SALT LAKE CITY, Nov. 5, 2019 /PRNewswire/ — EKA Solutions, Inc., provider of cloud-based freight integration ecosystem platform solutions announced today that it has executed a strategic collaboration agreement with Transflo® to jointly deliver innovative offerings to small and medium size brokers, shippers and carriers to help them thrive in the new supply chain world.
EKA provides a transformational digital freight integration ecosystem platform to manage all the customer’s freight businesses. EKA serves as the system of record across multiple applications and seamlessly ties into other freight solutions (TMS, driver apps, etc.). A single digital end-to-end hub delivers a seamlessly unified, consistent, efficient and effective experience across all freight management systems for customer’s entire business with trusted entities.
“The transportation industry is experiencing significant change, and most of it comes from software and technology,” stated Frank Adelman, President and CEO of Transflo®. “We’re excited to work closely with the experienced and talented supply chain leadership team at EKA Solutions, Inc., to meet the industry’s current and emerging needs. Creating a strategic relationship with a state-of-the-art end-end cloud-based logistics software solution provider like EKA will help accelerate the delivery of transformative solutions to small and medium size brokers, shippers and carriers.”
“EKA is enthusiastic and privileged to work with Transflo®, a leader in delivering real-time communications to thousands of fleets, brokers, and commercial vehicle drivers. The collaboration between TransFlo and EKA will be an important demonstration of how a cloud-based mobile extensibility solutions leader and a transformational end-to-end software solutions provider can strategically collaborate to create strategic operational leverage for brokers, carriers and shippers,” said JJ Singh, founder, investor & CEO of EKA Solutions, Inc.
Transflo® by Pegasus TransTech is a leading mobile, telematics, and business process automation provider to the transportation industry in the United States and Canada. Through its digital platform, the company delivers real-time communications to thousands of fleets, brokers, and commercial vehicle drivers. The company’s mobile and cloud-based technologies digitize over 500 million shipping documents each year, representing more than $84 billion in freight bills. Organizations throughout the Transflo client and partner network use the solution suite to increase efficiency, improve cash flow, and reduce costs. Headquartered in Tampa, Florida, USA, Transflo is setting the pace of innovation in transportation software. For more information, visit www.transflo.com.
EKA Solutions, Inc., provides the Smart, Unified Platform EKA Omni- TMS® for – Virtually – Everyone. EKA Omni-TMS ® is the cloud-based SaaS freight Eco-System designed to transform the transportation and logistics industry. It empowers small, medium and large size broker, carrier and shipper businesses to operate from quote-to-cash with affordable and best-in-class digital tools, enabling the higher performance demanded in tomorrow’s supply chain. With real-time information, EKA Omni-TMS® enables brokers, carriers and shippers to provide visibility and transparency as they fluidly trade across an expanding and verified network with key, trusted partners. For more information about EKA, visit: https://www.go-eka.com
Electrification, autonomous trucks, and connectivity are transforming the trucking industry. said Martin Lundstedt, President and CEO of the Volvo Group. He explored these topics addressing a crowd of trucking industry suppliers at the Heavy Duty Manufacturers Association’s lunch briefing during the North American Commercial Vehicle Show in Atlanta Oct. 29.
With 8 billion people projected to be living in an increasingly digital world by 2030, he said, “With that population that means that transportation needs will continue to grow and increase, both goods and people – but it needs to be considerably more sustainable,” in order to leave the world in good shape for future generations.
Vehicles are only used about 25 percent of the time over their life cycle, sitting idle and unproductive the rest of the time
Only about 40-50% of available load capacity is actually used, meaning more of a vehicle’s length is theoretically available for cargo
5-10% of total fuel consumed is used to move goods
Roads reach their peak throughput only 5% of the time, and even then, it is only 10% covered with vehicles
Nearly 7% of all U.S. accidents involve a large truck – and about 12% of fatal crashes.
“In Volvo, what we are going for is safety, that should continue to be the main priority,” he said – but at the same time, obviously new technologies offer great potential for more efficiency and productivity.
Lundstedt said the new technologies transforming the transportation system are electrification, autonomous technologies, and connectivity.
“They are interesting, but they must be put in context,” he said. “How do we get out the benefits?”
As a project that covers all three technologies, he highlighted Vera, an electric, connected and autonomous tractor, designed for repetitive assignments in logistics centers, factories and ports, Vera doesn’t even have a cab for a driver. Vera now is being used in its first real-world job – providing autonomous transport between a logistics center and the port terminal in Volvo’s hometown of Gothenburg, Sweden.
