Trucking

New California law adds a little chaos to truckers’ lives coast to coast.

Are independent owner-operators and drivers lease-independent contractors, or are they really employees under another name?

That’s the question posed by AB5, a controversial California law that has other states eyeing similar measures. Now that the law has passed a Supreme Court challenge, organizations like the TIA are studying the effect the ruling might have across the transportation industry.

 

It Started with Uber

AB5 was originally designed as a way to give gig drivers, like those working for Uber, Lyft, DoorDash, and similar app-based services, a fair shake. It codified the “ABC test” for determining if a driver was an independent contractor or an employee. You count as an employee – with all the obligations that entail – unless the company that hires you can prove:

  1. You’re “free of the control and direction of the employer in performing work”; in other words, you’re not subject to hands-on supervision.
  2. The work you do is outside the usual course of the employer’s business.
  3. You’re already working in an independently established trade, occupation, or business of the same nature as the work performed for the employer.

For Uber drivers and the like, the law meant a chance at unemployment insurance, health insurance, sick leave, minimum wage, and everything that goes with a regular job. It went into effect on January 1, 2020.

By November, the ride-share companies had sponsored their own law, Proposition 22, that overrode AB5 and specified that app-based drivers were independent contractors (though it did kick in some health-care subsidies and accident insurance for them).

But other independent contractors – and especially other drivers – were left out.

 

No Dice In Court

The California Trucking Association challenged the law and ultimately tried to bring its case before the U.S. Supreme Court, but the court declined to consider it, issuing a denial without comment this summer.

Different versions of the law passed in Massachusetts and New Jersey attracted similar challenges from groups representing freelance journalists and photographers, saying that a law declaring them employees was a limit on their freedom of speech, but those arguments got no further.

For now, the CTA case is back in a California district court, and the state was trying to have the Owner-Operator Independent Drivers Association (OOIDA) removed from it. The CTA and OOIDA replied with a joint statement saying, among other things, “It makes no sense that the State would oppose the participation of the nation’s largest and oldest organization representing small-business truck drivers in a lawsuit that harms tens of thousands of OOIDA’s members.”

That was in September. At the time this article is being written, it seems likely the court arguments will continue – but the law is already in effect.

 

Now What?

For now, TIA Board Vice Chair Mark Christos is heading up an “AB5 Task Force” looking into three possible impacts the law might have: first, on how brokers will now relate to owner-operators in California; second, on how agents used by brokers will be affected; and third, what broad effects the law will have on California’s cargo-carrying capacity.

The TIA also brought up the wider legal picture in Policy Forum in Washington, D.C. this September, as a part of what they’re calling “supply chain sustainability.” Our President Mark Fiorini attended the forum and is committed to being involved in these critical policy meetings. They’re hoping to get lawmakers to review how dozens of outdated or mismatched regulations are actually shaping the way things get moved from point A to point B.

For owner-operators and other independent contractors, as well as for the motor carriers who hire them, things are still somewhat in the air. Will brokers suddenly have to become employers if their drivers enter California (or Massachusetts, or New Jersey)? Can California-based motor carriers and owner-operators survive what the CTA has called “the costs and burdens associated with shifting to an employer-employee business model”? How will those “costs and burdens” affect prices and plans up and down the supply chain?

Unfortunately, those answers remain to be seen.

 

As Always, Westgate Global Logistics Will Keep You Informed On Industry Issues. We Encourage You To Evaluate Your Business, And If You Have Any Questions, CONTACT US To Discuss Your Transportation Needs.

 

Since this article was written, the U.S. Department of Labor has proposed a national regulation similar to AB5.

 

 

 

SOURCES:
https://www.investopedia.com/california-assembly-bill-5-ab5-4773201

https://www.foley.com/en/insights/publications/2022/07/supreme-court-refuses-challenges-california-ab5

https://www.freightwaves.com/news/california-doesnt-want-ooida-allowed-into-next-steps-in-ctas-ab5-lawsuit

https://multichannelmerchant.com/operations/ab5-upheld-as-supreme-court-declines-case/

https://www.freightwaves.com/news/viewpoint-how-a-supreme-court-ruling-will-immediately-affect-california-trucking

https://3plmagazine.tianet.org/2022/09/06/tia-task-force-to-review-impacts-of-ab5-to-industry/

 

 

Soaring Fuel Prices Putting the Squeeze on Owner-Operators

As fuel prices continue to surge, many of the 350,000 registered owner-operator drivers are looking at changing lanes and becoming company drivers. “It’s not happening yet, but it’s coming,” said William “Lewie” Pugh, an OOIDA executive vice president who worked as a leased owner-operator for 24 years, said of free-agent independent drivers either leaving the business or deciding to change the way they operate.

