Trucker Strike Poses New Threat to Supply Chains

November, 24 2022

Truckers protesting a California law they say hurts their livelihoods have crippled operations at the Port of Oakland. There’s concern the unrest could spread.

UPDATE Tuesday, July 26:
The Port of Oakland was able to resume normal operations after port leaders and police restricted truckers protesting California’s AB5 “gig worker” law to “free speech zones,” warning that violators would face citation. Protests had crippled operations at the port for about a week. Protesters being relegated to particular areas enabled trucks to again begin picking up and dropping off cargo at key marine terminals. Concerns remain that protests could spread to other California ports, resulting in more supply chain disruption.

A trucker strike is crippling operations at the ninth-busiest container port in the United States, another stick in the spokes of the already disrupted global supply chain and one with potential to impact importers in the promotional products industry and beyond.

Independent owner-operator truck drivers began protesting at the Port of Oakland on July 19 in opposition to a court ruling that cleared the way for the transport professionals to be subject to Assembly Bill 5 (AB5), a California law the strikers believe could detrimentally affect their livelihoods and way of life.

The protests have made it difficult for dockworkers to get to work and perform their jobs. The demonstrations are also preventing trucks from carrying cargo into and out of the Port of Oakland, the West Coast’s third-busiest container port behind Los Angeles and Long Beach.

The challenges are compelling some cargo ships that were waiting to unload at Oakland to re-route to other ports or to avoid the Northern California dock altogether – a phenomenon that, should it go on, could exacerbate ship congestion at other ports. The truckers have indicated they do not intend to stop protesting.

The end-result of such congestion, from a promo perspective, is that it can take longer for industry companies to get their imported product, thereby delaying restocking and potentially worsening inventory shortfalls as the holiday branded merch selling season nears.

Some analysts are worried the protests could reach other ports, including Los Angeles and Long Beach.

“If this kind of activity spreads to southern California, it is extremely significant from a supply chain standpoint,” Larry Gross, president and founder of Gross Transportation Consulting, told ABC. A continued strike could “break at least the Port of Oakland,” Gross said.

Legislators behind AB5 intended the law to protect workers in the so-called “gig-economy” from exploitation by essentially obligating employers to extend employee status to gig workers unless a three-pronged test could be passed to establish the person is truly an independent contractor.

California intended to begin implementing that law in 2020, but that was delayed in part by a lawsuit filed by the California Trucking Association. On June 30, the U.S. Supreme Court declined to review the case, enabling the Golden State’s government to begin enforcing AB5 as the legal battle continues.

There are about 70,000 independent owner-operator truckers in California, and the law now applies to them. Many are upset about that – hence the protests. They feel the law twists their arms into seeking work as employees, whereas they’d rather remain independent. It also, opponents claim, makes it more difficult to do business and increases the cost of doing business, among other ills.

California Gov. Gavin Newsom has indicated he’s not about to exempt truckers from AB5. “Although it has been the subject of litigation, AB5 was enacted in 2019, so no one should be caught by surprise by the law’s requirements at this time,” a spokesperson for the Governor’s office told The Wall Street Journal.

The trucker protests come as U.S. importers and exporters are also keeping nervous eyes on two contentious union contract negotiations that have potential to greatly affect supply chains should they go awry.

One involves unionized West Coast port workers represented by the International Longshore and Warehouse Union and employers represented by the Pacific Maritime Association. The contract for ILWU workers expired on July 1. Though talks are continuing and both sides have pledged to avoid a work stoppage, the sides are at odds on key points that include automation at ports.

Meanwhile, President Joe Biden recently intervened to prevent a possible strike by railroad workers whose unions are embroiled in difficult negotiations with large freight railroads for a new contract for the workers. On July 17, Biden appointed a special board to help move the stalled negotiations along – a move that, by law, prevents a strike for 60 days. Should no contract be reached and workers want to strike, Congress could potentially intervene.


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