Costco, one of the world’s largest retailers, has stopped doing business with a California trucking company accused of trapping drivers in debt and then using it to force them to work overtime.

The action comes as brands across the U.S. face increased scrutiny for ignoring labor abuses in their supply lines, a widespread problem first revealed in a USA TODAY Network investigation in June.

Earlier this month, four prominent Democratic Senators, led by Sherrod Brown of Ohio, sent letters to 16 retailers, calling on them to root out “shameful” labor abuses first outlined by the USA TODAY Network.

Soon after, Costco Wholesale dropped Pacific 9 Transportation, one of the biggest port trucking companies in Southern California.

Hewlett-Packard also sent an auditor to investigate the company’s labor practices.

Both retailers declined to comment on their actions. Alan Ta, chief operating officer for Pacific 9, said that even before Costco withdrew, his company had stopped leasing trucks to drivers and launched a series of reforms to improve their pay.

A wave of pressure from retailers and manufacturers has hit port trucking operations across the industry, according to drivers who say their employers have been fielding calls from clients.

Those clients include Walmart, which pledged in a letter responding to the senators that it would cancel contracts with any trucking company that did not provide “assurances” it was following fair labor practices.

“The stories profiled in that article are deeply concerning,” Executive Vice President Jay Jorgensen wrote of the USA TODAY Network investigation, “Rigged.”

“Any motor carrier that fails to comply with law, such as those alleged in the article, would be in violation of our contract and would therefore be subject to cancellation,” he wrote.

The series revealed how port trucking companies in southern California have spent the past decade forcing drivers to finance their own trucks through company-sponsored lease-to-own programs they could not afford.

The longer drivers worked, the more trapped they felt. After just a few months, drivers typically had paid thousands of dollars towards a truck.

If drivers quit or got fired for any reason, most of them lost the truck and everything they had paid in. Many worked 20 hours a day to keep up with their truck payment and feed their family.

For years, Pacific 9 used the same kind of lease-to-own program.

Forty drivers have won California labor commissioner cases against Pacific 9, accusing the company of using the leases to cheat them of fair pay. Half of them testified that they had to work up to 19 hours a day, violating federal fatigue laws for truckers.

As the USA TODAY Network began investigating and as labor judgments piled up against Pacific 9, the company stopped using leases. In April 2016, facing almost $7 million in court-ordered back pay and penalties, the company filed for bankruptcy protection.

It has since started rehiring drivers as full-time employees and stopped charging them truck expenses.

Ta and many of his drivers said the company is now working to become a model for the rest of the industry.

Pacific 9’s sudden loss of business comes at a precarious time for the company – the tail end of drawn out bankruptcy negotiation with truckers.

Drivers and their attorneys sent at least two letters to the senators pleading with them to ease pressure on retailers using Pacific 9.

Rivera and Shackelford, a San Diego firm representing some Pacific 9 drivers, said Costco’s decision might “lead to the closing of Pacific 9 altogether,” undoing months of negotiations and possibly leaving drivers empty-handed.

“We believe this would be a tragedy,” the attorneys wrote.

Some drivers feel the same — even those who once testified about pervasive labor abuses inside the company.

“Pacific 9 has followed through on its commitments to us drivers,” wrote trucker Santiago Aguilar, who filed a labor claim against the company in 2013 and has since been rehired as an employee with full protections. Aguilar’s letter was signed by 13 others at the company. “Now, I get a fair day’s pay for a hard day’s work,” he said.

Pacific 9 is one of the busiest operators at the Long Beach and Los Angeles ports, according to port truck data obtained through a public records request.

Using the data, reporters tracked the movement of the company’s 160 trucks and found that they were on the clock for more than the 14-hour maximum set by federal law at least 7,500 times over three years. Almost all of the company’s rigs exceeded the time limit set for commercial truckers at least once.

But executives say those practices are a thing of the past.

“We have made significant change in our company and to our industry,” Ta said in an email.

Other companies that have used Pacific 9, either directly or as a subcontractor, include Hasbro and Goodyear. Hasbro did not respond to multiple requests for comment.

Goodyear spokesman Keith Price said the tire giant “took immediate action and ceased use of Pacific 9 within two weeks of the California Labor Commission’s ruling against them.”

By: AJOT | Aug 17 2017 at 09:27 AM | Intermodal   | Transport Intermediaries

By: AJOT | Aug 17 2017 at 09:37 AM | International Trade

Infrastructure is the backbone of developed nations. Our ability to move raw materials and finished products between domestic and world markets is critical to economic success. Right now, the U.S. freight transportation industry is at a crossroads and infrastructure funding is urgently needed to grow our economy. In recent years, transportation infrastructure investment has lagged, impacting the flow of goods for farmers, manufacturers, workers and consumers who must have access to the global marketplace.

