Managing Capacity Disruptions in a Post-AB5 World
By Josh Osinski, Vice President of Sales at DrayNow
How did we get here?
Assembly Bill 5 was initially presented as a path to traditional employment and benefits for the thousands of people participating in the gig economy as independent contractors. In particular, the “gig worker bill” targeted those who provided transportation for ride share and delivery apps such as UBER, Lyft, and DoorDash. Intentionally or not, AB5 has sent shockwaves through the independent trucking community while ridesharing and delivery app drivers have been exempted from employee classification with the passage of California Proposition 22. Some in the trucking industry held onto the hope that legal and political action could persuade the courts to overturn AB5 and allow traditional contract trucking to continue. However, the recent Supreme Court decision not to hear challenges to the law, despite strong objection from the ATA, was little surprise to those who have followed this topic closely in recent years. Our CEO, Mike Albert wrote in January of 2020, “With the momentum behind this law, I believe the California trucking community will see major impact across brokers, shippers and carriers.”
What does it mean for IMCs?
AB5’s immediate implementation in California is yet another disruption in the unprecedented series of events that have shaken international and domestic supply chains since the beginning of 2020. AB5 puts additional hurdles between owner-operators and the companies that rely on them to move their freight. While some drayage providers will attempt to proactively solve the issues stemming from AB5 with their contracted owner operators, the experience of the ELD mandate in 2018 demonstrates that many owner-operators delay transitioning to the new model until they are legally required. Traditional drayage providers will falter as they scramble to adapt, putting additional pressure on capacity. Within brokers, 3PLs, and IMCs, carrier procurement and carrier relationship teams will be working overtime to make sure existing capacity is compliant with the new law while finding new capacity to replace what will be lost. In short; AB5 brings more disruption.
What does it mean for the DrayNow network?
For owner-operators and the brokers and IMCs that rely on them for coverage, DrayNow is the right platform at the right time. Our technology was built to empower the owner-operator; the small business owners who get up early and put on their boots every day to support their families and who keep our economy moving. DrayNow allows the owner-operator to uncouple from the dray company while giving them access to, and the freedom to choose from, the same drayage freight. Owner-operators use our platform to select and execute loads while providing tools that enable instant document upload, reducing back-office workload and expediting billing operations to improve cash flow. And with more than 5 years in business, DrayNow provides consistent work and pay that owner-ops can rely on for the long term. This means that while traditional drayage companies struggle to maintain capacity DrayNow continues to grow its carrier base.
Hope – that your drayage company stays compliant, that new legislation will stop AB5, that a loophole will provide relief – is not a strategy. Partnering with DrayNow makes AB5 compliance hassle-free, no loopholes necessary. DrayNow provides a verified network of owner-operators and backs them with the support of a world class operations team to help customers navigate the tricky business of intermodal transportation. DrayNow provides capacity with peace of mind for the bumpy road ahead in the post-AB5 world.
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