5.0 Implications for the Motor Carrier Industry, States, and CVO in General
CVISN appears to have the potential to help States and motor carriers achieve significant benefits. In the 2006 business case, motor carriers and the trucking industry in general were anticipated to benefit from CVISN through
- Bypass time savings and increased driver safety from not having to wait in long lines at weigh stations
- Opportunities to verify driver qualifications in a more timely way at the time of hiring
- Reduced numbers of trips to State licensing/permitting agency offices, and reduced time at the State office when trips are still required
- The development of a one-stop shop within each State for electronic credentials administration, permitting (e.g., Heavy Vehicle Use Tax, oversize/overweight permits), and other related CVO transactions
- The adoption of consistent methods for remote, secure, electronic payment of license and credentialing fees.
Likewise, State government agencies were anticipated to benefit through
- Reduced labor costs and more efficient deployment of enforcement resources
- Increased data quality and availability, including near-instant access to current data in the office and the field; better enforcement of registration, licensing, weight, size, and tax regulations; and improved methods for identifying and correcting errors and omissions in State databases
- Better access to State credentialing resources for carriers based in remote locations, and more efficient approaches to customer service and quality, with the reduction or avoidance of lengthy queues in State agency offices
- Closer coordination with State motor carrier associations, which helps both the State and the industry in the design, testing, deployment, and carrier outreach aspects of CVISN deployment
- Opportunities to improve the quality of State data by purging duplicate, outdated, or erroneous records in the course of deploying CVISN database resources
- Interoperable data sharing systems among jurisdictions and between States and individual motor carrier companies
- Development of an interagency CVISN oversight committee that assigns responsibilities, delineates jurisdiction, and codifies decisions to build consensus among teams where staff turnover is a factor.
Recommendations for Federal and State support of CVISN deployment included the following:
- Maintain an active contact list of States and individuals who were instrumental in early adoption of CVISN technologies
- Foster communication among States at various stages of deployment
- Provide market outreach to carriers and State associations, to make them aware of new CVISN technologies and potential benefits
- Set up mechanisms for current, accurate information to be sent from roadside inspections to the motor carrier companies affected
- Improve the quality and reliability of historical safety data, on which good inspection selection and electronic screening decisions depend
- Involve motor carriers in the CVISN deployment process, and maintain their input through the life of the project
- Educate motor carriers as to the purposes and goals of CVISN deployment, and to dispel any misinformation or misperceptions that may arise.
Many of the same benefits and recommendations emerged from the economic analysis of CVISN from the perspective of large motor carrier companies (FHWA 2007), which indicates significant, near-immediate financial benefits to carriers from taking part in electronic credentials administration, primarily through the ability to put new trucks into service more quickly. The economic analysis also shows substantial benefits to carriers from enrolling their trucks in electronic screening programs or partnerships, through reduced costs of operation brought about by keeping their trucks moving instead of stopping so often for routine weigh station checks.
The 2007 analysis found that motor carriers experienced negligible startup ($275 per carrier) and annual recurrent ($125) costs associated with electronic credentialing. The most significant benefit of electronic credentialing considered is the time value of increased fleet utilization, or the ability to expedite the process for placing trucks into service. This analysis indicated that electronic credentialing allows motor carriers to place new trucks into service an average of 3.5 days sooner than would have otherwise been possible under paper-based systems, at an average savings to motor carriers of $371 per truck. The cost savings associated with increased fleet utilization are based on the finance charges accruing on vehicles as they await credentials. For the mean value case that was modeled over a 10-year period, this fleet utilization benefit translated into an average of $349,787 in annual cost savings per carrier.
The second most significant benefit associated with electronic credentialing is the labor savings per transaction, which was estimated at $4.13 per transaction (10 to 12 minutes per transaction). Benefits associated with reduced materials and postage costs of $1 per transaction have also been identified. When the full range of benefits are considered, total net benefits per company were estimated at $3.6 million over a 10-year analysis time horizon (average annual net benefits of $360.5 thousand), resulting in an overall ROI ratio of 2,971:1 and a payback period of less than one month. The level of cost savings and resultant benefits associated with increased fleet utilization are expected differ from company to company, with smaller companies likely to realize the greatest benefits on a per-truck basis.
The 2007 analysis also shows that motor carriers incur very few up-front costs associated with the transponder acquisition, redistribution of transponders to vehicles, and driver training when entering electronic screening partnerships and programs. On a recurrent basis, most motor carriers incurred monthly costs ranging from $7 to $14 per transponder, based on the number of trucks enrolled in the electronic screening program and the negotiated rate. Time savings per bypass in this study are estimated at 3 to 5 minutes, and average motor carrier operating costs are valued at $2.16 per minute. Thus, cost savings associated with electronic screening are valued in this study at $8.68 per bypass. The annual net benefit per transponder-equipped truck was estimated at $1,169. Net benefits to motor carriers range from $3.2 to $219.4 million per company over the 10-year study time horizon with all but one of the ROI ratios ranging from 6.1:1 to 15.9:1 and with payback periods of less than one year.
For the motor carrier industry, these findings suggest that wider adoption of CVISN technologies would yield significant returns on relatively modest investments. Other business factors affecting adoption of CVISN technologies may also come into play, including the need for education and outreach to the industry, so that more carriers know about the CVISN technologies (and the benefits) available to them in the States where they operate.
Many motor carrier companies operate on very narrow profit margins. Some may tend to focus on the cost side of the technology deployment equation, not recognizing the value of the future benefits of technology to their particular operation, for example, the time that can be saved through electronic credentialing and screening, and the monetary value of this time savings. Also, most investments in new technology will be viewed with skepticism, but as more and more carriers deploy technologies such as CVISN electronic credentialing in their terminals and offices and electronic screening transponders in their tractors on the road, the word-of-mouth diffusion of positive experiences with CVISN—and how CVISN affects companies' business—can be expected to continue. This summary report and the two business cases on which it is based are intended to contribute to this kind of information sharing and exchange of knowledge.
Another implication of this research is that the awareness of CVISN and the derivation of benefits from CVISN appear to predominate among the larger motor carrier companies. The industry and government may explore approaches to extending the overall design of the CVISN program to include features that are more adapted to the medium- and smaller-sized carrier companies, who may, for example, credential only 10 or 100 power units per year, and so have a much different administrative burden than the large or giant motor carriers. The Federal and State government role in fostering the deployment of CVISN among motor carrier companies of all sizes should continue, through cost-sharing grants, research funding, and the facilitation of technology transfer. One of the hallmarks of CVISN deployment from its earliest days has been the readiness of States to collaborate through forums and channels established by FMCSA and other agencies of the USDOT. Traditionally, States have been very willing to speak up about problems and barriers they face in deploying advanced hardware and software. They have also actively shared new ideas and solutions they have learned or tried.
FMCSA can go a long way in disseminating accurate information about the scope and purpose of CVISN initiatives. This would increase the awareness of the motor carrier industry as to the limits of CVISN and promote realistic expectations of what carriers stand to gain by participating in CVISN. FMCSA can also work to dispel any misperceptions through continuous outreach and communication, the documentation of actual carrier experiences, and the collection and publication of valid data from the field to add to the knowledge that carriers need to make deployment and operations decisions.