Conexionado

Industry

When this Inquiry examined earlier reports and inquiries into the long distance trucking industry it was rather surprised by the substantial amount of evidence linking commercial

practices and safety performance. The association between commercial/industrial practices and safety in the long distance trucking industry had been repeatedly identified in reports and inquiries over many years. In addition to factors such as driver fatigue/the concentration required to drive large trucks over long periods, poor road conditions, inadequately maintained trucks and ‘cowboy’ drivers; reference has been made to a range of commercial/industrial practices and competitive pressures. These include intense competition for loads leading to depressed freight rates, tight schedules imposed by freight forwarders (themselves under pressure from load owners or consignees) and reward systems (notably per kilometre rates and delivery time bonus/penalties) that encourage overwork and speeding. This Report felt it necessary to summarise findings of earlier inquiries and reports to show that the evidence collected in the course of the current Inquiry in large part confirms what should have been known, indeed has been known, but which has not been acted upon in the past.

As noted by Hensher and Battellino (1990) over a decade ago these commercial/industrial issues had been repeatedly raised over many years, including in the 1984 Report of the National Road Freight Industry Inquiry. The National Road Freight Inquiry had been established to investigate industry efficiency (including competition from rail freight) and practices, truck financing practices and the involvement of heavy vehicles in road crashes. This broad brief enabled the Inquiry to investigate the link between commercial practices and safety. The final report was very clear about the bargaining power that consigners and shippers could exert over freight forwarders and transport operators in relation to freight rates. Just a few quotes illustrate this point.

Large consignors, through their ability to obtain competitive quotes, are able to lower the rates they pay by exercising their considerable bargaining power over forwarders (May et al,

1984:30).

Large shippers may negotiate discounted (or contract) rates well below the schedule rate, especially when the individual forwarder is faced with actual or potential competition for the business in question (May et al 1984:32).

It should be noted that when this report was written the residual effects of a number of earlier regulatory controls and impediments to competition within the industry (including some that the Trade Practices Act introduced a decade earlier had yet to effect) were still being felt. Looking specifically at the relationship between commercial practices and safety the Inquiry Report noted that not only was flouting of speed, weight limits and other regulations widespread but this was hardly surprising given the commercial advantages to do so. It noted that an instance of overloading of one tonne per trip might yield $1500 in additional revenue at the risk of only expecting to pay a fine or around $250 if the offence was detected (May et al 1984:184). In terms of commercial pressures the Report noted a survey of long distance owner/drivers by the NSW Freight Transport Industry Council which concluded they were:

…overloading and speeding in order to get and keep regular work with companies. They are working excessively long hours and attempting to cut costs on comprehensive and personal insurance and sometimes on vehicle maintenance (WD Scott, 1984 cited in May et al,

1984:184).

The Inquiry also heard suggestions that ease of entry of entry into the industry, including the lending practices of finance companies (discussed below) intensified competition for work and downward pressure on freight rates (May et al, 1984:197).

Too many of the entrants to the industry are insufficiently aware of the capital requirements that are usually necessary to stay in operation. The safety implications of this are developed

elsewhere and are the primary motivation behind the Inquiry’s recommendations in relation to quality licensing which tackles the problem of the poorly prepared and uninformed operators (May et al 1984:204).

The Report identified two major structural flaws in existing arrangements for maintaining safety in the road freight industry.

Firstly, the detection and enforcement system focuses almost entirely on the driver of the vehicle, and exclusively so in the case of the long distance owner-driver. The Inquiry however received consistent evidence that the freight forwarder, agent and broker also have a considerable role to play in influencing the observance and non-observance of safety regulations. Secondly, the existing system turns solely around the detection of breaches in specific cases on the road. As such it does not attempt to monitor the performance of operators over a period, although this is the most effective way to gauge safety behaviour, and cost-effective devices and systems appear to be available to permit this to be achieved

(May et al, 1984:166).