Moving to e-mobility, Lundstedt pointed to the Volvo Lights project (Volvo Low Impact Green Heavy Transport Solutions) where it’s conducting real-world tests of battery electric Volvo VNRs at the southern California ports, working with California’s South Coast Air Quality Management District and over a dozen industry partners. Volvo has said it plans to have the EVNRs available for sale by the end of 2020.
Also under the Volvo Group, Mack offers the LR electric for waste/refuse applications.
Autonomous trucks, he said, have a great deal of potential in areas such as safety, energy efficiency, and productivity, and predicted they “will come quickly into our business.” There are many applications the Volvo Group is involved with where autonomous trucks make sense, such as port drayage, mines, and cross dock operations. “This is an area where we are putting a lot of effort.”
Volvo recently announced it is establishing a new business division that will focus the company’s engineering, design and financial efforts to accelerate the development, commercialization and sales of self-driving vehicles. And earlier this year, Volvo Group announced a partnership with Nnvidia to develop advanced AI platform for autonomous trucks.
The third area where there is huge potential, he said, is “growing digitization.”
Today there are 1 million connected Volvo group vehicles. “We are collecting enormous amounts of data. The capability of collection, analysis and action have improved tremendously.”
This connectivity is enabling new levels of customer service and uptime, he said, allowing for more informed and specific advice.
Lundstedt emphasized that a large proportion of its investment in developing new technologies focuses on what he called “well-known technology,” such as powertrains, aerodynamics, and safety systems.
“Yes, we are investing heavily in new technologies, but equality heavily into what was call well known; there’s a lot that can be done in those areas as well.”
A few short years ago, I used to give a presentation on the wave of disruptive technology that was just beginning to stir up the trucking industry. My Big Finish slide was a shot of the then-new-and-mind-blowing Amazon delivery drone– to make the point that while many fleets were struggling to find drivers, tech companies like Amazon were testing flying robots to see if they could one day deliver packages.
Well, it looks like that one day is here.
A slew of news stories over the past few weeks have made it clear that drones are getting very close to operational deployment in introductory areas. UPS and FedEx have been particularly aggressive in getting their respective drone programs up to speed – which makes sense. They are the two companies that would benefit immediately from drone deliveries.
And while we haven’t heard much from Amazon lately on the drone front, ZF is working on a delivery system of its own, and a company called Alphabet’s Wing claims to have beat everyone else to the punch, launching the first commercial drone delivery service in the U.S. on Oct. 19th.
In the short term, these developments aren’t going to change much for most of us. In fact, I’d guess most of us are still several years away from seeing our first drone delivery in person.
As crazy as flying robots dropping packages off on your doorstep sounds, the real take-away here is much more profound: The fact that we’ve gone from delivery drones being a far-fetched concept used in presentations about technology five or six years ago to reality is a stark confirmation that change is coming with stunning swiftness. And the only thing you can do in the face of these technological onslaught is to accept it and make it work for you.
Even more important than that, I think, is the reality that the pace of change has accelerated far beyond what most of us think of as normal. I’m often asked when I think autonomous trucks will become a common sight. And people are shocked when I tell them it could happen in as soon as five years – with 10 years being a more reasonable assumption. Most people I know who cover this industry tend to say 25 to 50 years – if it ever happens at all.
But my personal conviction is that the rate of technological advancement has accelerated to such a point that the trucking industry – perhaps society as a whole – may be significantly transformed in ways we are only just beginning to envision in as little as a decade. And I’m hardly alone in making that assumption. The stark reality now is that things are happening fast. And they’re getting faster at an exponential rate every 12 to 18 months.
Maybe you find this to be depressing. We are, after all, quickly moving into areas with many unknowns. Just this morning, Google announced that its engineers have unlocked the secrets to quantum computing. Moreover, Google believes these unfathomably fast and powerful supercomputers could be in common usage in as little as five years. And that means that the already-frenetic fast pace of disruption and change we’re dealing with will basically jump into hyperspace.
So, on the one hand, I’m feeling pretty good about my five-to-ten-year prediction for autonomous trucks. But, on the other hand, some experts are saying that quantum computers could pose the single greatest existential threat to mankind in history – worse than nuclear weapons, even. And that is, you know, kind of a buzz kill.
