CSA 2011 UPDATE

1. CSA 2011 UPDATE FMCSA UPDATE COMMITTEE UPDATE INDUSTRY/FINANCIAL IMPACT MAIN TAKE AWAY

2. UNDERSTANDING CSA • BEFORE WE DISCUSS CSA, WE MUST FIRST UNDERSTAND THE SCOPE OF WHERE THE AGENCY IS GOING AND WHAT MIND SET THEIR OPERATING IN.

3. CSA “ 3 PRONG APPROACH” • SYSTEM: MANAGEMENT CONTROL FEATURES (CAN’T MANAGE WHAT YOU CAN’T MEASURE) • PROCESSES: TAKEN ACTION • RULES: ASSIGNING RATING FACTORS AT ROADSIDE

4. SYSTEM: PROJECT “SCORE” • FMCSA Believes that SYSTEMS ARE ONLY EFFECTIVE IF “MANAGEMENT CONTROL FEATURES” ARE PUT INTO ACTION AND FOLLOWED THRU OUT THE ORGANIZATION. • MANGEMENT CONTROL FEATURES, SET THE MATRIX BY WHICH PERFORMANCE IS MEASURED. • BEFORE YOU MEASURE, YOU MUST SET A GOAL • ACHIEVING YOUR GOAL, YOU NEED A BENCHMARK • SETTING A BENCHMARK, REQUIRES A “NUMBER” • NUMBERS REQUIRE “CALCULATIONS “ • CALCULATIONS NEED THRESHOLDS, • THRESHOLDS NEED A SCORE. • ADJUSTING YOUR SCORE, WILL REQUIRE A CHANGE IN YOUR “PROCESS”

5. PROCESSES: TAKEN ACTION • FMCSA is grading your Processes based on your Roadside Violations which are defining what kind of Management Control Features have been set in place . Poor Maintenance Practices, Lack of Driver Discipline resulting in Roadside Violations make it hard to defend that your Processes are working if the Management Control Features are really in place and being followed.

6. RULES: ASSIGNING A RATING “RATING A FILE HAS THAT HAS NEVER DRIVEN ITSELF DOWN THE HIGHWAY, IS BORDERLINE INSANE” • “FMCSA WILL BEGIN ASSIGNING FUTURE RATINGS BASED ON ROADSIDE VIOLATIONS” • “FIX THE TRUCK, YOU FIX THE SCORE”

7. FMCSA UPDATE: • Phase I: Launched the CSA scoring system Dec 13th, 2010. • Phase II: Warning Letters begin going out mid February of this year and continue….28,000 plus letters had gone out by June of this yr. • Phase III: New rating system and rule making due out by 1st quarter of 2012

8. FMCSA UPDATE CONT: • Remedial Directives: CARRIERS THAT ARE ISSUED A NOTICE OF VIOLATION THAT IS PLACED INTO A “REMEDIAL DIRECTIVE” AND THE CARRIER DOESN’T COMPLY WILL FIND THEMSELVES AT ROADSIDE PLACED OOS UNDER 395.13 (B)(4) OR 385.811 (D)

9. FMCSA UPDATE CONT: • Cargo securement will merge with Maintenance, Mid 2012 or sooner. • Medical card provisions go into effect Jan 30th, 2012 • Trailer wind deflectors will add to an inspection item at Roadside, 396.1 • Drivers will view a Carriers score before applying • Drivers will begin refusing dispatch or continuing if Equipment is not maintained.

10. CSA WORKING COMMITTEE: • In the spring of 2009, Dave Osieki of ATA established a CSA task force committee that would be given the task of reviewing every section code in the CSA tables regarding the Severity Weight factor assigned to each violation. • 13 Committee members reviewed the CSA tables and proposed changes to the “wieght rating” by the type of violation, mainly due to the Safety via Non-Safety related items they were grading, (form & manner, mud flaps, etc).