To resolve these problems Inquiry recommendations included a substantial increase in fines for breaches, introduction of short licence suspension, the use of tachographs and the introduction of an operator licensing system that would include freight forwarders, brokers and loading agents. The aim of operator licensing was to lift the standards (including business skills) that affected safety and a key role of the licensing body would be to identify persistent offenders who could then be targeted with effective sanctions, including suspension of their operating licence. These recommendations were not acted upon at least partly due to fierce resistance to them on the part of the industry. This might well be regarded as a tragic outcome in the light of what occurred over the next five years, culminating in the Cowper smash and a final widespread acknowledgment that the industry was running ‘out of control.’ The crisis of the late 1980s/early 1990s generated a new round of inquiries and reports which drew attention to the impact of commercial practices on safety although once again none of the regulatory changes brought in to address safety effectively addressed these issues.

In its 1989 report, Concerning Alert Drivers and Safe Speeds for Heavy Vehicles, STAYSAFE pointed to reward and other pressures on drivers and argued that operator accountability could only be improved if the incitement to misbehave was addressed:

14.1.1 STAYSAFE received substantial anecdotal evidence of drivers being rewarded for achieving delivery times which necessitated speeding and inadequate rest, and of drivers being penalised for failing to achieve such deadline. In some cases, contracts threaten penalties if deliveries are late without adequate excuse.

14.1.2 Some drivers claimed that they were told by owners or freight forwarders “get it there by 7.00 am, or don’t bother to come back for more work.” The “just-in-time” (JIT) manufacturing strategy was suggested as possibly contributing to this problem. STAYSAFE accepts that such practices probably do occur and sees them as very difficult to stop.

14.1.3 STAYSAFE understands that an exploration is in hand within the Roads and Traffic Authority of means of prosecuting unscrupulous freight forwarders. STAYSAFE considers

that rewards or penalties inciting illegal operations should themselves be clearly illegal, and those offering such inducements, regardless of driver explanation, should be subject to substantial penalties (emphasis in original, STAYSAFE, 1989).

As far as this Inquiry is aware the mooted RTA response never eventuated nor was there any other regulatory response to this strong recommendation.

Within a year a similar raft of issues was raised before the Coronial Inquest into the 1989 Cowper tragedy including unreasonable trip schedules, arrival time penalties/bonuses, requiring drivers to load, and using refusal to renew contracts to pressure owner/drivers to engage in unfair dangerous practices. The Coroner found evidence of excessive demands on drivers almost wholly anecdotal but added that the truck driver causing the incident that led to 20 deaths was:

Paid a fee per trip plus a fee per kilometre travelled. The more trips he fitted in, and the further he drove each day, the more he was paid. Such a method of remuneration is decidedly unhealthy (Coroners Court of NSW, 1990:27).

It should be noted in passing that despite this observation 10 years later trip-based payment systems remained pervasive in the industry, frequently applying to employee drivers as well as owner/drivers. It has been linked to more recent serious incidents such as the Blanchetown road crash where a truck driven a by a fatigued driver ploughed into several cars killing six motorists. The Coroner’s comments echo those of his Cowper disaster counterpart.

The extent to which the current system, whereby drivers are paid by the trip, or by the kilometre represents an incentive to break the law (the evidence from this inquest certainly proves that it does), and whether it is possible to design a different system which provides drivers with more incentive to comply with the law, and with safe work practices (cited in

House of Representatives Standing Committee on Communications, Transport and the Arts, 2000 page 96).