But one thing is for certain – we’re not going to put the technological toothpaste back into the proverbial tube any time soon. A whole new world is coming at us fast. And opting out of it is simply not going to be an option
Container volume growth on the East Coast of North America continues to outpace growth on the West Coast, despite longer ocean transit times and higher prices from Asia.
But the eastern railroads are not necessarily the beneficiaries here. CSX (NASDAQ: CSX) has cut many intermodal lanes, reducing intermodal volumes by 8% year-to-date, which followed a similar drop the prior year – the largest drop of any Class 1 railroad. Norfolk Southern (NYSE: NSC), on the other hand, moves the most intermodal freight as a percentage of total carloadings (55%), but has struggled to deliver operating ratio improvements as average intermodal rates fell from $1.78/mile to $1.47/mile this year (INTRM.USA).
First, price action in the spot markets for 40-foot containers from Asia to North America has responded to volume growth on the East Coast. Over the course of September, rates to West Coast ports (FBXD.CNAW) fell while they were flat or up to the East Coast ports (FBXD.CNAE), widening the ‘Panama spread’ (FBXD.PANA), or the difference between the rates.
A widening Panama spread has the effect of making West Coast ports relatively more attractive. U.S. Customs imported shipments to Savannah (CSTM.SAV) are at one of the highest levels they’ve been at in two years, while the same data for Los Angeles (CSTM.LAX) was higher for most of that period than it is today.
But the railroads that have pursued intermodal the most aggressively have underperformed against their main competitors, especially in the case of the eastern rails, CSX and Norfolk Southern. After CSX chief executive officer Hunter Harrison’s death in December 2017, Jim Foote took over, and described in earnings calls how the railroad’s intermodal network was almost a separate franchise that had been left nearly untouched by Harrison’s reorganization of the rest of CSX’s operations.
Foote removed about 7% of CSX’s intermodal volumes as he ‘rationalized’ the network to focus on high-density lanes where he saw an opportunity to improve service and yield by reducing the number of touches involved in CSX’s handling of the freight. The railroad was able to gets its operating ratio (OR), or the percentage of revenue consumed by operating expenses, down to 57.4% in the second quarter of 2019.
Norfolk Southern, on the other hand, is more committed to its intermodal business. NSC’s intermodal volumes are down only 2.4% year-to-date, compared to CSX’s 8%, the smallest drop of any U.S. railroad. But weak trucking spot prices (DATVF.VNU), down 16.4% year-to-date, have pulled intermodal rates down with them. Norfolk Southern was one of the last railroads to embrace the cost-cutting and efficiency initiatives of precision scheduled railroading (PSR), but so far has not seen the dramatic early-stage benefits that typically come with it.
“While the recent network changeover occurred without major incident, we are nonetheless puzzled by the seeming divergence in how the margin improvement story is unfolding at NSC versus prior PSR iterations (including what we have seen so far from UNP),” wrote Credit Suisse equities analyst Allison Landry in a July note on Norfolk Southern. “Typically, the step-function change in the OR occurs swiftly and in the magnitude of several hundred basis points of improvement within the first 12-18 months of implementation.”
Norfolk Southern’s large intermodal business, generally understood to be lower-margin than other commodity types, may be part of the problem. The other issue is that many railroad analysts think that intermodal is less competitive on the East Coast, that it doesn’t make as much economic sense to shippers, because average lengths of haul are shorter. If a shipper is moving freight from Los Angeles to Chicago, a distance of 2,000 miles, the shipper can save far more money by using intermodal instead of truck that it can on a lane like Savannah to Chicago, which is only about 970 miles.
Shippers who choose intermodal over truck are normally trading service for price, but for some customers, the trade-off is only worth it on long-haul lanes that produce bigger cost savings. The chart below shows relative year-to-date growth in long-haul trucking tender volumes for Savannah, Los Angeles, Elizabeth, New Jersey, and Houston.
Savannah’s long-haul trucking volumes have grown the fastest by far, nearly twice as fast as those of Los Angeles.
Part of the railroads’ struggle with intermodal this year – across the Class 1s, intermodal volumes are down 4.1% year-to-date – is caused by relatively soft freight demand and relatively loose trucking capacity. The rails have taken advantage of thinner volumes to reduce dwell times and run their trains faster, but those service metrics could deteriorate if volumes came back in a big way, for example if a resolution to trade disputes came earlier than expected, and re-accelerating economic growth sparked a surge in consumption.
In that scenario, railroad terminals could become snarled, trains might be delayed, and healthy margins might prove to be elusive as time-sensitive shippers prefer to pay premium prices to trucking carriers instead of the rails.
“Rails remain hotly debated,” observed Deutsche Bank equities analyst Amit Mehrotra in an October 3 investor note. “Investor bias is positive, but the magnitude of the volume decline is concerning, and as a result, third quarter results will be critical to the near/midterm outlook for Rail shares. In this sense, near-term conviction is significantly shaken, but long-term thesis still holds.”
Efficiency differences between port operators, the environmental regulation of drayage providers in Southern California, persistent labor disputes, and competitive container rates are all driving intermodal volumes to the East Coast. At present, it appears that CSX is largely uninterested in capturing that freight, Norfolk Southern may have more of it than it actually wants – NSC guided for flat intermodal volume growth for the full year – and that trucking carriers could stand to benefit the most.
Transflo has introduced Transflo Engage, giving fleets the ability to measure driver satisfaction from within the Transflo Mobile+ app using the People Element employee engagement platform.
People Element’s platform allows fleet managers and HR professionals to create, automate and delivery custom surveys to drivers through their mobile devices. It can be used to measure driver engagement, commitment to the organization and intent to stay, while helping employers take a proactive approach to turnover.
“When you combine our world-class survey platform and data coaches with the ability to reach drivers directly and easily through the Transflo Mobile+ app, you maximize your opportunity to increase driver engagement and retention like never before,” said Chris Coberly, president and CEO of People Element.
Traditional survey methods such as email or phone calls can be more easily ignored. Transflo Engage leverages the People Element platform and Transflo Mobile+ to provide a simple and convenient survey experience since the driver is responding to questions within the mobile app he or she uses as part of an everyday workflow.
With custom surveys and instant feedback, managers and HR professionals can make fast, strategic, data-driven decisions about how to manage driver satisfaction while maintaining a high level of engagement.
“Imagine if you could reach out to any one of your drivers at any time and ask how happy they are, or for their opinion about company policies or procedures,” said Doug Schrier, vice president of product and innovation at Transflo. “Now you can, with Transflo Engage on the Transflo Mobile+ platform. Drivers will feel more engaged and respected, which leads to improved morale, lower turnover, and a better bottom line.”
According to the Federal Motor Carrier Association (FMCSA) data, carriers who operate smaller fleet sizes of one to six trucks continue to add power to their operation, with tractor counts growing 5% since last September. Over the same time, fleets who operate more than 1,000 units have decreased tractor count size by almost 3.5%. A byproduct of the sell-off has been continued increase in used truck prices for 3-year-old class 8 trucks, even as the freight market has softened from a year-over-year perspective.
The trend is somewhat unexpected as this year has been marred with increasing instances of trucking company failures due to lower volumes and an oversupplied market. Only recently in August, was there a sustained level of increased volumes, but the increasing tractor counts for smaller fleets have been steadily rising all year. Some of this is explainable in the way the smaller carrier has the least amount of visibility to the broader market due to dealing with only a few shippers at a time, but that is not the entire story.
FreightWaves Chief Insight Officer Dean Croke says, “Digitization and e-commerce has made it easier for smaller carriers to penetrate the market by giving them visibility via technology like mobile load board apps and increasing volumes of regional freight movements compared to longer haul over-the-road freight that is more difficult to manage and maintain utilization levels.”
Along with load boards like DAT and Truckstop.com, many larger brokers like CH Robinson and XPO offer apps that make it very simple for drivers to identify freight demand on their phone without having an existing relationship with a shipper. Freight that travels less than 250 miles is easier to manage in a small fleet as round trips can be completed in a day, reducing the need for large networks. Many larger companies outside of Amazon such as The Home Depot have invested millions of dollars in their supply chain to make travel time from warehouse to end user shorter for faster online order completion. The demand for faster order fulfillment on just about all consumer goods has been expanding rapidly, which is changing the way freight is hauled.
The Shrinking Mid-haul
An upcoming release of a version of FreightWaves’ Outbound Tender Volume Index (OTVI) that divides the index into length of haul buckets, illustrates that volumes of loads travelling less than 100 miles (COTVI) are increasing much faster than other mileage bands over the past year. Interestingly, long-haul freight that travels over 800 miles is fighting for second place with loads travelling between 100 and 250 miles, leaving the 250 to 800-mile loads behind.