This spring, an important roundtable was held in Indianapolis during national Infrastructure Week where a group of national and Midwest experts discussed the most critical issues facing America’s freight transportation system and our economy. Representatives from manufacturers, ports, steelmaking, mining, logistics, trucking, agriculture, departments of transportation, Corps of Engineers and academia shared their concerns about the urgent need for new infrastructure funding and the catastrophic consequences if we don’t act. Topics included:

U.S. infrastructure lagging behind: American Society of Civil Engineers graded U.S. infrastructure as a D+ in 2016 and estimated that 56,000 bridges are structurally deficient, while over half of our locks and dams have exceeded their design life. Meanwhile, China lifted 400 million people out of poverty by heavily investing in infrastructure.
Congestion killing productivity: Road and rail systems are carrying volumes beyond what they were designed for, which increases congestion. American Transportation Research Institute reported congested highways cost the trucking industry $63 billion in 2015 and caused 996 million hours of lost productivity. That’s equal to 362,000 trucks sitting idle for a year.
11 million jobs depend on one aging lock: U.S. Department of Homeland Security reported that if the Poe Lock failed for six months, the nation would be plunged into a recession resulting in the loss of 11 million jobs. Rebuilt in 1968, the aging lock is the only feasible passageway for raw materials to get to the U.S. steel industry, and upgrades are critical.
$66 billion needed for U.S. ports: American Association of Port Authorities has identified a need for $66 billion in federal investments for critical port-related infrastructure over the next 10 years. Meanwhile, the port industry generates $320 billion annually in taxes, supports 23 million jobs and is investing $31 billion per year in infrastructure. Currently, the harbor maintenance taxes paid by shippers are much greater than the federal funds being allocated to maintain our harbors, and that needs to change.
Indiana’s model could benefit nation: Indiana recently passed groundbreaking legislation that provides $1.2 billion in new annual funding for roads and bridges over the next 20 years. By building a strong coalition and developing a collaborative process for identifying needs and sources of funding, a statewide logistics council was able to build a comfort level with legislators and the public about the need for tax increases. Raising taxes used to be considered a “death knell” for re-elections, but that is no longer the case when it comes to infrastructure.

The answer is…

Funding is obviously needed to improve infrastructure, but securing sufficient support for the needed investing requires key components:

Speak with one voice. This is a non-partisan issue that affects all modes of transportation and essentially every type of business.
Support a comprehensive national strategy. States have taken the lead on developing highways, but a broader multimodal perspective is needed to invest wisely in a national freight system.
Act now! It would not be wise to sit idle when the U.S. President is talking about making major investments in our country’s infrastructure. The time is now.

To that end, we call upon federal, state and local leaders to make infrastructure funding a top priority so that we can take our country’s economy to the next level.

This column was jointly written by Kurt Nagle, CEO/President of the American Association of Port Authorities, and Rich Cooper, Ports of Indiana CEO and board member of AAPA, to share industry concerns about the U.S freight transportation infrastructure. We thank you for considering this op-ed.

I received an email from an owner-operator this weekend with a few questions regarding the federal government’s fast-approaching mandate for electronic logging devices.

The rule hasn’t changed since its publication in December 2015 (though FMCSA has altered its interpretations of the rule’s key exemption), but there seems to be lore among some in the industry about who must comply with the mandate and when.

Given the apparent misinformation making the rounds among drivers, let’s dispel some of the rumors and provide an update on the efforts — which is all they are at present — to delay the mandate.

Compliance date: “I’ve been told by a few people it’s been pushed back until 2019,” said my weekend’s correspondent.

That, however, is false.

Truckers who use paper logs and run a year-model 2000 and later engine must adopt either an electronic logging device or an automatic onboard recording device by Dec. 17, 2017, to operate legally. Those caught without an ELD will be placed out of service.

A bill has been filed in the House to delay the mandate two years, to December 2019, but its fate in Congress is uncertain, and time is waning for lawmakers to act. However, as of Monday, the bill had 35 co-sponsors in the House, which means the bill has at least some support in Congress’ lower chamber.

Small fleet exemption: “Last I knew, the mandate was for [fleets with] over 10 trucks…” wrote the owner-operator who emailed me this weekend.

Also false. Even single-truck owner-operators must comply with the mandate.

**

Pre-2000 exemption: “…and for models newer than 1999.”

The driver I exchanged emails with this weekend was correct about the 1999 and earlier waiver — to an extent. FMCSA recently changed course on the pre-2000 exemption. Until last month, it had said the pre-2000 exemption would apply to trucks whose model year was 1999 and earlier, as evidenced by the truck’s VIN number, which includes the model year.

