Wow, it certainly has been quite a year, has it not? The trucking industry has seen a lot of growth and change as it evolves to accommodate a shifting transportation landscape. But the year isn’t over yet! We’ve got the latest and greatest news that impact the trucking industry, from moves in California to moves in Washington D.C.
We’ll start on the West Coast, where it seems just about anything California decides to do has an impact on the trucking industry. This time, there may be some movement regarding port company truck driver misclassification.
The L.A. Misclassification Debate
Well, it’s official. On December 12 the Los Angeles City Council voted unanimously to investigate a ban put in place to address trucking and warehouse companies it was believed may be breaking employment laws, whether local, state, federal or otherwise. The motion specifically applies to any businesses who are operating on city property.
Specifically, the motion requires that City Attorney Mike Feuer submit a written report regarding the situation. This report is to then be delivered to the City of Los Angeles. It is expected that the council will be briefed on options governing fair wage and fair working conditions for workers operating in the Port of Los Angeles.
Fueur also as a mandate to closely examine the city’s land use laws, and whether those laws can be used to deny access to a company if they are found to be in repeated violation of standing employment laws. Whether or not there will be any findings supporting using the law in such a way is still up for debate. The motion aims to zero in on companies that have already been accused of anything from denying truck drivers fair wages or benefits – especially where it relates to their employment status.
In making their decision, the City Council referenced a USA Today report that may have pointed to abuses at the Ports of LA and Long Beach. While trucking companies and other industry stakeholders came out firmly against the report, pointing to the large numbers of truck drivers who succeed as independent contractors.
In their summary, the City Council noted that since 2010, approximately 1,150 port truck drivers have filed small claims lawsuits in civil court. They may have also filed complaints with the labor commission. They continued by referencing statistics that shows judges side with truck drivers nearly 97% of the time.
As to what the result of the new investigation, and how it will impact both trucking companies and the owner-operators that work for them, no one yet knows. But it is worth noting that this is an issue that the City Council has set firmly in their sights.
The TRALA ELD Waiver Win
Have you heard? The Federal Motor Carrier Safety Administration (FMCSA) recently announced a 90-day waiver program for motor carriers operating short-term rental trucks. In their ruling they defined short-term as 30 days or less. What does this mean?
Trucking operations that operate within this situation will have until March 18, 2018 to figure out how they will proceed. On the other side, companies that rent tractors will have another three months to ensure their rental vehicles are compliant.
This win comes as a big victory for the Truck Renting and Leasing Association (TRALA) who won this concession with one week to go before the mandate is set to go into effect. The notice of the 90-day waiver is set to be published in the Federal Register as soon as the terms are written up.
In praising the decision, TRALA stated in a news release that the waiver is “welcome news to truck rental companies that have been spending the past few months trying to put together strategies and plans to address the fact that FMCSA only granted part of TRALA’s original request for a five-year exemption for short-term rental trucks.”
We had originally reported on a waiver for rentals of eight days or less, as opposed to the 30 days TRALA was originally asking for. TRALA worried that many of its members would not have enough time to respond to the changes and ensure their customer’s needs were met in a compliant fashion.
Many thought the 8-day ruling on the matter was the final word, but according to TRALA’s statement, they continued to discuss the matter with the FMCSA in the hopes of winning a final concession. They admitted needing to make “multiple calls” and initiated “face-to-face discussions” in order to come to an agreement.
TRALA President and CEO Jake Jacoby went on to call the interaction between his organization and the agency an “open, honest, and productive dialogue [that] really helped our membership and I know our members appreciate the agency’s understanding of the unique challenges this rule presents to rental trucks.”
Truck leasing companies have also come out in support of the waiver, citing the extra time given as a critical factor in ensuring they are able to stay in compliance. One of the major concerns both TRALA and industry lobbyists referenced was the unique nature of companies that rely on tractor rentals, as well as the limitations imposed when two different ELD systems cannot talk to each other.
TRALA points out that if a rental company uses one ELD system but then a business uses a different rental company who uses a different system, it could present unfortunate compliance issues. Others point out that providing the extension doesn’t rob the mandate of its efficacy, but merely ensures companies who have an interest are able to prepare in time.
Your Economic Update
Interest rates were raised again in early-December. The Federal Reserve doesn’t seem to be concerned that the economy is in any danger. The larger target interest rate is now at 1.5%. The current increase represents the fifth one the Fed has made since they reduced rates to zero following the Great Recession.
How will the change in the federal funds rate impact trucking? Mainly the relation is with inflationary pressures. The goods that go back and forth between parties creating and buying those goods happens on the back of the trucking industry. As the economy goes, so goes trucking.
Fortunately, there doesn’t appear to be any danger on the horizon. If you track inflation across a 12-month rolling cycle and take a historical peek back in time, it is still below the Fed’s target 2%. In other good news, unemployment remained muted and wages showed moderate growth. Still, economists wonder why there has been such a lack of inflationary pressures considering the liquid environment our economy has been in for the past decade.
The one slight dip appeared in the Institute for Supply Chain Management’s Manufacturing Index, which slightly declined, but not enough to send it into negative growth territory. The manufacturing sector appears to continue a healthy run.
Obviously, the economy changes and gradual movements on both the micro and macro scale could change the paradigm, but for now, despite bumps from major weather events, both the overall economy and trucking sector appear to be on pretty good footing.
Trucking Continues to Show Strength
Measures related to freight movements completed by for-hire transportation companies shows another rebound to start the fourth quarter of 2017. The Freight Transportation Services Index (TSI) released by the Transportation Department, saw an increase of 0.2% better than economists and industry watchers were expecting.
Significant increases in freight movement, from trucking, to rail, and intermodal all saw big jumps. This all takes place amid a backdrop of increasing economic strength. Adding to the good news was the Fed’s Industrial Production Index, which saw a rise of nearly 1% over the reporting period. From housing starts to savings, the American economy has been doing well and trucking benefits.
In fact, the Freight TSI measure in October was the third all-time high measurement the industry has seen. The four-month period from August to November 2017 saw huge levels of Freight TSI growth. These types of numbers have not been seen either ever or in a long time.
In fact, many industry insiders are expecting more explosive growth for the trucking industry, warehousing, and other sectors related to keeping the supply chain humming. Many companies have stated that they intend to expand operations in the new year, signaling more growth, more jobs and a healthy transportation sector.
What does this mean for the overall state of the industry? If the economy continues to do well, freight activity and supply-chain growth appear to be a dependable constant. While no one can predict the future, all signs point to a prosperous 2018.