It should be noted that the driver in this case was an employee not a subcontractor. However, what is perhaps notable about road transport is the similarity in payment systems between many of those in either category, narrowing the differences that might otherwise be expected. The Report will return to issue of payment by results systems. At this point it is worth noting that the Coroner identified a situation where the driver and other drivers employed by the same company were regularly doing trips that should take two and half days (if logbooks were properly abided by) in a day and half. Drivers were encouraged to undertake trips in this time by a mixture of reward pressures (receiving $440 for Adelaide/Sydney return trip) and scheduling pressure imposed by the company (in relation to the Blanchetown smash an early arrival was specified on both the written manifest and on an envelope). After interviewing a range of drivers employed by WRB the Coroner formed the view that, despite management claims to the contrary, unrealistic schedules that breached both road transport and OHS legislation were the norm. Describing a typical Adelaide/Sydney trip time of 17 hours Coroner Chivell observed that the company:

…had made no effort to provide accommodation or other systems of work with which drivers could comply with their statutory obligations, apart from during one period when they were carrying "time sensitive" freight. At this stage, they were obliged by contract to run a "shuttle service", and their drivers were provided with accommodation at Goulburn, and later at Golgol. This practice was discontinued when they lost the contract (Coronors Court of South

Australia, 1999 page 22).

In many respects the Coroner’s findings in relation to the Blanchetown incident mirrored earlier comments of District Court Judge Lowrie when sentencing the truck driver involved (Brian Douglas Snewin) on a charge of causing death by dangerous driving. It is worth reproducing some of these comments, as they highlight the interconnection between low pay/trip based payment and scheduling pressures/long hours with safety, and the judge’s view that these problems were by no means atypical.

It is not the first time I have heard how wage rates relate kilometres driven and the physical demand at times put on drivers by irresponsible employers to comply with schedules. I am

mot surprised with those submissions. It was said that you worked for one major trucking company, an interstate company, and found you could not financially survive because of the long hours and the small amount of remuneration and, of course, not assisted by vehicle breakdowns.

I am told you resigned from a number of positions because of the nature of these driving schedules and turn around times and delays. You clearly could not cope financially. Again I have heard of these difficulties with these so-called log books. It was mentioned that in one State, for instance, there is no requirement for log books and subsequently there is the impossibility of monitoring driving situations.

These matters really must be addressed by not only legislation but the industry…The details of your driving in the prior week from Adelaide to Sydney are simply unbelievable but no doubt you accepted the tasks as directed by management of this firm. And, indeed, looking at those hours and schedules it always spelt disaster.

I am told it was a common practice with this company to supply you with stimulants. When I look at these schedules…It is no wonder you had no concentration on that day or the next day…The conduct of those companies and the schedule is extremely culpable conduct (R v Brian Douglas Snewin, 1997 sentencing decision at pages 1-2).

Returning to the Cowper inquest the Coroner there drew attention to other commercial practices that impinged on safety. Turning to the issue of chain of contractual arrangements from those offering the loads to the actual driving of truck by a driver using a prime mover and trailer (with several worn tyres at the time of incident) owned by other parties, the Cowper disaster Coroner observed:

It is those drivers most dependent on loading contractors for their livelihood who are susceptible to unreasonable demands.

In this regard it has been submitted that these loading contractors should themselves be licensed, so that the opportunity by them of breaches of safety laws could result in they themselves being punished, and having their own licenses suspended.

Both Mr McPhee and Mr Robertson of the Road Transport Association were critical of loading agencies, which act as middle men, getting jobs done as cheaply as possible and taking his margin. It often follows that the owner-driver who is so dependent on them is forced to his own loading in addition to his own driving, so adding to the risk of fatigue. The evidence at the inquest showed that the arrangements between the deceased truck driver and the owners of the prime mover and semi trailer were very loose, and not conducive to safe, careful driving. Tragedy resulted.

A case has been made out for the licensing of loading agents to ensure that they carry out their work in a responsible way, with a concentration on driver welfare as well as profit margins.

It has been reported (SMH 29-2-1990) that at a road safety summit organised by the major trucking companies the setting of unrealistic delivery schedules was criticised, and it was decided that freight consignors should be made accountable for checking that drivers can make their journeys with speed and time limits.

In view of other recommendations made, I do not recommend that action in this regard commence immediately, but rather that the RTA give the matter earnest consideration with a view to implementing such a scheme in the future (Coroners Court of NSW, 1990:28-29).

