Regulations

You may have been hearing the buzz about a new bill that is rocking the transportation industry. Assembly Bill 5 has been a massively controversial development for both carriers and drivers. For years, the trucking industry has made a name for itself as a place where independents and entrepreneurs can thrive, but many industry experts are saying that this bill threatens the nature of that current model. Assembly Bill 5, also called the “Employees and Independent Contractor” bill, or simply AB5 essentially reclassifies employees who may have previously been able to call themselves independent contractors. 

Recently, it was decided that truckers would be granted a preliminary injunction from the California Trucking Association to cease the enforcement of AB5. While it might not necessarily be affecting us immediately, it’s important to read up on the potential outcome if the current pardon is lifted. This is especially important since the injunction may or may not be final. 

Many big employers in the transportation industry choose to classify their workers as independent contractors. This was previously a bonus for workers, as there was increased flexibility for hours and hauls. Companies such as Uber Freight have been providing increased opportunities for drivers while also increasing the pool of potential drivers to combat the nationwide shortage. The enforcement of reclassification will greatly impact how these companies structure their hiring policies. Before we dive into that, let’s nail down the details of the actual legislature. 

The Basics of the Bill 

Back in September, the bill was signed by the governor of California, Gavin Newsom. It was described as being “necessary and important” for the workers of the area. The intended purpose is to protect workers from being deprived of benefits and other perks that full-time employees are entitled to. If an employee is technically working full time for a carrier, while still technically being classified as a contract worker, the company isn’t obligated to provide them with the benefits of a traditional full-time employee. 

This legislation includes a strict basis for the rules of independent contracting. This is called an “ABC” system. First off, (A) the worker is free from the control and direction of the hiring entity; (B), the worker performs work that is outside the usual course of the hiring entity business; and (C), the worker is customarily engaged in an independently established trade, occupation, and business. If a worker fits all of these requirements, they are eligible to be considered independent. This is a much more restrictive system than the one previously in place. It is also the hiring entity’s responsibility to enact these standards, not the responsibility of the employee. 

Controversy and the Impact on Drivers and Carriers

This bill would impact the trucking industry severely, as a massive percentage of drivers fall into the category of independent, and they usually also sell their services to carriers, whose main business is transportation. This puts independent truckers in the category of being inside the usual course and disqualified from part B of the ABC system. 

So, while the intent of this bill was to get benefits for those employees, many industry experts disagree and argue that these restrictions on independent employees are actually going to severely harm employment levels and driver quality of life. If carriers and employers are forced to start employing people full time that they were previously only contracting, it’s going to be much more expensive for them. This is expected to cause a significant dip in employment opportunities for California drivers since carriers and companies will be hiring less and overall being more selective about who they hire. 

This bill could be especially impactful for the trucking industry since California is a huge state for the industry, as it has countless massive ports and facilities. It’s generally a big hub, and previously many drivers have flocked there for these opportunities. Now, industry professionals are not so sure that this trend will continue, as the opportunities might become less plentiful. It is likely that some of the smaller, less stable companies and a large number of owner-operators based in California will not survive this legislation, or at least be forced to relocate to outside of the state of California. 

What to Expect Moving Forward  

So now we’re all wondering “what’s next?” While we will have to wait and see how legislative bodies respond in the long run, and in the meantime, there are a few things that we know going forward. There was a hearing on January 13th that extended the restraining order granted for truckers against AB5 that was temporarily put in place back in December. The injunction was technically won by advocates from the transportation industry, but there will be a final court case in the upcoming months to reach a final conclusion. The timeline of this process is still up for debate. While the trucking industry is safe for now, many are still left guessing about the future of their business models. 

The transportation industry is a complicated tapestry. Fortunately, we are here to provide clarity and to keep you up to date with all of the latest news and updates. If you’re looking to get involved in the industry, Mission Financial can help you get started! 