In mid-July, the agency scrapped the interpretation. It now says the exemption will apply to the engine year, meaning trucks with model-year 1999 engines and earlier will not need to be equipped with an ELD. Drivers are not required to carry documentation stating their engine year, but such information must be kept “at the principal place of business.”

The push to automate freight brokering is gaining momentum with technology startup Convoy raising $62 million to accelerate its growth plans and Uber Freight adding features and expanding into new markets since its May launch.

These digital freight brokers offer mobile applications that match carriers with loads, automate manual processes and provide upfront pricing and speedy payment.

Other firms that are connecting carriers with available freight through smartphone apps include Transfix, TruckerPath’s Truckloads app, Cargomatic, Overhaul and LaneHoney.

Convoy’s new round of financing, led by startup accelerator Y Combinator, will enable the company to continue expanding its services.

Convoy will invest those funds in building a “national automated network of trucks and trucking companies,” CEO Dan Lewis told Transport Topics.

That expanded network will allow Convoy “to improve efficiency across the country and really start to lower the cost structure of the industry while also improving service levels,” he said.

At the same time, Convoy will continue to invest in its technology by hiring more workers with data science and engineering backgrounds.

The Seattle-based company currently has 120 employees and plans to “grow that significantly over the next couple of years,” Lewis said.

Convoy founders Grant Goodale and Dan Lewis, courtesy of Convoy

Since its launch in 2015, Convoy has been focused on automating various aspects of freight transactions, including pricing and load matching — in other words, “finding the right truck and the right driver for the right job at the right time at the right price,” he said.

Uber Freight is working to solve that same problem.

Uber Freight has updated its platform to provide personalized load matching designed to make it easier for drivers to find the types of freight they like to haul.

The app now automatically learns drivers’ preferences based on their past loads, location, home base, length of haul and other factors, the company said. When a new load that matches these preferences becomes available, the app pushes a notification to the driver.

“We are continuing to evolve the product and we are releasing a series of features to help get the right load to the right driver,” said Uber Freight Director Bill Driegert.

“The app is scraping all the loads that are in our system and pinpointing the ones that are the best suited to each driver at any given time,” added Eric Berdinis, Uber Freight’s senior product manager.

Berdinis described the update as “the first step in a longer journey.” As Uber continues to refine the technology and learn more about driver preferences, the goal is to reach a point where the load notifications sent to drivers are “a perfect match every time,” he said.

Uber Freight also is expanding its focus beyond its initial launch market in Texas.

While shippers and carriers already are using the app to move freight throughout the country, Uber is now working to increase the amount of loads available on the platform in major metro areas in California, Arizona, Georgia, North Carolina, South Carolina and Chicago and the Midwest.

“By focusing on these particular regions, we’re trying to drive density in targeted areas and also getting more and more drivers onto the application in those areas,” Driegert said.

While most of Uber Freight’s loads today are still in Texas, drivers can expect to see a greater number of loads available on the app in these new markets in the coming months, the company said.

It declined to say how many loads have been moved via the platform or how many drivers are currently using the app.

Uber Freight is a unit of ride-hailing giant Uber Technologies Inc.

In addition to Y Combinator, Convoy’s financing round also included Cascade Investment, the private investment company controlled by Microsoft co-founder Bill Gates, as well as Mosaic Ventures and Barry Diller.

Anu Hariharan and Ali Rowghani, partners in Y Combinator’s Continuity growth fund, joined the Convoy board of directors.

“By improving trucking, Convoy is improving the foundation of our economy,” Hariharan said. “This service allows shippers to transform their supply chains at the same time that it allows carriers to grow their businesses more quickly, on their own terms. In 10 years, we’ll be astonished that this was ever done another way.”

Convoy said its customers include more than 300 shippers of various sizes, including Fortune 500 companies such as Unilever and Anheuser-Busch.

“A lot of them want to make a bet on the future because they’re excited about innovation and trying new things and learning how to improve their businesses,” Lewis said. “We want to be that bet.”

About 10,000 trucking companies are participating in Convoy’s freight network, the company said.

“We’re doing thousands of jobs per week now,” Lewis added.

Prior to its latest round of funding, Convoy had previously raised almost $20 million, he said.

Other Convoy investors include Reid Hoffman and Simon Rothman of Greylock Partners, Amazon.com founder and CEO Jeff Bezos via Bezos Expeditions, Salesforce CEO Marc Benioff, Code.org founders Hadi and Ali Partovi, former Starbucks President Howard Behar and the founders and CEOs of Expedia, eBay, Instagram and DropBox.

Even as digital freight brokers such as Convoy and Uber Freight push to expand their networks, Convoy’s Lewis said his company is competing primarily with asset-based carriers and traditional freight brokers, at least for now.