The result of a booming 2018 freight market has left an impression on many operators on the revenue potential of trucking. Owner operators and small fleet owners are taking advantage of last year’s profits by expanding their fleets by purchasing some of the more recent model year equipment while the large carriers are selling.
Record numbers of class 8 orders in 2018 lead to a slew of new truck deliveries in 2019. With large carriers replacing older equipment as well as contracting their fleets, it would seem to be a good time to purchase as the market turns bearish. This is truer for the four and five-year-old models whose prices have moderated since peaking in May, growing 3.8% and 2.7% respectively YoY. Three-year model prices have grown a much more robust 14.2% over the past twelve months.
It will be interesting to see if the trend of small fleet growth continues into 2020. Freight volumes have picked up, but more locally than long distance. Less-than-truckload (LTL) carriers specialize in local freight movements due to having a large portion of their fleet dedicated to local pickup and delivery runs. They will also benefit greatly from the shrinking load distances as they are more price competitive in that range
A new California law, going into effect in January, designed to address worker misclassification could seriously affect the trucking industry, but there is so much up in the air that there’s no clear path for trucking companies using independent contractor owner-operator drivers in the state.
AB5 does away with most of the traditional methods of determining whether someone is truly an independent contractor or an employee, such as the worker’s amount of risk and investment in his or her business, in favor of an ABC test.
The big problem with the ABC test is the “B” prong, which states that to be considered an independent contractor rather than an employee, the worker must perform “work that is outside the usual course of the hiring entity’s business.”
In other words, if you’re in the business of hauling freight, you could contract with someone to paint your building or do your taxes, but you can’t use an independent contractor to haul freight.
Or at least that’s what you would think. But AB5, like any bill, includes pages and pages of additional legalese, carve-outs for specific industries and other bits and pieces that have led to a variety of opinions on how it’s going to affect trucking companies.
“Is the sky falling?” asked Greg Feary, president and managing partner of the Scopelitis law firm, in a webinar. “It’s falling in certain areas, but we don’t predict it is falling in trucking for independent contractors.”
That doesn’t mean there aren’t some serious challenges ahead, and in the meantime, trucking companies in California are still trying to figure out what to do next.
“We have more questions than answers,” said Weston LaBar, executive director of the Harbor Trucking Association in California, in an interview, pointing out that the law as passed had no language in it specifically about trucking, for good or for bad.
Converting owner-operators to employee drivers
The bill’s supporters seem to expect that companies will simply convert their independent contractors to employees.
But Feary told HDT that he doesn’t see that as a “comprehensive solution.
“I would be surprised that under normal circumstances, a motor carrier approaching the independent contractor workforce and saying, ‘Give me a show of hands, who wants to become an employee,’ I doubt there would be many hands that would go up in the air.”
“A significant number of owner-operators, more than a simple majority, see themselves as independent businesses and entrepreneurs – and they did that intentionally. If they wanted to be an employee, they already would have been an employee for a motor carrier.”
LaBar said the association has members that already have been in the process of converting their independent contractors to employees. But he notes that the law is being challenged, and if ultimately the courts find that it is preempted by federal law governing motor carriers, “and you already reclassified them as employees, it’ll be impossible to convert them back. You would be compliant with state law but may be giving up a competitive advantage.”
In addition, like Feary, LaBar pointed out that a lot of independent contractor truckers don’t want to be employees, and rather than be converted, will likely take their truck to another motor carrier that is still signing on owner-operators. “If they have a large number of contractors they will lose capacity, and that is a concern, especially for our large motor carrier members who rely on hundreds of owner-operators,” he said. “Over the last couple of years, a lot of motor carriers who have gone to all employee fleets have lost a significant amount of drivers. In some cases we’ve seen two-thirds or more of the fleet leave and go elsewhere, because they want to remain ICs.”
Another knotty part of that conversion: Who’s going to buy the owner-operator’s truck? With all of California’s air quality regulations, “I don’t see trucking companies buying older used trucks from owner-operators.” We may see the used-truck market in California become flooded with equipment, meaning owner-operators won’t be able to sell the truck for nearly what it’s worth.
Are they truly in the same business?
The author of AB5 has targeted the “gig” economy and companies such as Uber and Lyft in her comments. Yet Uber has said it has no plans to make Uber drivers company employees.
