Tuesday, October 19, 2021

The California trucking mess: It's a lot murkier than it seems


Last week we spoke of California's trucking regulations as one factor contributing to the logjam in that state's ports, with dozens of container ships anchored awaiting berths to offload their cargoes.  I've been looking into that, particularly in the light of Aesop's criticism (warning:  NSFW language) of my perspective and that of other contributors.

In an effort to find out more, I started doing Internet searches and looking for other sources.  There's an awful lot of smoke around the issue as interested parties try to put forward their own perspectives while trash-talking those of others;  but it's clear there have been problems for a long time.  Those problems gave rise to recent California legislation that changed the structure of the trucking industry in that state.  They may have changed it for the worse:  but they were an attempt to address long-standing abuses.

One of the most interesting investigations was carried out by USA Today five years ago.  It's well worth reading.  Here's an excerpt.

A yearlong investigation by the USA TODAY Network found that port trucking companies in southern California have spent the past decade forcing drivers to finance their own trucks by taking on debt they could not afford. Companies then used that debt as leverage to extract forced labor and trap drivers in jobs that left them destitute.

If a driver quit, the company seized his truck and kept everything he had paid towards owning it.

If drivers missed payments, or if they got sick or became too exhausted to go on, their companies fired them and kept everything. Then they turned around and leased the trucks to someone else.

Drivers who manage to hang on to their jobs sometimes end up owing money to their employers – essentially working for free. Reporters identified seven different companies that have told their employees they owe money at week’s end.

The USA TODAY Network pieced together accounts from more than 300 drivers, listened to hundreds of hours of sworn labor dispute testimony and reviewed contracts that have never been seen by the public.

Using the contracts, submitted as evidence in labor complaints, and shipping manifests, reporters matched the trucking companies with the most labor violations to dozens of retail brands, including Target, Hewlett-Packard, Home Depot, Hasbro, J.Crew, UPS, Goodyear, Costco, Ralph Lauren and more.

Among the findings:

  • Trucking companies force drivers to work against their will – up to 20 hours a day – by threatening to take their trucks and keep the money they paid toward buying them. Bosses create a culture of fear by firing drivers, suspending them without pay or reassigning them the lowest-paying routes.
  • To keep drivers working, managers at a few companies have physically barred them from going home. More than once, Marvin Figueroa returned from a full day’s work to find the gate to the parking lot locked and a manager ordering drivers back to work. “That was how they forced me to continue working,” he testified in a 2015 labor case. Truckers at two other companies have made similar claims.
  • Employers charge not just for truck leases but for a host of other expenses, including hundreds of dollars a month for insurance and diesel fuel. Some charge truckers a parking fee to use the company lot. One company, Fargo Trucking, charged $2 per week for the office toilet paper and other supplies.
  • Drivers at many companies say they had no choice but to break federal safety laws that limit truckers to 11 hours on the road each day. Drivers at Pacific 9 Transportation testified that their managers dispatched truckers up to 20 hours a day, then wouldn’t pay them until drivers falsified inspection reports that track hours. Hundreds of California port truckers have gotten into accidents, leading to more than 20 fatalities from 2013 to 2015, according to the USA TODAY Network's analysis of federal crash and port trade data.
  • Many drivers thought they were paying into their truck like a mortgage. Instead, when they lost their job, they discovered they also lost their truck, along with everything they’d paid toward it. Eddy Gonzalez took seven days off to care for his dying mother and then bury her. When he came back, his company fired him and kept the truck. For two years, Ho Lee was charged more than $1,600 a month for a truck lease. When he got ill and missed a week of work, he lost the truck and everything he’d paid.
  • Retailers could refuse to allow companies with labor violations to truck their goods. Instead they’ve let shipping and logistics contractors hire the lowest bidder, while lobbying on behalf of trucking companies in Sacramento and Washington D.C. Walmart, Target and dozens of other Fortune 500 companies have paid lobbyists up to $12.6 million to fight bills that would have held companies liable or given drivers a minimum wage and other protections that most U.S. workers already enjoy.

This isn’t a case of a few bad trucking companies accused of mistreating a handful of workers.

Since 2010, at least 1,150 port truck drivers have filed claims in civil court or with the California Department of Industrial Relations’ enforcement arm, known as the labor commission.