 

 

As we wrap up 2019, we’re left reflecting on the progress made in the industry this year. With the exponential rise of online commerce and ever-growing demand for immediate product fulfillment, the transportation industry is becoming more integral to the American economy than ever before. As the field grows, one would hope that conditions for drivers improve accordingly, but we all know that this is sometimes tricky. While drivers may be receiving many perks for fulfilling this important role, things still aren’t perfect out on the road.  In our last post, we detailed some of the most frustrating issues facing drivers this year, and in this edition, we intend to unpack five more of these common complaints. 

#6 Speed Limits  

While it’s no question that speed limits are an important part of keeping everyone safe on the roads, excessively low speed limits can be a great annoyance for truckers. Speed plays a big role in a driver’s overall fuel efficiency. Fuel is easily the most expensive maintenance cost of owning a semi, and drivers try to maximize their miles per gallon. One of the best ways to do this is to find your trucks “sweet spot” which is the speed at which you’re getting the most out of your diesel. Speed limitations can cause drivers to miss out on their sweet spot and therefore miss out on precious fuel miles. 

Slowing down can also slow down your routes significantly. An unexpected slowdown can lead to delayed or even missed deliveries if poorly planned. Efficiency is key out on the road. While safety measures are wildly important, speed limits are often huge hurdles for truck drivers. To minimize this inconvenience, try to take major highways and interstates that will probably have higher limits than surface roads. Additionally, try to find the sweetest spot possible for fuel intake while not risking unsafe or illegal driving habits. 

#7 Faulty Infrastructure

Faulty infrastructure can be a huge inconvenience to truckers, particularly when it concerns the roads and bridges that they are driving across all day. Potholes, cracks and generally poorly maintained roads are not only unpleasant and bumpy to drive on, but they can also be a safety concern. Driving a semi-truck is high risk due to its size and power, so absolute control of the vehicle is essential at all times. Rough road conditions can also be hard on the mechanics of your truck. Potholes and cracks can cause damage to your suspension and tires. Particularly deep ones can even break an axle if you’re going fast enough, causing thousands of dollars in unnecessary repairs. 

While it’s not necessarily realistic or possible to avoid these issues, try your best to minimize the damages they cause. Slow down a bit if you see a large pothole in your path.

#8 Distracted Drivers

Driver distraction is a huge issue for truck drivers, as it presents a massive safety concern. This is especially true of non-commercial drivers who aren’t always respectful of the amount of space required following an 18-wheeler. Drivers who are not paying attention and are unaware of a semi-truck’s blind spot present a real threat to themselves and the truck driver. Controlling a semi is a tough job already and trying to account for distracted drivers nearby only makes it harder. Trucks can’t maneuver or respond as quickly as regular cars, so when someone drifts into your lane or stops short, it can lead to a catastrophic outcome. Try to avoid potential collisions by always staying aware of your surroundings, frequently checking your mirrors, and never following too closely. 

#9 Driver Training Standards 

Driver training is the first defense when it comes to creating safe and efficient drivers. While many find extensive driver training protocol to be invasive and boring, its essential when it comes to creating good habits for the future of the industry. Even if you’re a seasoned industry veteran, being an advocate for thorough training creates a better industry standard. To personally help raise the bar, stay up to date on current training and make sure that you’re informed of all essential protocol. 

#10 Delays at Facilities 

One of the most important things to a driver is efficiency, and the ultimate killer of efficiency is a delay. Delays at facilities can eat away at a driver’s day tremendously. A delay of a few hours can mean missing out on hundreds of miles of driving that day. Depending on your unique employment situation, you may also be missing out on wages. If your hourly rate only includes hours on the road and not sitting in line at facilities, you could be missing out on time on the clock. While much of this is out of your control, you can minimize the waiting to the best of your ability by being prompt for all your appointments. To avoid missed pay, carefully review your employment terms when starting a new position. 

If you’re considering getting into this industry, it’s good to have a helping hand. Mission Financial has an informative blog and plenty of resources to help you get started with your financing!  