“Contrary to some of the rhetoric we’ve heard, AB5 does not automatically reclassify any rideshare drivers from independent contractors to employees,” said Tony West, Uber’s chief legal officer, in comments after the bill’s passage. “AB5 does not provide drivers with benefits, nor does it give drivers the right to organize. In fact, the bill currently says nothing about rideshare drivers.”
Referring to the three-part ABC test, West said, “arguably the highest bar is that a company must prove that contractors are doing work ‘outside the usual course’ of its business. But just because the test is hard does not mean we will not be able to pass it. In fact, severalpreviousrulings have found that drivers’ work is outside the usual course of Uber’s business, which is serving as a technology platform for several different types of digital marketplaces.”
Asked about Uber’s position, Feary explained, “Uber’s position has been for a long time that they’re a technology marketing company.” The drivers are doing business with people that who to move from point A to point B; Uber’s business is simply to put a platform together so those two can talk to each other.
Trucking companies could theoretically make similar arguments. You can argue (and companies have argued in court, with varying degrees of success) that the business of a motor carrier, engaging the shipping public and dealing with all the things associated with being a motor carrier, is not the same type of business than the independent contractor driver, whose business is freight delivery.
“The court recognized that QDA’s normal course of business was arranging for the delivery of those RVs, where the driver’s normal course of business was delivering them,” he said. “The court did note that if the company also had W2 drivers, they may have reached a different decision.”
However, said Scopelitis Partner Chris McNatt, “From what we’ve seen so far it’s highly doubtful a California judge would look at the driver-motor carrier relationship and not find they are engaged in the same business.”
A possible model: The business-to-business exemption
There is a business-to-business exemption in AB5 that may be of value, said Shannon Cohen, a Scopelitis partner, “meant to capture bona fide business-to-business relationships.”
To potentially meet this exemption, the independent contractor would have to have a business entity (such as an LLC, a corporation, etc.) that is registered by the state, she explained in a webinar. The business must have a separate business location and be “customarily engaged in an independently established business as the area of work performed,” advertise those services to the public, provide its own equipment be able to negotiate its own rates and set its own hours, and has to enter into contracts with other businesses performing the same work.
“That’s a series of fairly stringent factors,” Cohen said. “We do feel the model can be used to create a viable, workable model, but there are going to be a few factors you need to pay attention to,” such as the requirement to enter into actual contracts with other businesses – not just having the right to enter into such contracts as has previously been one of the factors often used to determine the independent contractor relationship.
Some companies, Feary said, might decide that they really are a third-party logistics provider or broker, not a motor carrier, and broker freight to motor carriers. Some of the company’s independent contractors might be willing to become independent motor carriers and accept brokered freight from the same company they used to run under contract to.
“You’ll find today any number of motor carriers that have a brokerage subsidiary because they can’t handle all the freight their customers want them to handle. Or they don’t prefer some of the freight their customers want them to move, it’s the wrong route, the wrong price, and they broker it out to small motor carriers. It may be they look at that and say, my brokerage affiliate or subsidiary is going to do more business now because that’ the way they’re going to do business in California. That’s going to depend on your position in the industry and who your customers are, if that’s the way they want to do business with you.”
The Harbor Trucking Association offers a Trucker Advantage program that helps drivers become motor carriers, offering help with permits, authority, insurance, etc. “That’s not easy for a lot of folks to do,” LaBar said.
Will the law even stand as is?
“Certainly one option is to stand pat,” Feary said. There are legal challenges and the possibility of “trailer” legislation, and even a potential ballot initiative, all of which mean “you have to think about, will this law even look the same a year from now?”
Scopelitis’ McNatt said the ripple effects of AB5 could be significant. “California is in many cases the bellwether of what’s going to happen across the rest of the country.” Democratic presidential candidate Elizabeth Warren earlier this month released a sweeping labor proposal, including adapting California’s ABC law as the federal standard.
“There have been extensive lobbying efforts; the California Trucking Association engaged in a valiant effort to obtain an exemption for trucking,” McNatt said. “Those will continue beyond the legislative session,” he added, and could lead to so-called trailer legislation, follow-up legislation that could change the law.
“Stay tuned also for what you will see from the gig companies potentially pushing their own trailer legislation and/or pushing for a ballot measure, which could bleed over into trucking,” he said.
