How Safety Rating affects company’s profits?

If your goal is to become rich in the US logistics market, the first thing to learn is the rules and schemes by which this market operates. It is important to understand that the American business system is based on one simple but important principle: «The rules are the same for everyone!». To earn money, you have to follow them, to deceive the state or to disobey the law will not work… exactly the opposite, it will be more expensive, because the reputation of the company in the USA the most important!

That’s why most truckers care about their company’s Safety Rating, which directly affects the level of earnings.

Safety Rating also called carriers’ safety rating. Assessment of the extent which meets the safety standards required by FMCSA (Federal Motor Carrier Safety Administration). FMCSA is a civil service that basically controls all cargo transportation activities in the United States.

How exactly do you form the Safety Rating?

Each violation of the rules done by the company corresponds to certain points and the more serious the violation, the more points are issued during the inspection, both to the driver and to the firm.

After verification, one of the three security ratings is assigned respectively. If the unsatisfactory rating becomes final, FMCSA will issue a termination order from the company. Any carrier who violates this order will be punished.

There is also such a thing as the severity of violations. Every month, information on FMCSA inspections is updated and the sum of points of violations is divided by the sum of points of serious violations. Thus the sum of the rating of companies on a certain index is calculated.

Company growth and profit

Company’s growth is directly affected by the inspection of violations, as well as the lack of awareness of both the driver and the head of the track business in terms of this process. Moreover, company’s wellbeing can be indirectly influenced by management and practices that are applied within the company. And, of course, unprofessional Safety – manager.

It is also important to understand that Safety Rating directly affects insurance and profits. How exactly? Well, for starters it has a bad effect on working with brokers.

Brokers who consider the cargo carrier’s application to update insurance, must be sure to check his safety rating. Based on the FMCSA inspection rate for the previous year, they analyze the company’s index of violation and then decide what price to offer. If you have a zero Safety Rating, then the insurance company will offer lower rates when updating the insurance.

Also brokers always check the “safer” – portal of the cargo carrier. In order to understand how reliable the carrier is, how many miles carrier passed in a year and whether it is possible to trust any cargo to this particular company?

Thus, Safety Rating influences what kind of cargo you will give the broker. If the rating is bad, it can give more expensive load, or even refuse to offer them, because you are considered a potentially unreliable carrier, which may soon close, and so it is not profitable to build relationships with you.

To put it simply: none of your business partners, whether brokers, factoring companies or insurers, will liaise and cooperate with the firm that FMCSA defines as an unreliable carrier. The direct measure of reliability is as we remember the Safety Rating.

That is why it is considered one of the most important indicators of the trucking company. Likewise, a good Safety Rating will help you get as many customers as possible and earn as much money as possible.

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