‘Legal Questions’ for Trucking  Industry Amid AB5 Compliance

While California’s worker classification law — better known as Assembly Bill 5, AB5 or the “gig worker bill” — took effect on January 1, 2020, its impact on supply chains was not expected to be felt until the state’s more than 100,000 trucking companies and 70,000 independent owner/operators became required to comply with it.

That happened on June 30, when the U.S. Supreme Court declined to hear a case challenging AB5. The bill, designed to protect such gig workers as Uber or DoorDash drivers, requires workers to meet three criteria to be considered independent contractors; otherwise, they are considered employees entitled to job benefits. 

The trucking industry was hopeful for an exemption, but AB5 now governs truck owner-operators and their service of carriers, brokers and shippers. In response, truckers staged protests in July at several California supply chain nodes, including the Ports of Los Angeles and Long Beach. 

Supply managers have braced for an impact on cargo flows in the coming months as companies comply with AB5 — or advise their owner-operator partners to leave the state.

According to research by the Washington, D.C.-based National Association of Manufacturers, trucking companies have two options: (1) hire owner-operators as employees (however, many drivers will want to retain autonomy with their own trucks) or (2) convert to brokers or freight forwarders with driver contracts, where the company manages dispatches, but the drivers remain independent.

US$1 Billion

Grant funding for 85 U.S. airports to expand and upgrade terminals and other facilities that was announced by the Biden administration in July, using monies approved in the infrastructure bill that became law in November 2021.

Among the grants to be dispersed  by the Federal Aviation Administration: $60 million to improve the terminal and replace the bag-handling system at Denver International Airport and $50 million each for terminal improvements at Logan International Airport in Boston, Orlando (Florida) International Airport and Dulles International Airport outside Washington, D.C.

Logistics grade: Qatar was 30th in The World Bank’s Logistics Performance Index in 2018, but with a burgeoning hydrocarbon sector, an investor-friendly environment and improving trade traffic, the country ranked seventh in the 2022 Emerging Markets Logistics Index by Kuwait-based supply chain services provider Agility.

Infrastructure: The world’s second- largest exporter of natural gas has made big infrastructure investments that will be on display during the World Cup soccer tournament in November. While some nations build new highways and airports, Qatar has what is being called a “new city” — Lusail City, a US$45-billion metropolis that has largely taken shape in the last decade.

The customs house: Hosting the World Cup has put even more scrutiny on Qatar’s human-rights record; there have been frequent charges of forced labor and inhumane conditions for migrant workers building stadiums and other facilities. Also, the country’s promise of a carbon-neutral World Cup has been met with much skepticism.