The Pace Logistics Lab

Exploring Today’s Marketplace Through the Lens of Logistics

Risk Management 101: An Interview with Brian Jungeberg (VP Transportation, Risk Strategies / Risk Management Consultant for Pace)

If you take in the logistics industry news,  you are likely to also have nightmares about crumbling infrastructure, driver shortages, and the human workforce being taken over by robots.  In an effort to keep our heads in the game and to educate ourselves about opportunities and risks in our industry, Keeping Pace sat down with Brian Jungeberg, VP Transportation for Risk Strategies.   

Following is a transcript of our interview.  

Keeping Pace:  What are some of the important trends and issues regarding risk management that companies like Pace are facing in the logistics industry? 
Brian:  Adjusting to deductible and retention increases, the use of technology in a meaningful, impactful way, proactive safety and training, and executing follow-up on these constantly.  
Keeping Pace:  What role does cyber-security play as it relates to our industry’s vulnerability? 
Brian:  EVERY industry is vulnerable. I think transportation and logistics companies tend to believe they do not have “cyber risk” because they aren’t doing a ton of financial transactions daily, but every business in every sector is at risk of cyber security breaches, hacks, viruses, etc.
Keeping Pace:  What are your thoughts on the impending driver shortage – some analysts project a 100K shortage by 2022. Is this a risk to the health of the industry?
Brian:  The biggest part of the driver shortage that concerns us is the inevitable influx of drivers who do not have good, solid driving experience. The lack of experience inevitably leads to more on the road incidents and accidents.  
Keeping Pace:  Some have concerns about greater regulatory oversight going forward. What are your thoughts on how greater oversight may impact the industry positively and negatively?
Brian:  I think greater oversight tends to hurt the largest and smallest companies, but the middle of the pack (in terms of financial size) are able to flourish. Personally, I don’t believe greater regulatory oversight is necessary for your industry, but I also believe that the IC model has been thrust into the spotlight with Uber & Lyft, so the government sees an opportunity to capitalize on what it believes is lost revenue from the IC model and go after it. That is a negative for everyone, in my opinion.
Keeping Pace:  There’s talk of a “crumbling” infrastructure. How might that impact the industry as a risk factor? Does bad infrastructure always lead to higher costs due to safety issues?
Brian:  Bad infrastructure will lead to higher risk factors, more claims, and higher costs. Road conditions are an important element in any incident, so if that is a poor element, it would only increase the impact it has in claims. I’m not sure I buy into the notion that the infrastructure is “crumbling,” but there are definitely some areas of the country that need some TLC and quickly!
Keeping Pace:  Do you have anything to add about FMCSA regulations compliance and record-keeping?
Brian:  From the insurance and risk management side – ELD is pretty cut and dry. Adhere to it, and it increases your chances of the safest operation you can have. That said, changes have been proposed and are being reviewed, which would change the game for an operation like Pace. Again, even if the ELD rules change, adhering to them is an absolute, but I would encourage ANY of my clients to help let the data guide you. So if you saw an increase in incidents with your drivers occurring in the last hour or two of a shift, then investigating the ability to have a lower # of hours of service threshold, as a practice of Pace, might make very good safety and financial sense.
Keeping Pace:  What risk management issues are associated with loss prevention, fraud, abuse, and theft as it relates to moving inventory for our customers? Who typically bears the responsibility of risk management? The customer or the logistics company or both?
Brian:  Obviously all of the items mentioned adversely affect the customer and Pace. Hiring “good character” people and reinforcing a “good character” culture both go a VERY long way to ensuring those type of issues don’t happen. I believe Pace has that type of culture. You hire carefully, and you expect that each and every employee is going to do the right thing(s) each and every day. That thinking, shared across a team, keeps the “bad character” losses -fraud, abuse, and theft – from occurring. I think Pace bears the responsibility of cultivating a culture of “good people”, and it only strengthens the client experience with you if that is happening!
Keeping Pace:  How does risk management play a role in measures taken to screen, hire, and train W2 drivers?
Brian:  A good risk management approach and program utilizes all three of these to gauge a potential and new employee’s ability to work for Pace in a safe and effective way. Screening backgrounds and motor vehicle records give us an indication of how they have conducted themselves in the workplace and in a vehicle. Training once aboard gives us a glimpse at them as learners and safe employees, whether in an office, warehouse, or vehicle. If those in management positions get a sense that someone isn’t going to live up to the risk management standards and principles of the company, then it is best to let that person go quickly than to have an incident or accident inevitably occur later involving that employee in question.
Keeping Pace:  What are the risks in screening, choosing, and ensuring safety and compliance with an IC fleet? 
Brian:  The biggest risk is violating labor law while aiming to safeguard yourself, but good labor attorneys and resources (such as OpenForce – a vendor to Pace) can minimize the risk and maximize the safety & compliance.
Keeping Pace:  What are current risk management trends as it relates to recruitment and onboarding drivers? ROI?
Brian:  Stricter guidelines with respects to moving violations, age of drivers in certain sized vehicles, and safety training during onboarding are the latest trends we are seeing. All are meant to reduce claims frequency and severity, so the ROI is excellent to all parties if they effectively reduce or eliminate claims.
Keeping Pace:  What are some powerful ways to educate Pace employees and drivers about safety measures? 
Brian:  Make it part of your culture. Live safety on a daily basis. Implement the safety plan and constantly reinforce it with all employees. Keep reinforcing it and sending the message in all sorts of different ways to keep it fresh and bright with staff. Videos from top management and staff of all levels are great, quick ways to educate and entertain, and without some entertainment, people may not watch or read!

Brian has been in his current role with Risk Strategies for the last two years and in the same role for seven years prior with Brightstone Insurance Services (acquired by Risk Strategies).  Brian has consulted with Pace on risk management on an on-going basis. Risk Strategies approaches risk in an different manner.  In their words, their approach is fast, smart, and innovative.  In our industry, with technology, business models, and even regulations changing rapidly, we need to stay ahead of the curve.

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