Demand is high, and supply seems to have dwindled. Continued reports paint a picture of ships floating aimlessly, awaiting the ability to make port in California’s port terminal. At the same time, frustration mounts as citizens need products, and they appear just out of reach. Like the demand for justice, the people of the United States seek answers and demand solutions. After all, we are a people who do not like to wait. We have grown accustomed to instant gratification.
We want answers. Like a fine meal served up on a stylish platter, labor shortages are the culprit publicized on the nightly news. To the typical American glancing at the programming, this seems to sum it up. Taking a deeper look and giving consideration to other factors, We the People might be surprised to find that the explanation might be short of information mirroring the shortage in supply.
California Truck Ban
Politics pave the way for the future, and oil and gas finds itself on the outs more and more. Just recently, California’s Governor Gavin Newsom upped the intensity of his attack on fossil fuels with an executive order mandating all passenger vehicles be zero-emission models by 2035. The Air Resources Board is developing legislation for all drayage trucks to meet zero-emission regulations by 100% of the same year. Drayage trucks, it just happens, include diesel-powered trucks that transport shipping containers. Those would be the same containers stacked to the hilt on those same ships awaiting dock access.
While seemingly under attack or at least collateral damage of the war on fossil fuels, drayage truck owners themselves could be part of the shortage explanations. This would stack up nicely with the nightly reports of labor shortages. In this case, however, they result from a political agenda.
With new drayage trucks costing anywhere from $75,000 to over $200,000, the investment is comparable to the purchase of a home, but with shorter terms typically negotiated between 48 and 60 months. Considering the cost of a 30-year mortgage on a $200,000 home, one can deduce that a five-year note on the similar purchase price of a drayage truck can be financially taxing.
With a kill date of 2035 looming, the question can be rendered of why would an individual make the investment in trucking equipment only to end up obsolete. If a private operator decided today to invest in trucking and take the financial plunge, the truck would be paid off in 2026. That leaves a nine-year window to make the truck last until 2035 or reinvest in new equipment. No matter the route taken, the end is near. Why would one invest time and money into a business that will drastically change? With the technology not clearly available to yield success after 2035, private operators could be seeking out new business opportunities in other industries. So that would explain the labor shortages found to be at the hands of the very politicians that pontificate they are trying to help the citizens they serve.
Employee and Contractor Distinction
A very telling matter has risen to the top to shed light on the California port labor shortage. On September 18, 2019, Governor Newsom signed AB5 into law. With this new piece of legislation, increased difficulty has been leveraged upon companies and how they classify those who work for them as 1099 contractors.
Interestingly enough, of the estimated 13,000 truckers who serve the ports of Los Angeles and Long Beach, only a few 100 are classified as W2 employees. The bulk of this workforce are owner-operators who typically lease trucks from trucking companies, drive under these same companies’ permits, and rely on driving assignments from them. They receive a 1099 at the end of the year for tax purposes.
Under these current constraints, the bulk of the drivers needed to transport those containers awaiting offloading are simply not eligible to participate any longer. Replacements are needed, and the solution is not as simple as putting an ad on the internet. It takes skill and training to operate these transport vehicles, and one is not going to just terminate employment at the local hardware store to climb up into the cab of a big rig. No, it is not that simple, and as we wait for a solution, we will wait for goods to make their way into the port.
Future of Hope, or Doubt
Like with most disputes, solutions seem long-off and uncertain. With the nation seemingly caught in the middle of the siege on fossil fuels and a self-serving political agenda, who knows when the containers will be offloaded into California ports.
Many motives have been forced and agendas levied without much resistance. While explanations are vague and take the identity of “labor shortages,” it is almost horrific that this general answer gains acceptance and not question. No one seems to be interested in demanding more in-depth answers with immediate rectifying action.
So, while the holidays approach and the demand for even more goods increasingly spirals out of control, We the People might want to take the time to pay attention, ask questions, and demand true solutions. Otherwise, doing without is going to prevail as the common theme throughout the country.