While conditions for drivers are constantly improving, there is still a variety of nuisances that have yet to be worked out. While it can be profitable and fulfilling, being a commercial truck driver is still a demanding and difficult job with its own set of hurdles. Many of the intricacies of the ever-changing transportation industry affect the lives of drivers, in both positive and negative ways. We listened to the concerns of seasoned industry professionals and curated a list of the top 10 issues plaguing drivers in the year 2019. 

#1: Driver Compensation

With the growing driver shortage, many carrier companies are offering great financial incentives for drivers, but even still, compensation is a huge point of conflict for many drivers. While driving for a commercial carrier can be fulfilling, stable and profitable, there may be some room for improvement. Annual salaries in this industry usually hover around the national average household annual income, which is $56,516, but this obviously depends on the area you’re based out of. While this might seem low for the demands of this career, there are many ways to boost your chances of receiving a higher salary. 

As a commercial truck driver, your salary is often dependent on the length of your routes, the frequency of them, and the area where you are based out of. Additionally, your experience and driving record factor into how much you are offered in terms of compensation. As you gain more years in the industry under your belt, you will be eligible for higher pay rates than you found at the beginning of your career. Additionally, keeping your driving record clean will also boost offers. In terms of what can be accomplished in the shorter term, assuming more responsibility leads to higher pay. Try seeking out longer or more frequent routes for a pay upgrade. 

Fortunately, there have been strides in a positive direction. In a recent trial, the court favored a verdict claiming that drivers should be paid for their time in the sleeper berth, and there has been a recent push to include this “off-duty” time into worker pay. 

#2: Invasive Break Policies

Working hours have often been a major concern for drivers. Despite the media portrayals of drivers powering through sleepiness on the road all night, this is far from the reality of the situation. There are many laws to ensure rest and meal breaks, some of these regulations going to excessive lengths. While exact regulations vary by state, usually an average of 8 hours is required for drivers to spend in the sleeper berth portion of the truck in addition to two consecutive hours otherwise off-duty, but many areas are attempting to go a step further. Some areas are trying to enforce 30-minute meal breaks throughout the day, which can disrupt efficiency and compromise driver well-being. Many drivers find these strict laws about breaks to be disruptive to their efficiency and are fighting back. Being forced to take too many breaks throughout their workday can interrupt their “flow” and even tire them out more than if they just got their driving knocked out in longer blocks. Many of them also find this law invasive, claiming that they don’t like to be told when to be taking their breaks. Thankfully, recent legislation such as the REST act seeks to eliminate frivolous 30-minute break requirements. Finding this balance is an important part of the industry as it vastly impacts the driver’s quality of life.  

#3: Truck Parking 

The availability of parking for semi-trucks is also a concern for American drivers. Drivers can’t simply pull into any gas station or roadside rest stop, they have to look for places with special accommodations in specific areas for semi-trucks. While the industry is investing in building more facilities for this purpose, they are still sometimes too scarce in certain areas. The lack of available truck parking spaces can be detrimental to a driver’s quality of life, as it often forces them to drive further to find these spots. Driving further can push past the required hours of service that were previously mentioned and betray public regulations that are set in place to protect the driver and the carrier alike. 

#4: Autonomous Truck Technology 

While autonomous trucking technology wouldn’t eliminate the role of the long haul-trucker, as autonomous trucks would still need to be manned by an actual person, it would drastically change the job description. Truckers who deeply cherish their daily routine are slowly having to come to terms with the evolving nature of the industry. Drivers will soon have to switch from driving to monitoring, and while many assert that this will make routes safer and more efficient, it will take much of the interest out of the days’ work as well as possibly being threatening to individual careers. 

Currently, there is still a massive national driver shortage that drivers can take full advantage of and get additional incentives from their current position along with increased hours and therefore increased pay. 

#5: The ELD Mandate

The Electronic Logging Device Mandate often referred to simply as the ELD Mandate, is a new regulation that requires trucks to be equipped with additional technology that aims to improve safety and efficiency on the road. It was originally implemented in 2017, but it is just now becoming a nuisance for many drivers. The deadline for vehicles that were grandfathered in is quickly approaching, becoming final in December 2019. While it had certain safety benefits, many drivers found it invasive and inconvenient. This inconvenience is exaggerated when drivers own their own trucks and have to personally pay for the installation of these logging devices. 