Again, as with the 1989 STAYSAFE report, the Inquiry is unaware of any action being taken in this regard. Trip-based payment remains common throughout the industry, consignors/loading agents were not licensed, unrealistic delivery schedules remain a common source of complaint (see below) and subcontracting arrangements remain loose and unregulated (at least when it comes to enforcement).

Much of the evidence collected by various inquiries linking safety to commercial/industrial practices was anecdotal although it should be added that this label could equally apply to most evidence tendered to inquiries, coronial inquests and the like via written or verbal submissions. Further, given that drivers and other parties had made these claims over many years would suggest, at the very least, that they warranted serious investigation.

However, it would be entirely wrong to believe that the evidence on the effect of commercial/industrial practices on safety is either entirely anecdotal or only based on testimony given to inquiries or coronial inquests. Indeed, the first attempts to systematically measure these effects were undertaken more than a decade ago. In 1990 Hensher and Battellino published a paper entitled ‘Long-distance trucking: why do drivers speed’ which specifically tested a number of hypotheses about the impact of commercial/industrial conditions and practices on driving behaviour. Their evidence was derived from a pilot survey of 46 drivers (31 employee-drivers and 15 owner/drivers) undertaken at a outer Sydney truck terminal in September 1989. In terms of age and level of experience the survey sample revealed that most had been driving trucks over 10 years. Hensher and Battellino (1990:541) observed that this profile, as well as details on earnings was not consistent with media portrayals of drivers as being in the industry for ‘quick rewards’ at the expense of safety. It should also be noted in passing that this workforce profile is consistent with the survey evidence collected for this Inquiry (see Appendix 3) and other (large and representative) surveys (see NOHSC, 1992 and Williamson et al, 2000). While the media no longer emphasises the ‘quick returns’ scenario (hardly surprising given driver complaints about they capacity to survive), a parallel argument has been mounted by some observers over the last decade to suggest owner/drivers would work excessive hours, speed etc even if their payment levels were improved. This contention, commonly raised in relation to the debate about minimum freight rates, is predicated on a ‘quick returns’ view of owner/drivers which, while it may apply to some, does not match up with the road transport workforce. If owner/drivers, and other drivers for that matter, were primarily driven by a desire for ‘quick returns’ most would have left the industry many years ago (and average length of employment in the industry would be far lower).

Returning to the issue of commercial/industrial practices, Hensher and Battellino (1990:542- 543) found little evidence of imposed tight schedules on longer trips. However, drivers made constant reference to the requirement that shorter haul deliveries between Sydney/Melbourne and Sydney/Brisbane had to be overnight and the reasonableness of schedules was significantly affected by time spent getting loaded/unloaded. With regard to the latter, drivers complained of having to arrive early to avoid being caught in queues at warehouses, freight depots or manufactures; the need to travel across the city in peak hour or make multiple drops upon arrival; and preference given local/intra urban trucks in unloading. For the freight forwarder, warehouse or load recipient giving preference to intra-urban trucks was logical given that these drivers were being paid by the hour and time spent waiting therefore represented a cost. On the other hand, long distance drivers were typically paid on a per-tonne or per-trip/kilometre basis without demurrage, so delaying unloading of their trucks imposed no direct cost on the client. For owner/drivers in particular, delays at loading also increased the risk of missing another load or delivery time (Hensher and Battellino, 1990:543-544).. The weak bargaining position of owner/drivers in terms of accepting loads at particular rates, usually offered on a take it or leave it basis by load owners or transport companies, was

exacerbated by an over-supply of drivers. Disputing the view of an earlier (1979) inquiry into long distance trucking by the Bureau of Transport Economics that argued over-supply was a short-term disequilibrium problem that would ultimately correct itself, Hensher and Battellino stated:

Our investigations in 1989 indicate firstly that there is possibly still an oversupply of drivers in the industry, suggesting that this is not a short term disequilibrium problem, but a structural feature of the industry, and secondly that it is not necessarily only the owner driver