According to weekly data from the Energy Information Administration (EIA), on-highway diesel pump prices are still hovering around record-high levels, averaging $5.72 a gallon nationwide. On top of the soaring fuel prices due to rising oil prices, flattening demand and lower spot rates are putting owner-operators in a tough spot. As a result, many drivers are looking to change the way they operate by either becoming company drivers and avoiding the fuel mess or by leasing their independent services to a fleet.

 

Freight Industry Downshifts from Hectic Pace for Shipping

As we approach the midway point of the year, the survey-based Logistics Managers Index fell for the first time this year. In fact, it fell from a record high in March to the lowest level since January 2021. However, not every sector in the industry was hit equally. While the inventory and warehousing sectors only exhibited minor changes, the transportation sector showed the steepest drop.

“Despite the slowdown in transportation, respondents still indicate growth in the sector, just at a slower pace than what we’ve seen over the last 18 months,” the report stated. “It can be observed that the two curves have not yet inverted, suggesting that while the frantic pace in the transportation market has slowed down, we have not yet tilted into a full-on recession.”

 

Rail Regulators Want to Speed Emergency Service Responses

Recently, the Surface Transportation Board (STB) announced the upcoming policy changes that will overhaul the existing emergency service rules. The new policy would essentially set up an accelerated response to emergency situations.

The STB mentioned many issues faced by the rail sector, including:

  • tight car supply
  • unfilled railcar orders
  • missed switches
  • ineffective customer assistance

 

“The rail service challenges shippers are currently experiencing are amplified by certain recent conditions but are not new,” STB Chairman Marty Oberman said in a release. “For several years the Board has gathered information showing that the existing emergency service rules are too cumbersome to be of use to shippers in need of immediate relief.”

 

About Westgate

You can always count on Westgate Global Logistics to keep you up-to-date on industry news. Our passion for delivering exceptional logistics services continues to be at our core and is why we have thrived in this constantly changing industry. CONTACT US today to experience how we can improve your shipping efficiencies.

 

 

SOURCES:
https://www.freightwaves.com/news/soaring-fuel-prices-leave-owner-operators-with-tough-choices
https://www.ttnews.com/articles/white-house-eyes-emissions-fuel-prices-congress-finalizes-supply-chain-bill
https://www.ttnews.com/articles/freight-industry-downshifts-hectic-pace-shipping
https://www.freightwaves.com/news/rail-regulators-want-to-speed-emergency-service-responses

 

Truck Tonnage is Up1

Compared to this time last year, truck tonnage is up over 2.5%. “Demand for trucking freight services remains strong, but for-hire contract carriers are capacity constrained due to the driver and equipment markets. The spot market has been surging as these carriers can’t haul all of the freight they are asked to move,” said Bob Costello, ATA’s chief economist. “So the fact that the tonnage index hasn’t fully recovered is a supply problem, not a lack of demand.”

In fact, demand has been on the rise since the beginning of 2021. According to the National Retail Federation, retail sales are expected to continue to rise in 2022. “NRF expects retail sales to increase in 2022, as consumers are ready to spend and have the resources to do so,” NRF CEO Matthew Shay said. “We should see durable growth this year given consumer confidence to continue this expansion, notwithstanding risks related to inflation, COVID-19 and geopolitical threats.”

Even though the expected growth rate for 2022 is lower than the 14% annual growth rate we saw in 2021, it is stronger than the 10-year, pre-COVID-19 pandemic growth rate of 3.7%.

 

Women in Logistics2

Many women are taking advantage of the opportunity to work in the logistics industry and contribute to a field that is often considered the backbone of American society. However, women’s presence in the industry is still lacking. In fact, men make up about 90% of the driving and warehouse positions and 70-80% of the positions in the 3PL space.

