes, legalizing psilocybin. That is a natural form of LSD. And the idea that we're gonna start to legalize what I would describe as relatively hardcore drugs is starting to get beyond seen. And that's just my editorial comment. I apologize. Thank you very much. We have our last question from James. How have the changes in California affected getting cargo in and out of the port? The port of LA Long Beach? Well, as you probably know, you're gonna have to have an electric truck very soon at LA Long Beach. It's raised the cost. I've also, I hate to go after collective bargaining, but the labor costs at LA Long Beach are almost sinking them. We've seen dramatic shifts to the East Coast, to the Houston Ship Canal. And it's all because it's so difficult because of congestion to get in and out of the port. Now I have to have a $400,000 truck to get in and out. And the gantry cane operators making 380,000 a year for three days of work. So they're doing this to themselves. I don't know what their solutions are. I would say California these days is the tail wagging the dog. And I think we just need to turn California into case study in some cases of just what not to do in 49 other states. I'm sorry, that's how Dan Murray sees it on a Tuesday. All right. Thank you so much. That's all the questions we have. Thanks so much for sharing your expertise with us today. I enjoyed it. Thank you very much for having me here. And I know, Pat, you also wanted to thank you as well and that you wanted to add some closing comments before we do our gift card. Yeah, absolutely. Dan, thanks a lot. I think for me, the big takeaways are while the presentation and the topics seem very relevant to people who are underwriting auto liability and that type of thing, you have to remember that all of these impact the cargo that's in the truck. So driver shortage, less experienced drivers rolling down the road. They're more likely to get into collision upset overturns, which is the leading cause of cargo damage. Truck parking. A truck parked on a, you know, somewhere other than a legitimate truck parking space is more susceptible to being hit, is more susceptible to theft, is more susceptible to any of the other things that could impact the cargo in the truck. Hey, Pat, you know what, now that you mention it, I didn't include a report we just released last month that's probably one of the most important reports for you, predatory towing, because we documented predatory towing in all the states, you know, best cases, worst cases. Many of these predatory towing companies are locking up the truck trailer and all the cargo in it and sitting on it with daily charges up to $150,000 per invoice or more. So if you grab the predatory towing report, it does talk about, you know, model language, model legislation that'll protect cargo and truck drivers from predatory towing practices, which are just getting crazy. Exactly. Just, you know, one other example. And, you know, Dan spoke about the shrinking excess liability limits and how expensive liability insurance is getting. Well, and how some of the trucking companies out there are starting to shrink the amount of insurance they're buying, which opens them up to more financial issues. They're cutting corners there. How else are they cutting corners that can lead to financial issues? I loved the crash predictor behavior statistics. If we can correlate this with some of the CAB data that I know the cargo underwriters are looking at, you can perhaps, you know, because the whole goal is to pick the best of the best truckers, right? The ones that are doing, you're never going to eliminate losses, but what you want to do is position yourself as an underwriter to be riding those truckers that are doing everything within their power to run a safe trucking operation. And that is how we can use this research from ATRI. And just really thank you, Dan, for everything your group does and for coming to speak with us today. Absolutely. I appreciate it, Pat. I'm happy to come back anytime. Again, go to truckingresearch.org and join the contact database and we'll push everything out to you when it's published. If you have any links to send us, we can also add it directly to our email, follow-up email that we send out to all of our attendees. Yeah, I think I'll send you the predatory towing report because that's got to hit right in your backyard for you folks when you think about the cargo being locked up for weeks at a time. Absolutely. Well, thank you so much, both of you. Really appreciate it. This has been really informative. And as you see, we had lots of questions from the attendees. So it was very interactive and engaging. And it's really tough to pick who would get the $25 Amazon gift card. So there were a number of questions, and I'm going to go with Tim, who asked about the ICE vehicles in California. Okay. Congratulations, Tim. Well, you know, $25 could buy a lot of brownies for the guy who asked about the CBD question. As long as he's not driving a truck. And with that, we also, for our attendees, we really appreciate your participation today. We have a link to the survey to provide your feedback. It is in the chat tab. So please click on that link and fill out the survey. It'll just take a moment of your time. And thank you all. This ends today's webinar. Thank you, everyone.

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changing transportation landscape

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Inland Marine Underwriters Association

driver shortage

truck parking challenges

safety technologies

autonomous vehicles

litigation impact

AI technologies