Judges have sided with drivers in more than 97% of the cases heard, ruling time after time that port truckers in California can’t legally be classified as independent contractors. Instead, they are employees who, by law, must be paid minimum wage and can’t be charged for the equipment they use at work.

There's more at the link.

Those abuses are one of the main reasons why California passed legislation forcing trucking companies to treat owner/operators as employees rather than contractors.  That, in turn, had the unintended consequence of forcing many owner/operators to cease working in California, as they could no longer claim a host of expenses against taxable income for which they'd previously been eligible.  Others, with older trucks, found they couldn't afford to meet new emissions requirements.  For both reasons, many have either left the industry or left the state, taking their trucks with them.

So, it seems the trucking situation in California becomes murkier the deeper one delves into it.  I'm not saying that Sundance was wrong in his assessment of the situation, as reported in my earlier article:  but perhaps he didn't take some factors into account (or insufficiently so).  Clearly, I didn't either.  Thanks, Aesop, for providing the impetus for me to dig a little deeper.



Dan C said...

Then there are union slowdowns at the dock too....


Cedar said...

These things are usually messier than just a simple answer. Which usually also means that resolving them is not going to be easy, what with the knee-jerk laws that get passed and the unintended consequences thereof.

Keyser Soze said...

I blame part of the problem on social and television media. It has had a Pavlovian result on the populace at large, and they now have the attention span of 140 characters.

Everything has complexity and nuance, but nobody wants to invest the time into truly understanding something any more. Unless it's "panem et circensus", then people will invest gobs of time into their fantasy football league, celebrity antics, clothing, hairstyles, and foppish life in general.

Ray - SoCal said...

AB5 that caused most independent workers to be classified as employees, except for politically favored industries, was union backed and aimed at the non unionized gig economy, trucking was not specifically targeted.

From what picked up:

1. Retail sales are up 18% in the us per a housing economist I heard on a webinar.

2. Larger ships are being used that take longer to unload due to consolidation to reduce costs

3. Ca ports require a newer truck to be used

4. Trucking is a hard job and was relatively blow paid, so the option of other income options is very attractive. Such as Covid unemployment payments.

5. Us now limits the hours a truck driver can drive

6. Lots of uncertainty about the future of trucking. Lots of press about automated truck driving. Why choose a carrier with a bleak future?

7. My guess, no data, but the Ca ports probably have not increased their throughput / efficiency with more automation, cranes, etc due to the dock worker union. A couple of years ago they fought bar coding. I wonder if the use transponders, rfid, on each container?

Eric Wilner said...

Indentured servants owing their souls to the company store? Sounds like Silicon Valley's corporate dream! But expecting prospective employees to go massively into debt to Big Education before signing on with the corporate plantation is a little less blatantly crooked.
Hm. How many port trucking companies are there in California, what are the barriers to entry, how tightly have they been regulated over the decades, and to what extent does the ownership overlap?

Jess said...

If you look deep enough, you'll find the worst of the problem is rooted in the corruption of government, excessive regulations, and those that manipulate to increase their profits by contributing to politicians and unions. The problem could be easily solved, but it's California, and will never be.

JaimeInTexas said...

As someone stated to at Aesop's, embrace the power of AND.

Paul said...

That kind of over heated rhetoric sounds like npr.

You cannot drive for 20 hours as the nation wide cdl only allows for 14 hours of continuous service. Ie if your dat starts at 8 am it is done 14 hours later no matter if the truck covered distance or not. That is why most of the bigger firms use two drivers.

Yes, trucks could be the bottle neck, but I think it is more a finely tuned system that cannot handle burps.

That means you cannot flex up for a large ibfoux of product that has been ordered by wal-mart or target or whomever.

No, we are seeing the natural result. Which cannot be as sexy and juicy as those nasty companies abusing the drivers making them quit.

CheezusCrackers said...

Aaand maybe...

CheezusCrackers said...

...these ships are staging military equipment the Regime will need when the great vaks die off starts and fiod is scarce?

Aesop said...

(Wait...salty language? Moi? Well, yeah. Guilty.)