Are we lacking women in logistics? If so, we’ve come a long way, but what else can we do? How can we attract female talent to the industry? The TIA’s Women in Logistics (WIL) committee has a few plans in this regard, including speaking to high school and college-age students to introduce an industry they might not have ever considered.

 

Save Money with Expedited Shipping3

As shipping delays and supply chain issues continue to disrupt the logistics industry, a huge issue businesses are struggling with is shipping and receiving products on time. These disruptions can cause companies to miss deadlines, leading to the loss of valuable customers and vendors.

However, expedited shipping services can help mitigate these issues and save you money in the long run. Westgate has almost 40 years of experience as a freight broker. We can identify the quickest and most cost-effective transportation methods while also helping to prevent financial loss caused by absent or late shipments.

When you partner with Westgate, we save your account information, needs, and special requests in our customer database. That means that every time you ship with us, you’ll spend less time explaining your situation, getting your inventory on the road and on its way even faster.

 

When you have goods that need to be delivered, there’s no time to waste. LEARN MORE today to find out how we can help you with your shipping needs. CONTACT US today to request a quote!

Less than truck load (LTL) shipping can be an extremely efficient way to move shipments when you don’t need to fill an entire trailer.

 

However, if the LTL shipping process is not implemented well, it can have some potential disadvantages, costing the company more time and money than necessary.

In order to ship smarter, a shipper needs to know how to get the most benefit for the cheapest price. Understanding common LTL shipping mistakes makes it much easier to avoid these issues. LTL shipping is a growing side of the freight industry and shippers need to know these common pitfalls in order to avoid a potentially costly shipping mistake.

 

Here are some ways to avoid common LTL shipping mistakes you could be making that hinder productivity and negatively impact the bottom line…

1] Know your dock delivery set up to plan for additional services needed.

2] Include proper labeling and documentation.

3] Train employees in OSHA regulations and the risks associated with not following them.

4] Provide correct load dimensions.

5] Provide accurate class designations.

6] Use the right equipment to weigh the freight correctly.

 

If you’re tired of dealing with the frustration that comes with shipping via LTL carriers, working with an experienced 3PL to manage your less than truckload shipping tasks is a smart idea that can save you a tremendous amount of money.

For more packing tips and tricks, download our free Freight Pallet Packing Guide HERE.

CONTACT Westgate today to speak with a shipping specialist about how to make your shipping more efficient!

Prior to the Covid pandemic, less than 50% of the population had any knowledge regarding supply chain issues.

Today, over 90% are aware of supply chain issues and the impacts they have on our everyday lives.

 

There continues to be significant congestion of ships and an overwhelming shortage of container equipment in addition to staffing problems at the ports. In order to abate anxiety among the general public, container vessels must now anchor at least 50 miles from the Ports of LA and Long Beach until they are called in for offloading. Out of sight, out of mind.  Although unpredictable, capacity and supply will eventually return, which will cause rates to level off somewhat.

Shippers who negotiated contracts early in 2021 will experience the highest rate increases in 2022. Early negotiation created a buffer for the price increases that developed throughout the year. Those shippers may experience rate increases as high as 20%.

While all shippers are interested in transit time, the primary concerns are occurring at the point of origin. It is vital for shippers to get products off their docks, opening floor space and providing the opportunity to invoice their customers. Transit time has become a secondary concern. Unfortunately, we will continue to experience a degradation of service throughout 2022.

It’s nearly impossible to have a lean operation without a predictable supply chain. Shippers must reassess what they consider to be safe inventory levels to meet production goals and may be forced to consider additional warehousing when necessary. Lean and just in time (JIT) inventories must be closely monitored and risk assessments should be performed regularly when permitting vendors to maintain stock.

Carriers have been working around the clock to keep up with the influx of freight. It all begins and ends with drivers. Both shippers and carriers need to work together to make the truck driving profession more appealing. The current commercial truck driver market consists of 92% men and 8% women, with the average age around 49 years old. A campaign to lower the age requirement to 18 years old as well as add more women to the driver pool appears to be a necessity. Despite driver pay increasing by as much as 25%, attracting more drivers has continued to be a challenge.  Carriers have also reported that many current drivers have opted to work shorter hours in response to their increases in pay.

