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Proposed rule threatens owner-operator trucking model
A proposed rule from the Department of Labor could threaten supply chains across the country. The new rule would help end the classification of truck drivers as independent contractors and could be finalized in the next three to six months.
The proposed rule would make it much more difficult for companies to protect the independent contractor status of owner-operators. The proposed law could impact 350,000 independent truckers in drayage and over-the-road trucking in the US.
The Association of Bi-State Motor Carriers in NY-NJ, where roughly 80% of drivers are independent operators, is already sounding the alarm to its member companies.
The requirements in the proposed rule differ from the AB5 regulation in California. AB5 is based on the “ABC test,” that contains three criteria involving scope of work and the amount of control a trucking company exerts over drivers. All three criteria must be proven to demonstrate the worker’s status.
The new proposed rule contains five criteria to be met to demonstrate independent contractor status. They include company control over the driver; the investment made by the worker; whether technology allows the company to exert control over the worker; the extent of managerial decision-making afforded to the contractor; and whether the driver engages in “exclusivity” if they contract with the same company for years.
The proposed rule would require that the majority of the five criteria be met, rather than all five. Luckily, this rule would not impact O’Neill Logistics. We operate asset-based fleets with company drivers in New Jersey, Savannah, and California.
Ocean rate decline to define market “status quo” in 2023
There is a key uncertainty hovering over the industry in 2023 and beyond. Stakeholders are curious about the long-term impact of the Covid-19 pandemic on the container shipping market. Was the shock to the system so great that the trajectory of the market will be altered going forward? Many believe that the answer is no.
Ocean rates collapsed 77% from January to mid-December 2022. Various stakeholders interpret the collapse as a reversion to the pre-pandemic status quo. However, many are wondering if the reversion is just temporary.
Market behavior has also reverted to pre-pandemic norms. Many shippers were demanding relief from existing contract rates in 2022. Others tried to renegotiate multi-year contracts signed over the past two years. Additionally, shippers that signed for 2023 obtained rates that are much more “normal” by historic standards.
However, there is also evidence that the industry changed in significant ways. Carriers used their profits during the pandemic to accelerate their diversification into various logistics services, marine terminals, air freight, towage and even media and healthcare.
Although those moves have diversified their revenue, carrier success will always be dependent on core container shipping activities that are tied to supply and demand. Carriers also became more skillful in adjusting capacity via blank sailings in response to short-term changes in demand.
Unlike the demand surge that pushed freight rates to record heights during the pandemic, liner consolidation and increased flexibility in capacity management represent real change from prior industry history.
About O’Neill Logistics
O’Neill Logistics is a leading third party logistics provider. We operate in California, Savannah, New Jersey. We service many verticals including Garments, Fashion Accessories, Footwear, Furniture, Home Goods, & Electronics. Additionally, we offer omni-channel distribution and all value-added services. Lastly, we focus on retail “drop shipment” fulfillment and item-level fulfillment services with same-day service offerings.
O’Neill Logistics has over 2 million square feet of state-of-the-art facilities. Additionally, we offer dray services to support the warehouses and provide distribution to retailers and wholesalers. Our reliable 3PL platform combines sophisticated technology with robust, flexible processing designs and speed-to-market gateway models.
Lastly, we aim to simplify your supply chain. We deliver exceptional service and can optimize your operational performance. Therefore, we aim to build, protect and foster strong business partnerships.
Please reach out to us if you have any questions or need assistance with your logistics solutions!