The no-axe-to-grind-and-no-real-dog-in-this-fight links I provided to the BBC page noted that
1) US orders to China are 25% higher this year than even their peak in pre-COVID days, when the economy was positively booming. That's YUUUUUUUUUGE.
2) Excess cargo handling capacity at the SoCal ports tops out at about 5% over normal. That means, inevitably, that every 5 days (20%+20%+20%+20%+20%=100%. QED.), the ports get another day behind. A current 20-day backlog means this problem has been piling up for the last 100 days.
[Math: Still a thing.]
3) There is no shortage of trucks in CA, nor of trucks that can pick up cargo at the ports.
4) There is absolutely a shortage of enough trucks in the US to deal with a 500,000 container glut of inbound loads, which is what's sitting off LA/LB right this minute.
FTR, there are only 2M semi trucks in the entire country. If we sent 1 out of every 4 trucks in the US and truckers to drive them to the port, right this minute, the convoy would stretch from LA to NYFC, two lanes wide, bumper to bumper with no gaps, and still have enough left over to get to Boston and Bangor Maine.
And even if that happened, that would just catch things up to current.
5) Multiple entities have acted to make the truck driving lemon not worth the squeeze, and fewer and fewer people want to play, as you've noted. Trucking companies have gone begging for drivers hereabouts for years, but no one wants to play in a rigged game. And even the unions like the teamsters do everything in their power to pull the ladder up behind them, and leave drivers either forced to work for non-union haulers, while they even shaft their newer union members in order to secure golden goose eggs for the old-timer membership. Why would a new driver want to pay union dues to be treated like a second-class citizen, when they can get that exact treatment from unscrupulous trucking companies for free?
6) The "newer" trucks the ports require include anything built in the last 11 years. That's literally half the trucks on the road, right this minute, which constitutes no such "shortage" of available vehicles. Anybody spinning that tale obviously consulted sources in his own underpants.
6) All of the above makes the original suggestion (subsequently doubled down upon by the original author) that this was wholly the fault of an obscure and mostly irrelevant law nothing but a barrel of codswallop.

Not being a fan of foolish assertions, and driving regularly in the region in question, it only took about 5 minutes to shoot that obvious fairytale to dollrags without even reloading. People who put such stuff out and think no one will ever find out or figure it out are as yet unaware that the internet is a thing, and it's not going away.

Neither is addition and multiplication.
Common Core grads should pay heed.

Unknown said...

As someone with a commercial drivers license in CA (I don't make my living from it), the claims of excessive hours don't ring true.

The penalties to the companies for falsified records and violating thee hours of service are very high (IIRC, something like $10k per violation), and several years ago laws were passed to make the reporting of hours not be a paper log, but an electronic device wired into the truck

and even if the logs are faked, once there is a tip about it, it's easy enough to track a particular truck (given the number of traffic cameras on the freeways around Los Angeles, this can probably be done from an office using publicly available cameras)

Drivers suckered into paying a lease instead of a purchase are probably out of luck. not reading and understanding the fine print on contracts (especially ones costing you that much) is a recipe for disaster.

David Lang

Wraith said...

@ Paul: I'm a 25-year truck driver and I have run the LA ports.

You have absolutely no idea what you're talking about. Sit down and be quiet.

Ray - SoCal said...

Going down the rabbit hole it seems the foreign owned docks were trying to cut costs by using more “unskilled” labor”, which per the unions slowed things down.


And carriages were sent to third parties, which the union also claims slowed down loading of trucks.


And the ports have been working at reduced capacity due to whatever the most recent Ca Covid Rules are.

My guess is the dockworker union has a lot more responsibility for this back up then has come out so far.

I’m curious about any capital plans to increase the throughput for The LA and Long Beach ports. Seem not much recently:


The current mayor of LA, Garcetti,is very careful to upset no one, so gets nothing done. He is supposed to become the Ambassador to India. He is basically a lame duck.

The Ca Governor, Newsom, does nothing unless it helps him personally.

Alameda corridor has made rail a lot more efficient getting trains out of la county easier by adding under and over passes. Only negative is they take forever to get built. I think we are in year 4 of a 2 year project for two near my house, with no reliable completion date forecast.

5stonegames said...

Old Spanish Proverb.

God take man take what you want and pay for it.

A whole lot of people don't want to pay for skilled labor so they aren't getting it.

Sow, Reap.

Aesop said...

The time to upgrade throughput at CA's ports was 20 years ago.

Califrutopia is going to be paying the penalty for three terms of Moonbeam Jerry Brown as governor for decades after I'm dead and cold.

This is just the most recent example.

I would loooooooove to hear your first-person take on what you know about what you know, from your front-row seat.

Please, do share.

Ray - SoCal said...

More issues with empties and storage: