Freight Disruption at Port of Oakland as California Truckers Protest AB5

Watch out, folks! 📢

More shipment delays may be expected as more than a hundred protesters – composed of truck drivers who own and operate their own rigs – descended upon the Port of Oakland on Monday to challenge the California Assembly Bill 5 (AB5).

The protests prevented other trucks from entering the port, resulting in port congestion and halting operations for one of the busiest ports in the US. And disruptions may continue until the U.S. Supreme Court grants judicial review of the controversial state law.

What Is AB5?

The California Assembly Bill 5, also known as the gig worker law, is a law signed by Governor Gavin Newsom last September 2019 affecting independent contractors doing business in California. The law took effect four months later, resulting in countless independent contractors or workers belonging to the gig economy to be reclassified as employees.

The law aims to prevent companies from exploiting workers who categorize their staff as independent contractors instead of employees, and thus, withhold from them their mandated rights and benefits such as receiving minimum wage and paid sick leaves, among others.

The law intends to regulate companies that employ independent workers in huge numbers such as app-based delivery and ride-hailing service providers like DoorDash, Lyft and Uber. These companies opposed AB5 from the start, and with the support of more than half of California voters, succeeded in overriding it with Proposition 22, which designates their drivers and workers as independent contractors and not employees.

Why Are The Independent Truck Owner-Operators Against It?

Under AB5, trucking companies must reclassify and treat all their drivers as their employees. This is problematic for the independent truckers who value the flexibility of the current set-up: trucking companies deal with the port and all the paperwork and the independent drivers just procure and deliver the goods.

As independent service providers, the only way they can still make use of their rigs is for them to establish their own trucking company and deal with all of the legalities, paperwork, and headaches of running a trucking business.

Given this unfavorable situation they are in, the strike may be their last-ditch effort to express their disagreement over the new law. On June 28, the U.S. Supreme Court declined to listen to the challenge raised by the California truck drivers regarding AB5.

How Will The Strike Affect Sellers?

The Port of Oakland ranks among the top ten busiest container ports in the United States, where over 99% of the container goods headed for Northern California are loaded and shipped out. The protesters account for 90% of the port’s business, highlighting the scale of the disruption their strike has on the economy of the state.

As a result of the port being extremely congested – authorities were able to negotiate with the protesters to let ten trucks enter the port every half hour – the supply chain of affected businesses suffered greatly.

For the countless business owners who rely on the trucks to deliver their stock, the strike is very bad news for their operations and ultimately, their bottom line.

Delayed arrival of goods translates to delayed shipping of orders, poor customer experience, negative seller reputation, and potentially lower sales – not to mention capital tied up for a longer period of time. Marketplace sellers are also facing an increased risk of stockout as the strike hinders the usually smooth passage of goods and quick replenishment of supplies.

As every business owner knows, a delay in one part of the supply chain will have a domino effect along the rest of the line. It will take a significant amount of time before the port gets decongested and its operations resume as normal.

Related: How to Ship To Amazon FBA (And Speed Up Check-In Times)

What Can Be Done To Alleviate These Supply Chain Challenges?

While waiting for the authorities and the independent truck owner-operators to arrive at a resolution, you may want to go into solution mode and research ways to minimize your risk for these shipping delays.

Choosing a reputable 3rd-party logistics (3PL) provider could offer you more flexible and cost-effective delivery methods.

Preparing air freight, while more costly, could help you to avoid stockouts that could hurt your rankings.

What Else Can We Expect?

While AB5 applies only to the state of California, companies and business owners from other states who hire independent contractors may want to keep themselves updated about any legislative developments concerning the gig economy and gig workers. For example, the states of Illinois, New Jersey, and New York may enact similar laws in the near future so there certainly is a risk that this problem could spread if things go that way.