Many carriers are transitioning to target pricing, which is essentially identifying “good freight” versus “bad freight”. For example: How easy are the customers to work with? Which shippers load and unload quickly? How far out of route do they have to travel to their next pickup? etc. The pricing carriers quote will reflect their assumption on what freight works and what freight does not work in their systems.

The overall cost of trucking will remain high considering the elevated costs they are facing. In addition to the rising costs of fuel, equipment and insurance, LTL carriers are forced to use outside TL carriers to supplement their linehaul service.

Keep an eye out for another potential Black Swan Event. The ILWU has threatened a strike in July. While in the past they were agreeable to automation, they are now opposed and that has become a major sticking point in contract negotiations

 

WHAT IS A SHIPPER TO DO?
  • Become a strategic shipper.
  • Limit the dwell time carriers experience on the docks.
  • Make it as easy as possible for carriers to pick up and deliver.
  • Turn containers and trailers around quickly.
  • Provide a desirable environment for drivers.
  • Share important information.
  • Put yourself in the driver’s shoes with regard to your dock processes.

 

If you’re interested in improving your supply chain or reducing your freight costs… CALL WESTGATE GLOBAL LOGISTICS

610-866-8001

 

 

 

 

Currently, there are an incredible number of container ships waiting to be unloaded at the Ports of LA and Long Beach. To add to the congestion, there are more ships en route. Since these two ports account for the nation’s largest trans-shipment centers, this provides insight into the trouble we face going forward.  The sad truth is that the U.S. doesn’t have the infrastructure to handle the tremendous flow of containers headed for our country. Clearing the backlog could take us into Q3 or Q4 of 2022.

A view of the parcel side is equally dismal. UPS and FedEx have more freight than they know what to do with as we enter Q4 of 2021 and approach the holiday shipping surge. Expect the parcel carriers to utilize and initiate accessorial charges to offset their increased costs. Moreover, expect transit time to suffer.

The LTL and Truckload sectors are having similar issues. In addition to their struggle to find drivers and dock workers, these carriers are unable to obtain enough equipment to service their current volume. Shippers are not releasing trailers fast enough and storage trailers are in extremely high demand which has created a significant trailer shortage. Meanwhile, manufactures of tractors and trailers are having difficulty fulfilling orders for new equipment. COVID shortages are only making this matter worse.

What to expect for 2022? Without question, HIGHER RATES.

How can a shipper combat these dire problems? Focus on internal processes, watch for opportunities to consolidate shipments and work closely with vendors regarding product availability and scheduling.

Most importantly, call the professionals at Westgate Global Logistics to help minimize the impact of a difficult market.

800-637-8001

The COVID-19 pandemic completely turned the American economy, businesses, and the political world on its head. Because of this, 2020 was the first year that the TIA held the Policy Forum virtually, using Zoom to facilitate meetings between Members of Congress and the forum participants.

 

Even with the virtual adaptation, it was considered a great success for having enlisted ten sponsors (five from each political party) for the Motor Carrier Safety Selection Standard Act. “This success was a direct result of your grassroots efforts and direct lobbying. The fact is your voice is the most prominent and meaningful for a Member of Congress and their legislative priorities,” said TIA.

The TIA wanted “to build upon that success of getting back to the basics of grassroots advocacy efforts” with this year’s 3PL Policy Forum. The hybrid event, which was held on September 28th and 29th, featured both in-person and virtual registration options.

This year’s forum made more time for TIA Members to be able to meet with their entire Congressional delegation in order to present questions and comments, as well as ongoing high-level briefings from key officials from the Federal Motor Carrier Safety Administration (FMCSA).

“I never miss this chance to speak on behalf of our industry about the issues the industry faces — now and in the future. The more we get in front of these people, the more we can guide the narrative about our industry and steer regulation to help us all,” Mark Fiorini, president of Westgate Global Logistics.

Mark is dedicated to constantly improving processes for the industry as a whole. “The Policy Forum provides people and businesses an opportunity to sit down with the people who make decisions about our industry, and all of us here at Westgate strive to be at the forefront of these policy changes and trends.”

TIA plans to continue to focus their energy and dedication to 3PL advocacy efforts moving forward, and Westgate will be directly in their wake making moves for a better tomorrow.

 

CONTACT US today to experience our dedication to best shipping practices.