“That’s the majority of who we bump into when we do business,” he said, adding that there hasn’t yet been a lot of overlap between the digital freight companies given the size of the transportation industry.

That will change, however, if these companies successfully realize their growth plans.

Less than three months after launching, Uber Freight is expanding into new markets and building out its on-demand freight app, adding personalized features and push notifications to make it easier for drivers to find work.

The ride-hailing technology company’s fledgling logistics business is expanding efforts to sign up drivers located in the West, Midwest and South. Uber Freight has used Texas as a testbed from its soft launch in late 2016 through its public debut in May, though drivers on the app have been delivering loads from the state throughout the country, the company said.

As of this week, the company is actively marketing to drivers and shippers in major metropolitan areas in California, Arizona, the Chicago-Midwest region, Georgia, South Carolina and North Carolina.

The updates come as competition intensifies among on-demand freight matching startups looking to disrupt the established logistics industry. Venture firms are expected to pour $1 billion into cloud-based freight platforms this year, including Convoy, which raised $62 million in a new financing round late last month.

Uber Freight won’t disclose how many drivers are using its cloud-based load-matching platform and accompanying mobile app, how many shippers it is working with or other specifics. However, loads from current shippers have increased “about 10 times since the beginning of the year,” said Eric Berdinis, product manager at Uber Freight.

“We’re growing at an Uber-like pace,” said Bill Driegert, director of Uber Freight.

Whatever growth Uber Freight is experiencing comes despite ongoing problems at Uber, including the continuing search to fill the chief executive job vacated when founder Travis Kalanick was forced out earlier this summer. The problems at its parent company come up occasionally in Uber Freight’s discussions with customers, but so far, it has not affected business, Driegert said.

“The product speaks for itself,” he said. “We’re heads down focused on building out the best product we can. If we build the right product for our customers, that’s ultimately what matters.”

Despite its troubles, Uber has billions of dollars in investor cash the company can use to bankroll Uber Freight to get it running without having to worry about turning a profit, said John Larkin, transportation and logistics industry analyst with Stifel Equity Research.

Though they’ve got a lot going for them, startups such as Uber Freight and Convoy are recreating what’s already offered by traditional brokers such as CH Robinson and Coyote, which have been working on updating their own technology to make it more user-friendly, Larkin said.

“The question becomes how comfortable are shippers dealing with startups that are heavy on tech and a little light on the freight side,” he said.

New App Features

To encourage sign ups, Uber Freight updated its mobile app so drivers can set load preferences based on location, hometown, past loads and other specifications. The app uses push notifications – technology that flashes an alert onto a mobile device even when an app isn’t open – to point drivers to available loads that match their preferences.

In the coming weeks, Uber Freight plans to add features that will show drivers “packs” of local, short- or long-haul loads, along with a “For You” pack that includes all personalized recommendations.

Uber Freight continues to limits its service only to full truckloads, though the company is beginning to experiment with other types of services, Driegert said

Trucker Ferdinand Heres of Knoxville, Tenn., signed up with Uber Freight in May. (Photo: Ferdinand Heres)

A handful of drivers who have used Uber Freight’s app since May told Trucks.com they only had good things to say about it.

Ferdinand Heres, an owner-operator who runs out of Knoxville, Tenn., downloaded the app when it became available in May. Since then, he has used it almost exclusively, for approximately 30 loads. He calls the experience so far “picture perfect.”

That’s not the experience he had with other load boards advertising cargo that was gone by the time he saw them.

“I like it much better,” said Heres, owner of Heres Transport. “You look at the loads and prices and take it or leave it.”

Uber Freight has connected him with both small shippers and large companies. Compared to other brokers he’s worked with, Uber Freight is “better organized than just the average, and a little bit more professional,” Heres said.

Phoenix-based Circle H Intermodal is using Uber Freight’s push into new territory to expand its own business. The 42-truck interstate carrier is expanding the lanes it runs from its current territory of the West, Southwest and Texas into the Midwest and Ohio basin area, said Edward Hampton, a partner and the chief executive of Circle H.

Also, four of the company’s 35 drivers have been using the Uber Freight app with such positive results the company is giving it to 15 more drivers this month. Information on loads has been accurate, and the company normally gets paid in 48 hours or less, Hampton said.

“When we need to call in we get a live [person] for answers to questions we have. In my opinion, it’s been a great union,” he said.

Uber Freight’s effort to market itself as a driver-friendly service extends to sponsoring an annual concert at the Great American Truck Show expo later this month in Dallas. The “Take a Load Off With GATS and Uber Freight” concert stars Tony Justice and two other country singers who are either truckers or have truck-driver connections.