While there is no legal avoidance of this mandate, it’s important to consider its intentions. The money and effort that goes into this installation might save you thousands of collision damages later by helping you avoid them in the first place. 

These issues may be annoying right now, but many are a result of the blossoming industry that will lead to driver prosperity. These growing pains have incredible potential to be indicative of a brighter future for truckers, and in the short term, many can be aided with creative problem-solving skills and an optimistic mindset. Hopefully, this information has informed a more holistic view of trucker culture as a whole, and next month, you can check out part two of this article right here on our blog! 

 

California tried to update its trucking laws to more closely resemble a typical work environment but was recently overruled. In an office setting, it’s suggested that employees take frequent breaks to stretch and refocus. Getting up from a desk and getting time away from the harsh blue light of a computer can be helpful for workplace wellness. While small breaks throughout the day are fine when you have to merely stand up from a desk, frequent breaks are more of an interruption than a relief for truckers.  When government regulations attempt to force them into the same box as office workers, their needs aren’t being properly met.

California’s Strict Break Requirements   

Typically, drivers get a 30-minute meal break per day and are not permitted to drive for more than 11 hours at a time. The U.S. Court of Appeals for the Ninth Circuit passed a law in 2014 that required California drivers to take a paid 10-minute break every 4 hours and a 30-minute meal break every 5 hours. The breaks were also required to be taken separately as to further break up driving. The law also pushed back total driving time allotted to 12 hours before stopping for the day to sleep and rest. These regulations are considerably stricter than the surrounding states’ rules, particularly the 10-minute break requirement that only adds tediousness to a drive. The inconsistency between states has drivers fearing for the efficiency and predictability of their routes.

Flaws in the Plan

While consistent breaks work effectively in a traditional office environment, the trucking industry is unique and doesn’t conform to the same standards of a typical workplace. After the passing of this law, national protest came from industry officials and benefactors alike. One group in particular who signed numerous petitions was the American Trucking Association (ATA). The law was designed by people who were supposedly unfamiliar with what truckers and transport businesses actually want and need. The law would greatly differ from regulations in other states, and therefore robs drivers of their consistency and routine. Having such different regulations from one state to another doesn’t allow truckers to properly plan their meal breaks and rest stops, as the timing would become complicated and tiresome.

Additionally, stopping too frequently breaks up work flow in a way that can actually be more tiring for drivers. In a more conventional office, breaks might help to relax and ease the stress of a workday, but for truckers, it can do the opposite. It also significantly cuts down on efficiency, so it’s a taxing financial regulation as well; less productive drivers mean longer transport times and more money spent per route. More time pulling off of the highway to take excessive breaks leads to less distance covered per day and therefore higher costs for transported product and harm done to the American consumer. In fact, driver productivity in California was reduced by three percent after these regulations were passed, according to an FMCSA Administrator.

FMCSA Grants Petitions

In 2018, the ATA filled a petition with the Department of Transportation (DOT) that proved all of the following points:

• “California’s meal period and rest break laws offer no additional safety benefit beyond the safety benefit generated by the hours-of-service requirements
• The laws are incompatible with the hours-of-service regulations enforced by the Department of Transportation
• The meal and rest break laws cause an unreasonable burden to drivers and carriers operating in interstate commerce”

After a long debate, the DOT and Federal Motor Carrier Safety Administration (FMCSA) granted the petition, stating that California trucking companies were no longer required to provide paid rest and meal breaks. While the law was initially set in place to create safer driving conditions for truckers, industry gurus asserted that more national consistency would lead to safer trucking practices as opposed to additional breaks.

Standards for American Drivers

While regulations that require excessive breaks can be a burden for productivity, the intent behind the California law was to decrease worker exploitation in the trucking industry, which is a persistent problem. Commercial truck drivers are often forced to work long hours without substantial breaks, and while California overstepped in execution, the industry is making strides by putting these necessities in a federally sanctioned domain. Truckers already work some of the country’s longest and most tiresome hours in our nation and need helpful standards to prevent their hard work from being exploited. Now that California trucking companies are no longer required to provide paid breaks, drivers can choose when and how they take them.

