Preparing for the Christmas Freight Peak: Casual Drivers, Subcontractors and Your Cover

From late October, many transport businesses start doing the same thing at once: lining up extra drivers, subcontracting overflow work and squeezing more runs out of the same fleet ahead of the Christmas freight peak. That is good for revenue, but it is also when an operation is most likely to have a driver, a vehicle or a contract arrangement that its insurance programme was never set up around.

This article looks at the three pressure points that tend to appear in the run-up to the busiest quarter: taking on casual or temporary drivers, handing work to subcontract carriers, and asking more of existing drivers and gear. It draws on the primary sources linked throughout and is general information rather than advice.

Before the rush: check that your cover matches the operation you will be running

Most insurance programmes are arranged around a picture of the business given at renewal: how many vehicles, which drivers, what freight, where it goes and who else does the work. The peak season can quietly change several of those at once. A business that is mostly owner-driven might put three new drivers on for eight weeks. A carrier that normally does all its own work might pass a quarter of its freight to subcontractors. A fleet that usually parks up at night might start running a second shift.

None of those changes is unusual, but each one is worth raising with your broker or insurer before it happens rather than after a claim. The questions are simple. Does the policy restrict who can drive, by age, experience or licence? Does it need to be told about new drivers? Does it cover vehicles you hire in, or only those listed? Does it say anything about subcontracting? It is much easier to get a clear answer in October than in the week before Christmas.

Taking on casual and temporary drivers

Check the licence, properly

The NZ Transport Agency explains that there are four licence classes for heavy vehicles, that a driver needs the licence that matches the type and weight of the vehicle, and that in some cases special endorsements are also required. A driver who holds a heavy licence is not automatically licensed for every vehicle in your yard, so match each driver to the actual units they will drive.

Looking at a plastic card is a start, but it does not tell you whether the licence has since been suspended or disqualified. The agency's Driver Check service lets a registered business inquire on drivers against the Driver Licence Register. Its help pages say you must have a driver's consent before you inquire on their licence, that only approved administrators should log in, and that once a driver is on your list, your administrator is notified automatically if the status of their licence changes. They also note a limitation: if a licence is already expired, suspended or disqualified when you add the driver, you will not get an alert about that existing status, because the system only detects changes. So check status when you add someone, not just afterwards.

Induct them as you would a permanent driver

Temporary drivers are often the least familiar with your vehicles, your customers' sites and your procedures, and they arrive at the busiest, most time-pressured point of the year. A short structured induction covering pre-trip checks, load restraint, site rules at regular delivery points, fatigue and incident reporting is one of the cheapest risk controls available. Keep a record that it happened. If a claim follows, being able to show what a driver was told and when is useful evidence.

Tell your insurer where the policy requires it

Motor policies differ in how they describe who may drive, and some set conditions around who is acceptable. Whatever your wording says, check before the new driver takes a truck out, not when the first claim form asks who was behind the wheel.

Handing work to subcontract carriers

Who is liable to your customer

Subcontracting is common at peak, and the Contract and Commercial Law Act 2017 has specific rules for it. The Act distinguishes between the contracting carrier, who contracts with the customer, and actual carriers, who perform some or all of the carriage. Section 248 sorts every contract of carriage into one of four kinds: at owner's risk, at declared value risk, on declared terms, or at limited carrier's risk. Under limited carrier's risk and declared value risk, section 259 caps the carrier's liability at $2,000 for each unit of goods, or at the declared value.

If you take the job and pass it on, your customer's contract is still with you. Your liability to them does not disappear because someone else was driving.

What you can recover from the subcontractor

The Act then deals with the relationship between you and your subcontractor. Section 262 provides that where one actual carrier is involved, that carrier must compensate the contracting carrier for goods lost or damaged while the actual carrier was independently in charge of them, and that this applies even if the actual carrier did not cause the loss. It is subject to the terms of the contract between the two carriers, and section 245 allows the parties to agree their own terms on these matters.

That last point is the one to act on. If your subcontract arrangement says nothing, the statutory position applies. If it says something, that is what counts. Before the peak, it is worth confirming that your subcontractors have their own carriers liability and motor cover, that you have seen evidence of it, and that your written terms with them say what you think they say. If a subcontractor's terms reduce what you can recover, your own carriers liability cover may end up carrying a loss you expected to pass on. Our guide to carriers liability explains how the cover works in more detail.

Check what your own policy says about subcontracting

Some carriers liability and transit wordings contain specific conditions about subcontracted work, such as requirements about the terms on which goods are handed to a subcontractor or documents that must be obtained. Others do not. Read the relevant section of your own wording, or ask your broker to point you to it, before you start passing on loads.

Safety duties do not pass down the chain

Under the Health and Safety at Work Act 2015, using a subcontractor does not hand over your safety responsibilities. WorkSafe's overlapping duties position states that a business cannot contract out of its duties, that businesses sharing duties must co-operate, co-ordinate and consult with each other so far as is reasonably practicable, and that a business at the top of a contracting chain should not push risk down the chain. In practical terms, that means choosing subcontractors with care, sharing the information they need about loads and sites, and agreeing who manages which risks.

Asking more of existing drivers and gear

Hours and fatigue

The peak is when work time limits are most likely to be tested, because the pressure to finish one more run is highest. The rules are covered in our article on fatigue management and heavy vehicle insurance, and they apply in December exactly as they do in June. Build rosters that fit within them from the start, rather than relying on drivers to manage their own limits at the end of a long week.

Loads and equipment

Busier yards, more varied freight and tired crews are a common combination for load security problems. Our new guide to load security and the Truck Loading Code sets out the legal duty, which sits with both the operator and whoever loads the vehicle, and a practical routine for checking restraint. Peak season is also a good time to replace worn straps and chains rather than stretching them through the busiest weeks.

Downtime at the worst moment

A truck off the road in December costs more than a truck off the road in February, because the work is there and replacement capacity is scarce. If you rely on a small number of units, it is worth checking whether your programme includes downtime or loss of use cover and on what terms. Our explainer on downtime and loss of use sets out how that cover generally works.

A pre-peak checklist

• List every driver you expect to use between now and the end of January, and confirm each one's licence class, endorsements and current status.
• Confirm with your broker or insurer that any new or temporary drivers are acceptable under your motor policy.
• List your subcontract carriers, obtain evidence of their insurance, and check your written terms with each of them.
• Read the subcontracting and driver sections of your own policy wordings.
• Agree with regular customers who loads, who restrains and who checks at their sites.
• Plan rosters within work time limits before the work arrives.
• Check the condition of restraint gear and replace anything worn.
• Note any new freight types or routes you will take on and tell your broker.

Getting help before the busy season

If the peak will change how many drivers you use, how much work you subcontract or what you carry, a short conversation before it starts is usually worth having. You can Get a Quote and we will pass your enquiry to a Registered Financial Service Provider with heavy vehicle experience who can review whether your programme fits the operation you will be running.