Transportation Industry Advancements Come with Some Risk

Risks Faced by the U.S. Transportation Industry in 2021

By and large, Advancements in technology and regulatory compliance have helped the U.S. Transportation industry. However, the COVID-19 pandemic has added to a list of the pre-existing risks the industry faces. Market shocks, cyber exposures, worsening driver shortage, and deteriorating infrastructure pose continual challenges.

Here are the six major risks faced by the American transportation industry in 2021.

Persistent Shortage of Drivers

A major risk for a transportation company is staffing problems. By 2022, the trucking industry will be grappling with a shortage of over 100,000 drivers, according to the American Trucking Association. The increasing demand driven by the expansion of e-commerce will only exacerbate this staffing issue. Moreover, the average age of truck drivers in the U.S. today is 56 years old. An older workforce typically has more health issues, and therefore utilizes more employee benefits, resulting in higher employee costs. One of the reasons for the shortage says Joe Bukovsky, Vice President, Head of Trucking and Transportation Programs at PMC Insurance, “is that due to Covid, it is taking longer for students to complete their CDL license.  However, the increasing shortage of drivers was noted and was an increasing problem several years, even before Covid struck.”

Increased Regulatory Compliances

Legislations meant to address problems in the transportation industry are also, ironically, some of the biggest risks you have to consider when weighing the pros and cons of business growth. Trucks now must be equipped with tracking devices that record the number of hours that the drivers spend on the road. While this has helped combat driver fatigue and reduced the number of accidents, it has also increased training costs and can lead to delayed deliveries. Large trucking companies also have to comply with the Food Safety Modernization Act (FSMA), which requires motor carriers transporting food to follow stipulated sanitary best practices. Though a good piece of legislation, it also adds weight to the regulatory compliance burden on trucking businesses.

Ever-fluctuating Demand

There is no clear-cut economic general principle on how freight growth relates to economic growth, according to McKinsey & Company. For instance, despite the robust economic activity in 2019, the pricing and demand in the trucking industry fell to 30%, and thousands of trucking businesses went bankrupt. This uncertainty has been exacerbated by the COVID-19 pandemic and the resultant shifts in supply chains and imposed restrictions. With no clarity on when the restrictions will be lifted, trucking companies are reacting by creating safe workspaces, preserving cash, adjusting the workforce size to suit the shifting demand, in addition to providing humanitarian aid. “The fluctuating demand and uncertainty, mixed with a driver shortage, a pandemic, and the rising costs of freight rates and transportation costs makes things very difficult for trucking companies right now,” adds Bukovsky. “The pandemic taught us how important trucking is to this country, so we need solutions for the industry to flourish.”

Outdated and Poorly-maintained Infrastructure

The highways and byways in the U.S. are increasingly becoming dangerous for road users. Issues that range from construction delays to signage issues to asphalt deterioration hinder fast delivery of goods in addition to increasing crashes and personal injuries. According to the American Society of Civil Engineers, 43% of our public roads are in poor or mediocre condition. The result may lead to delayed deliveries, ruined perishables, and canceled contracts.

Increased Cybersecurity Risks

Greater reliance on sensors linked to the Internet of Things, as well as semi and full automation of vehicles, are likely to heighten cyber transportation risks. These technologies may enhance safety and alleviate some of the persistent problems such as driver shortage. However, according to Infosys, transport companies must build robust cybersecurity infrastructure to counter the increased cybersecurity risks.

Increased Vulnerability of Physical Assets

The increased reliance on fleet telematics programs that track the status, condition, and location of physical assets increases the exposure to cybercriminals. While a cyber breach may lead to exposure of private data, an even bigger risk for transportation firms is the possibility of hackers physically damaging a vehicle or its cargo.

Transportation companies should be wary of these risks and more importantly, take the necessary measures to mitigate them.

At PMC, we provide specialty Workers’ Compensation programs in Trucking and Transportation. For a consultation or to discuss a customized Workers’ Compensation solution contact Joe Bukovsky at

By PMC Insurance Group

Since 1996, PMC Insurance Group has worked to help independent agents grow their client base by offering workers' compensation solutions for a wide array of businesses. As one of the most distinguished workers' compensation wholesalers in the country, we have the tools and resources to help you create coverage programs for both small businesses and large accounts.