 

At the beginning of 2019, there was a wide range of speculation as to how new tariffs against China would affect the U.S. economy, the price of goods, and trucking demands. Now that the year is half over, tensions are heating up even more. As a trade war between the U.S. and China wages on, other countries are becoming concerned of the possible implications to their own economies. Additionally, in the U.S., the trade war may have an effect on the commercial trucking industry. Here is what you need to know about the trade war between the U.S. and China.

Tariffs Against China and Mexico  

In 2018, three rounds of tariffs against China were put in place by the U.S. These tariffs covered more than $250 billion worth of Chinese exports, including technology, tires, purses, and railway equipment. Accusing the U.S. of starting “the largest trade war in economic history,” Beijing retaliated with over $110 billion in tariffs against U.S. goods. This included tariffs on medical equipment, coal paraphernalia, chemicals, and soybeans.

The U.S. is not only aiming tariffs at China. In fact, The World Trade Organization (WTO) has stated this may be the worst global trade crisis since 1947. On May 30, the president shocked the financial markets by increasing tariffs to Mexico. In addition, threats were made that taxes would only continue to rise until Mexico began to work with the U.S. to minimize illegal immigration at the border. Analysts stated that these heightened tariffs could send both the U.S. and their closest ally into “economic and diplomatic crisis.”

Fortunately, just nine days after announcing these tariffs, the president tweeted that Mexico and the U.S. had come to an agreement, and the higher taxes would not go into effect. While Mexico has agreed to limit immigration at the southwest border, the results of this have yet to be seen. Only time will tell if this agreement will stand. However, for now, it seems the tariffs that would have resulted in increased prices on goods exported from Mexico, including a possible extra $15 million in taxes for the U.S. food chain Chipotle, will not be put into effect.

Understanding the Tariffs

The president’s tariffs have been placed on billions of dollars’ worth of goods in a variety of countries, with China receiving the brunt of the taxes. He has held the stance since before the 2016 election that he believes China has unfair trade tactics in place. In the case of Mexico, many tariffs are being used as a means to get them to cooperate with his plans. Additionally, President Trump believes that placing higher tariffs on imported goods will encourage more manufacturing to come to the U.S. This will, in turn, boost the U.S. economy and create jobs for Americans.

Will the Trade War Affect the Trucking Industry?

In regard to how the trade war may affect the U.S. trucking industry, Vice President of Trucking Research for FTR Transportation Intelligence Avery Vise, has a positive outlook. Vise states he does not expect the president’s new tariffs to have much of an effect on American trucking. It is projected that many price increases will be absorbed by the original manufacturer of the goods for competitive reasons. This means the higher prices will not transfer to the consumer.

Vise also mentions that if tariffs are applied to Mexico after all, it could mean consumers would seek products from other areas due to the considerable price increase. This, in turn, could result in declined freight volumes. However, there are no longer plans to increase Mexican tariffs currently.

An Uncertain Future  

When it comes to the U.S.-China trade war, there is no projected end in sight. Trucking is the primary form of transportation for foreign goods arriving in West Coast ports from China. The trade war has caused a dramatic drop in the number of ocean shipments coming from China, meaning less trucks are needed to haul freight. This has caused a drop in the demand for truckers at these ports.

While West Coast demand may continue to fall, trucking needs could increase on the East Coast. With products from China becoming too expensive, it is projected that businesses will find new sources for the goods they need. This could mean ports in Savannah, New Jersey, and New York could see a rise in demand for truckers as goods start coming in from other places. Therefore, the need for truckers will not diminish. It may simply transfer to a new location.

Despite trade tensions and threats of higher tariffs, the future of the trucking industry is still looking bright. Trucking will continue to remain a vital component of the U.S. economy, which means owner operators will always be needed. At Mission Financial, we are always keeping up with the latest industry news, so visit our blog today.