11. PAST COMMITTEE ACCOMPLISHMENTS • Able to convince FMCSA to NOT post the Cargo Securement Violations • Able to convince FMCSA to continue to NOT post the Crash Data • Able to convince FMCSA to adjust their Severity Weight ratings at that time for specific violations

12. CURRENT WORKING COMMITTEE AGENDA: • Petitioning FMCSA to allow for Carriers to obtain the Drivers Safety Management Score • Petitioning FMCSA to remove a Rating Score OR Lesson the weight assigned to 392.2S for Dismissed citations by the court, instead of remaining on the Carrier and Drivers record. • Petitioning FMCSA/CVSA to evaluate and lesson the weight rating for Carriers that had no knowledge of a Drivers CDL suspension , basically Safety related CDL suspensions via Non-Safety related suspensions • Lesson severity weights if Carriers can prove that a State did not notify the Carrier of the drivers CDL suspension.

13. CSA FINANCIAL IMPACT AREAS: • Administrative training will be a of a key essence when paying attention to CSA inspections and taken action once a Roadside Inspection as occurred, which equates to cost/training. • Lack of Credit lines and loans will cause more stress on Carriers that are forced to run there Aging Equipment • Investments and Investors will begin to use the CSA scores for underwriting purposes when evaluating their risks and return on growth. • Insurance have begun using Carriers Scores for underwriting puposes. • Shipper demands for new equipment are being felt on Carriers. • Legal escrow accounts will have to be increased.

14. CSA SIGNIFICANT IMPACTS: • Maintenance “Intervals” will demand that “Major Components” be added to rotation schedules. • Type of parts used and supplier warranties will have to be paid closer attention to, life cycles of components a key factor here.

15. INDUSTRY IMPACT: • Attention will have to be spent protecting the Carriers “Image” • Higher Driver Pay • Substantial Increase in Maintenance Costs • Increased Insurance Premiums • Enhanced Shipper Relations • Exposed Legal Issues • Stricter Lending Rules

16. INDUSTRY IMPACT CONT: • Second hand equipment challenges for Owner Operators • ECM: Security Issues • Enhanced Public Relation programs • Regulatory Trust and Credit • Technician Accountability, they need to know their now going to be involved in Data Q’s and Audits

17. ADMINISTRATION COSTS: • CSA will demand that 86% of the carriers staffing time be paid attention to what is being said about that carriers drivers and operations derived from Roadside Inspections • Due Diligence will have to be addressed immediately once a Roadside violation has been recorded.

18. HIRING PRACTICES: • Don’t let the Roadside Officer tell you who is driving your truck…….know who you’ve hired. Your ability to remain in business and your very existence depends on it.

19. PSP Report

20. PROTECT YOUR DRIVER: • Enhance your HR tools • Don’t issue pin and portals log in’s to customers that now have your drivers private information • Don’t hide your problems • Communicate with honesty • Remember their name, not their unit number…….they are a person

21. MAINTENANCE MATTERS: • Establish CSA safety lanes across the US. • Tighten your Brake Component intervals • Place your lighting components on intervals • Tire wear and inflation, tighten up the intervals. • Require “proof of repair” for record retention of Data Q’s

22. KNOW YOUR STEPS, TRAINING: • Level 1 inspections on Tractor/Trailer combinations have a 37 step procedure that Roadside Officers follow: • Of those 37 steps, 32 of those steps have 672 ratable sections in the CSA tables…….672 different ways to be scored in 1 Roadside Inspection.

23. EVALUATE YOUR BUSINESS: Downsizing may not sound or look attractive, but trying to maintenance equipment 2,000 miles from your terminal with a 2 year roadside violation on your record isn’t attractive either. Just know that downsizing will result in pricing lanes differently and driver pay.

24. ENHANCE EQUIP SPECS: • Work with manufactures for image displays of electrical screens for diagnostic checks before and during dispatch…..KNOW that your LIGHTS are still BURNING! • Dry sump pans……why oil leaks? • Enhanced fault code alerts, brake adjustments, air leaks, etc.

25. Warning Letters

26. CHOOSE YOUR BATTLES WISELY: • Attacking the issues on your operations will reach far more in the Regulators eyes, then attacking the Regulators. • Let the Associations help pick your Battles since they are near the heartbeat of the lawmakers.

27. DON’T FIGHT THIS ALONE: • Third party help will help outweigh public and court opinion then trying to going alone. • Use the tools and resources available so your able to defend your companies image when an accident occurs or legal action is taken against you. • USE THE TOOLS YOU HAVE AVALIBLE!!!