Temperatures and Freight Costs Are on the Rise This Summer

 

According to data provided by Cass Information Systems (NASDAQ: CASS), freight costs saw a surge in June and are expected to continue to rise moving forward.

The expenditures component of the Cass Freight Index increased 56.4% year-over-year and was 11% higher than in May. In fact, compared to 2019, the expenditures index was up 27.9%

The difference in the year-over-year numbers has been greatly affected by a steep drop in demand due to world-wide COVID-related lockdowns during the same period in 2020. This trend of increasing rates will likely continue due to the widespread lack of drivers, warehouse space, and equipment like trucks and containers.

“Tougher comparisons in the coming months will naturally slow these year-over-year increases, but extraordinary growth rates will continue in the near term, driven by increases in both shipment volumes and freight rates,” Tim Denoyer of ACT Research explained.1

Many industry experts expect the capacity constraints to ease up in the near future as the driver employment rate increases in response to higher pay which should, in turn, change the trajectory of truckload rates.

“Even with material supply constraints, the freight cycle remains in high-growth mode, benefiting from a strong retail economy, tight inventories, and a persistent backlog of container ships anchored in the San Pedro Bay,” Denoyer said. He believes the industrial sector will begin to catch up to broader demand as “record capital goods demand and likely infrastructure programs” play out. 1

The current capacity backdrop could begin to loosen as transportation payrolls expand and extended unemployment benefits have already expired in some states. Additionally, waning stimulus payments and supply constraints (drivers, trailers, and chassis) are weighing on volumes.

Though 2020 was marked by low levels of supply and exceptionally high demand, these levels will not last indefinitely. As they say, the cure for high prices is high prices; the market will eventually correct itself.

 

 

Becoming a Truck Driver Looks Good Through Higher Pay Tinted Glasses…

 

Driver recruitment and retention remains the top priority throughout the trucking industry.

It’s estimated that more than 200,000 qualified CDL holders are not currently working due not only to the COVID-19 pandemic, but also increased compliance with the Drug & Alcohol Clearinghouse. Diminished driver school graduation rates, early retirements, and more than 75,000 Clearinghouse violations are also some factors for the reduced number of drivers.

Data shows that driver hiring conditions are getting better, according to Tulsa, Oklahoma-based software-as-a-service provider Tenstreet. A recent report from the company that helps carriers better recruit and onboard drivers noted a “positive driver hiring outlook on the horizon.”

There has been a “slow but steady climb back to January levels” the data shows, with the number of drivers filling out job lead forms and applications continuing to move higher. January is usually a busy month for activity as drivers tend to inquire about changing fleets or jobs at the beginning of each year.

“Overall, we’re starting to see the same general seasonal trend lines the trucking industry is used to, with applications taking a hopeful turn upward in May, which will ideally mirror 2019’s trend of an increase in applications over the summer and into the fall,” the report read.2

A press release cited support from customers and their understanding of “the growing needs of the market” as a catalyst for the pay raise.

 

See for yourself why businesses are depending on Westgate to improve their shipping processes and to keep them informed of industry trends. 

REACH OUT to us to experience our boutique approach to streamlining logistics through an extensive network of resources, trained brokerage experts and unique personal service.

 

 

SOURCES:
1. https://www.freightwaves.com/news/freight-costs-see-june-surge-tougher-comps-coming</a>
2. https://www.freightwaves.com/news/driver-employment-market-may-be-improving-amid-historic-pay-increases

 

Like many industries, the United States truckload capacity market moves in cycles of supply and demand, supply being the number of trucks and drivers that haul freight and demand being the demand for those trucks to meet the needs of the current market.

 

For shippers and brokers, the cyclical rise and fall feels perhaps even more exaggerated in recent memory, given the current COVID-19. In fact, at the end of Q4 in 2019, capacity started becoming tighter than anything we’ve seen before. And now that the economy is rebounding and business is booming for many industries, freight demand is gaining momentum. With an increase in consumer spending and difficulties in finding enough drivers, the capacity squeeze continues.

Another factor in the tight capacity is the low supply of available warehouse space caused by consumers spending on physical goods and companies holding more inventory. A report from CBRE states that we will see an increase to 26% of retail sales by 2025 in the U.S. and globally we will need an increase of 1.5 billion square feet to keep up with a $1.5 trillion uptick in e-commerce sales.

