Supply chain issues have played front and center for businesses since the pandemic started. Consumers faced empty toilet paper shelves and retailers said we just needed to ‘calm down and quit hoarding their paper products.’ So with the multiple news stories about the trucking industry in California and AB5, the law that could upend the supply chain is ultra bad news.
As of right now, those directly impacted are owner-operator truckers in California who work the coastal ports. The trucking industry asked the Supreme Court to step in, but the Court declined, and the part of the law impacting owner-operator truckers could go into effect quickly.
“If the worst-case scenario happens, we’ll have bigger worries than empty toilet paper shelves.”
Because of the law, truckers protested last week, stopping traffic on port area highways, but the ports themselves continued offloading as usual. Protests did not impede operations at the L.A.-area ports, Eugene Seroka, Executive Director of the Port of Los Angeles, said during a press conference. The L.A. ports handle 40% of all U.S. import/export port freight movement.
The actual conflict is a conundrum of differing opinions, including differing opinions from the truckers themselves. But businesses depending on the supply chain’s success to survive can only wait and see… and stay on top of the news.
If the law does as experts say, it could be bad, very bad. 70% of the truckers working the ports will be impacted. Of those impacted, not all will be able to meet the A-B-C test to continue work as usual.
A. The person is free from the control and direction of the hiring entity, both in contract and in fact.
B. The person performs work that is outside the usual course of the hiring entity’s business.
C. The person is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
The trucking industry says B is the problem for most truckers impacted.
The California lawmaker who wrote the law says it protects truckers, and some truckers agree.
Still, the law creates uncertainty about the supply chain, which is something retailers could live without.
The California retail association has sent a letter to California Governor Gavin Newsom expressing concerns.
The Biden Administration has said it is looking forward to California’s action plan for handling AB5.
At a meeting at the Port of Los Angeles, Retired U.S. Army General, Stephen Lyons (the recently appointed White House supply chain envoy) made clear that he’s aware of the ongoing issue. He said:
“The truckers are so critical to this supply chain and we’ve got to make sure there are conditions that will take care of them. We’ll continue to watch and assess these impacts.”
In the meantime, retailers and consumers have yet another worry about the supply chain in the post-pandemic age. If the worst-case scenario happens, we’ll have bigger worries than empty toilet paper shelves.