However, said HTA’s LaBar of a trailer bill that addresses trucking companies, “We don’t know if that will be beneficial for the trucking industry or will be even more onerous on the trucking industry.”
The law is also being challenged by suits alleging that for trucking, it is preempted by federal law through the Federal Aviation Administration Authorization Act, part of which prohibits states from enacting laws that affected a motor carrier’s prices, routes and services.
If the dispute makes it to the Supreme Court, Feary said, “you might find out this law is federally preempted in trucking. But you can appreciate that’s not going to be a quick solution.”
Meanwhile, Cohen noted, “the legislation was subject of a hard-fought battle, and I think those efforts will continue through the 2020 session.”
Although Uber has said its drivers are not affected by the law because they’re not in the same business, it nevertheless is taking action to try to change the law. “We will continue advocating for a compromise agreement,” West said. “But we are also pursuing several legal and political options, including working with Lyft and other Internet platform companies to lay the groundwork for a statewide ballot initiative in 2020.”
Scopelitis’ attorneys said one possibility is a “dependent contractor” model. “Uber and Lyft have suggested that’s a direction they may go,” said Feary. “That has a genesis in Canada where we see the idea that they are independent contractors,” but there are still benefits and the ability to collectively bargain.
“A dependent contractor bill was launched in June in New York and it got no favor on the business side or the labor side; both were opposed to it. But with Uber and Lyft pushing it we might see some movement.” In fact, Bloomberg Law reported on Oct. 10 that lawmakers in New York are working on legislation to create a new dependent contractor category.
Another possibility is a ballot initiative. When AB5 passed, Uber and Lyft together had already transferred $60 million into a campaign committee account for a ballot initiative.
What’s your appetite for risk?
HTA’s LaBar said the association has spoken with many top legal experts and attorneys in the state. “Most of them have very differing opinions on what you can or can’t do,” he told HDT. “Mostly the question you get asked is, what is your risk exposure appetite – how afraid are you of getting sued? If you’re completely risk averse, classify them as employees and try to build a business that way. If you’re medium risk, there are ways such as co employers and brokerage models. And if you have a big risk appetite, don’t do anything; at the end of the day you may be federally preempted and end up in a great position.”
Recently EKA Solutions launched its EKA MPlace platform, which lets shippers and brokers create private freight marketplaces where they can trade with their trusted providers in a precise, automated and real-time way.
Now EKA is offering some of the capabilities of its cloud-based Software-as-a-Service freight ecosystem to large motor carriers that use owner-operators. EKA iLoop Solution can help carriers that want to mitigate worker classification liability risks when they contract with lease or independent operators.
“The EKA iLoop platform enables carriers to manage their leased or independent operator relationships without interfering into their independent execution,” explained JJ Singh, founder and CEO of EKA Solutions, in a press release. EKA gives carriers a driver-facing app that enables load tendering, interactive communication with dispatcher and real-time information access to improve life on the road for these owner-operators.
“By providing leased-on owner-operators the ability to select freight, determine routes and schedules, monitor settlements and manage operational accounting in their own systems, carriers can improve owner-operator relationships while mitigating work classification liability risks,” said Mark Walker, EKA president.
EKA iLoop provides real-time visibility of load movement and ETA updates (LiveETA) that factor in driver unplanned events, hours-of-service compliance, and actual traffic and weather conditions.
EKA Solutions recently launched MPlace, which allows larger shippers and brokers to create private marketplaces where they can trade with “trusted providers in a more precise, automated and real-time manner,” the company said in a release.
“We provide technology solutions that are very efficient and at a lower cost,” JJ Singh, founder and chief executive of EKA, told FreightWaves. “We already focus on small and medium-sized brokers, shippers and carriers, so we thought larger brokers and shippers could benefit from our solutions.”
The company launched its unified, cloud-based Omni-TMS (transportation management system) platform for small and medium-sized brokers, carriers and shippers in 2018. Its is now offering some of the capabilities of its software platform to larger shippers, brokers and carriers “in a way that can complement their existing TMS platforms and help them meet today’s more dynamic logistics environment,” the company said.
For example, if a large shipper needs a load hauled in a new freight lane, one of its employees can go onto MPlace and find partners in its own private space and not have to go out to the spot market or load boards,” Singh said.
“Utilizing the EKA MPlace, customers reduce direct labor, transportation spend and contracting risk while providing end-to-end visibility, audit and analysis,” Singh said.
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