Imported cargo shipments to the U.S. are expected to remain at a record or near-record levels for several more months as consumer spending continues to restart the pandemic-damaged economy. But economists and other experts say that all of that buying is clogging an already overtaxed supply chain.

“I see the back half of the year remaining strong,” Port of Los Angeles Executive Director Gene Seroka said. “The peak season starts for us on August 1st for our back-to-school specials, fall fashions, and then the holidays. But we have to hustle; we still have some cargo in the back lot to clean up before we pivot to peak season.” The Port of Los Angeles reported five months into the year, overall cargo volume is 4,551,445 TEUs, an increase of 48.2% compared to 2020.

“Supply chains are finding it difficult to keep up with demand as shipping capacity struggles,” Hackett Associates founder Ben Hackett said. “A number of vessels taken out of service when volumes were low remain in dry dock while others are delayed in congested ports, which face a lack of manpower both because of COVID-19 illnesses and the tight labor market.

 

A Busy Rest of 2021 Ahead

As we move into a busy fall season and then into the holidays at the end of the year we could face more challenges. Some industries are seeing their defined peak seasons disappear as the e-commerce boom has caused them to have year-round demand. But, we will still see some seasonal increases in an already tight environment.

If the last two years have taught us anything, it is to expect the unexpected! Proper planning and working with trusted logistics partners can help ease any burdens we may face in the rest of the year.

 

See for yourself why businesses are depending on Westgate to improve their shipping processes and to keep them informed of industry trends. 

REACH OUT to us to experience our boutique approach to streamlining logistics through an extensive network of resources, trained brokerage experts and unique personal service.

 

 

 

With 2021 well under way, the logistics industry is off to a solid start and top analysts are optimistic that the transportation industry will remain steady this year.

 

The U.S. economy is predicted to be in store for record-breaking GDP growth. Goldman Sachs raised its forecast for 2021 US gross-domestic-product growth to 6.8% from 6.6% because of the expected larger coronavirus relief package. This will be a large increase especially following the anemic year we had in 2020. The US economy contracted 3.5 percent on an annual basis in 2020, the largest contraction for any full year since the demobilization from World War II in 1946. However, disposable personal income (which subtracts taxes paid and adds government benefits received) experienced the fastest annual growth since 1984 contributing to the increase in purchasing of goods in 2020.

Amid the COVID-19 pandemic in 2020, truckers did an extraordinary job supporting the US economy. The trucking industry’s response to the COVID-19 pandemic created and flood of support for drivers and greatly improved public opinion of the industry as a whole. “Consumers have witnessed now firsthand what we do all the time. Unfortunately, it takes a worldwide pandemic for that to come to the surface, but the recognition is so well-earned and deserved…” said American Trucking Associations President Chris Spear, “2020 was a very defining year for trucking.”

Online shopping was already increasing in popularity, and shoppers being isolated indoors since March of 2020 has only accelerated that shift. “For the last four years, e-commerce growth has averaged between 13% to 17% increase, and last year it was up 14.7%,” says Ron Sides, Deloitte’s vice chairman and U.S. leader retail and distribution. “This year it will go ballistic, somewhere around 25% and it may go higher” bringing last-mile delivery up to unprecedented levels.

The medical transport sector is also geared to sky rocket, though much depends on the vaccine and how fast it is distributed to the general population. American Trucking Associations Chief Economist Bob Costello said, “the vaccine will help return to ‘normal,’ which means sectors that are currently hurting — like services and manufacturing — can bounce back, leading to more freight.”

Fortunately for truckers, pay increases should continue through 2021 as capacity continues to tighten and fleets are forced to compete for drivers. As companies increase driver pay to attract new drivers, it forces others to do the same to remain competitive.

 

We haven’t missed a beat. See for yourself why businesses are depending on Westgate to improve their shipping processes and to keep them informed of industry trends.

 

REACH OUT to us to experience our boutique approach to streamlining logistics through an extensive network of resources, trained brokerage experts and unique personal service.

 

 

Sources:
https://www.piie.com/blogs/realtime-economic-issues-watch/what-us-gdp-data-tell-us-about-2020
https://www.ttnews.com/articles/trucking-industry-experts-optimistic-about-2021-once-covid-over