In my earlier article on supply chain, we noted a turn in the ocean freight side of things, at least in the Pacific. We saw container traffic has continued to grow, but the serious backlogs at ports were improving.
In this update I will discuss the domestic intermodal freight situation. Here, the outlook is more pessimistic with several 'wild cards' yet to be played.
The dual ports of Los Angeles/Long Beach have been poster children for supply chain problems. Problems unloading ships have been gradually decreasing, as some actual improvements have been made, and volumes dropped. A wild card is the negotiation of a new labor agreement for port workers. It’s anyone’s guess whether this will result in an agreeable settlement or a labor stoppage. The past agreement expired June 30, 2022, and so far both sides remain at the bargaining table.
Another wild card is the recent news that the U.S. Supreme Court declined to hear an appeal on the California bill AB-5. This bill makes it much more difficult to classify truck drivers as independent contractors. While passed a few years ago, enforcement was halted pending the lawsuit. Industry experts expect this to reduce the overall number of drivers, while increasing labor costs for those who remain. Ironically, this bill was largely developed to target Uber/Lyft, demanding they treat drivers as employees rather than contractors. However, the ride-sharing industry was able to obtain an exemption.
So far, many truck drivers are protesting, but little concrete action has been taken. California has said that they will proceed with enforcement.
[RELATED: California Trucking Association tears down Solicitor General’s AB 5 argument]
Rarely mentioned is the fact these ports have long been recognized as some of the least productive ports in the world. World Bank evaluations of global ports have regularly scored the U.S. ports favorably. So, this isn’t a new development by any means.
