MARKET BRIEF | July 2022
A BRIEF look at what’s happening in the logistics and shipping industry.
SUPPLY CHAIN DISRUPTION TO CARRY INTO 2023
Many are warning that global supply chain disruption — occurring since 2020 — will almost certainly continue in next year. Prior to 2020, disruption in the industry would be able to correct itself after a few months. This current, unprecedented, situation is obviously different. The market is still trying to recover from the multiple shockwaves it has experienced from the (im)perfect storm of COVID-19 affecting workers along the supply chain, massive increases in online consumer activity, frequent lockdowns in China, and issues with the U.S. rail system. There are other factors adding to the complexity, such as summer labor availability, labor union unrest, and surging inflation and fuel prices.
WEST COAST DOCKWORKERS EXTEND LABOR TALKS
The union representing about 22,000 West Coast dockworkers and their employers will continue negotiations, even though it is past the July 1 expiration of their current contract. This will keep the port functioning, and normal operations will continue at the ports until an agreement can be reached between the Pacific Maritime Association and the International Longshore and Warehouse Union. Both sides understand the strategic importance of the ports to the local, regional, and national economies, and are mindful of the need to finalize a new coast-wide contract, as soon as possible, to ensure continuing confidence in the ports.
THE EFFECTS OF CALIFORNIA’S ASSEMBLY BILL ON TRUCKING
On June 30, the Supreme Court denied to review a case challenging California’s Assembly Bill 5 (AB5). AB5 is changing the rules for how to classify a worker as either an independent contractor or an employee. As of now, owner-operators working for a trucking company are unable to qualify as contractors, and have not been granted an exemption. The model for many trucking companies — especially in California — is to own a few trucks, and lease the majority of their fleet to owner-operators that they classify as independent contractors running under their authority. Many even have lease-to-own deals for the equipment. There are obvious advantages to this model for trucking companies, but the main one is that they do not have to buy and maintain a large number of assets. Trucking companies have a few options, if they are to comply with AB5. The most obvious one would be to move out-of-state, as many carriers did when California enforced the CARB law. (CARB introduced new regulations aimed at lowering emissions that many carriers did not want to comply with, so they moved out of California, and resumed operations.) Another option would be to convert their independent contractors to employees, which some will surely do. The third would be for the independent contractors to file for their own authority, the trucking companies obtain a brokerage authority, then tender loads to those contractors. However, this means they can no longer pose as a carrier running freight on their own equipment.
AERONET FEATURED IN ORANGE COUNTY BUSINESS JOURNAL
The Orange County Business Journal featured Aeronet Worldwide in its July 4-10, 2022 edition. It’s a really nice piece, by the OCBJ’s Kevin Costello, that chronicles Aeronet growth. It also includes a spotlight on Aeronet’s founder, Chairman and CEO Anthony N. Pereira. … READ THE ARTICLE
CASE STUDY: EXPEDITED SERVICES TO HELP COVID-19 TESTING
Aeronet Worldwide’s client, Cue Health, is a manufacturer of COVID-19 point-of-care tests, which gives a result within 15-20 minutes. They were contracted by the U.S. Department of Health and Human Services (DHHS) to provide these tests. In late 2020, Cue Health tasked Aeronet San Diego with the handling of air imports of readers and cartridges from their Chinese supplier, and also their Customs brokerage … READ MORE
Many are warning that global supply chain disruption — occurring since 2020 — will almost certainly continue in next year. Prior to 2020, disruption in the industry would be able to correct itself after a few months. This current, unprecedented, situation is obviously different. The market is still trying to recover from the multiple shockwaves it has experienced from the (im)perfect storm of COVID-19 affecting workers along the supply chain, massive increases in online consumer activity, frequent lockdowns in China, and issues with the U.S. rail system. There are other factors adding to the complexity, such as summer labor availability, labor union unrest, and surging inflation and fuel prices.
WEST COAST DOCKWORKERS EXTEND LABOR TALKS
The union representing about 22,000 West Coast dockworkers and their employers will continue negotiations, even though it is past the July 1 expiration of their current contract. This will keep the port functioning, and normal operations will continue at the ports until an agreement can be reached between the Pacific Maritime Association and the International Longshore and Warehouse Union. Both sides understand the strategic importance of the ports to the local, regional, and national economies, and are mindful of the need to finalize a new coast-wide contract, as soon as possible, to ensure continuing confidence in the ports.
THE EFFECTS OF CALIFORNIA’S ASSEMBLY BILL ON TRUCKING
On June 30, the Supreme Court denied to review a case challenging California’s Assembly Bill 5 (AB5). AB5 is changing the rules for how to classify a worker as either an independent contractor or an employee. As of now, owner-operators working for a trucking company are unable to qualify as contractors, and have not been granted an exemption. The model for many trucking companies — especially in California — is to own a few trucks, and lease the majority of their fleet to owner-operators that they classify as independent contractors running under their authority. Many even have lease-to-own deals for the equipment. There are obvious advantages to this model for trucking companies, but the main one is that they do not have to buy and maintain a large number of assets. Trucking companies have a few options, if they are to comply with AB5. The most obvious one would be to move out-of-state, as many carriers did when California enforced the CARB law. (CARB introduced new regulations aimed at lowering emissions that many carriers did not want to comply with, so they moved out of California, and resumed operations.) Another option would be to convert their independent contractors to employees, which some will surely do. The third would be for the independent contractors to file for their own authority, the trucking companies obtain a brokerage authority, then tender loads to those contractors. However, this means they can no longer pose as a carrier running freight on their own equipment.
AERONET FEATURED IN ORANGE COUNTY BUSINESS JOURNAL
The Orange County Business Journal featured Aeronet Worldwide in its July 4-10, 2022 edition. It’s a really nice piece, by the OCBJ’s Kevin Costello, that chronicles Aeronet growth. It also includes a spotlight on Aeronet’s founder, Chairman and CEO Anthony N. Pereira. … READ THE ARTICLE
CASE STUDY: EXPEDITED SERVICES TO HELP COVID-19 TESTING
Aeronet Worldwide’s client, Cue Health, is a manufacturer of COVID-19 point-of-care tests, which gives a result within 15-20 minutes. They were contracted by the U.S. Department of Health and Human Services (DHHS) to provide these tests. In late 2020, Cue Health tasked Aeronet San Diego with the handling of air imports of readers and cartridges from their Chinese supplier, and also their Customs brokerage … READ MORE
For more information on Aeronet Worldwide, visit Aeronet.com.
