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Troy: Alright truckers, this is Troy Diffenderfer
Lenay: And this is Lenay Ruhl
Troy: And you’re listening to the 22nd episode of BigRigBanter… and it’s actually the last episode of 2018. Lenay, how are you doing today?
Lenay: I’m good Troy, how are you?
Troy: Good, so like I said, we’re winding down. Lenay, January 1 is quickly upon us, do you have any New Year resolutions that you want to get off your chest? Maybe be nicer to me on the podcast or anything?
Lenay: Laughing Not a chance
Troy: Alright, alright. Mine would probably be to eat a little healthier. I know you always give me crap for what I eat at lunch. I think it’s unnecessary but I do agree that I might need to lay off the McDonalds.
Lenay: Yeah, because then I want to eat it too. Did you make any resolutions last year?
Troy: Umm… probably the same one as this year.
Lenay: Laughing
Troy: And it didn’t really go that well, but let’s not talk about that. Let’s talk about… let’s talk about our first…
Lenay: Let’s talk about how you can’t talk and now I’ll do it
Troy: Fine, fine
Lenay: Laughing Right now we’re going to count down the top five things that we think you should keep an eye on for next year. The first one is actually a supreme court case. A truck driver, Dominic Oliveira actually sued a company that he was working for, New Prime, about his pay, and the court case actually made it all the way to the supreme court. Now this case is something that will be decided in 2019, probably somewhere between the new year and June. But we had a chance to sit down and talk with Dominic’s lawyer, Jennifer Bennett, and she is from an organization called Public Justice. So, let’s listen to what Jennifer has to say about the case and what it could mean for drivers.
Jennifer: So, the lawsuit, the underlying lawsuit is about New Prime not paying its driver minimum wage. So, Dominic started at New Prime because they advertised this paid apprenticeship program where new drivers work alongside experienced drivers. But, it turned out that although it’s advertised as a paid apprenticeship, at first, he actually wasn’t paid at all, and in fact, that company said that Dominic owed the company money for driving for it. And the company says now you owe us tuition for this paid apprenticeship and that we’ll only forgive this tuition if you work for us for a year. And so, Dominic did, and even once Prime started paying him, his paycheck was often far less than minimum wage because the company would deduct, you know, the cost of the truck he was driving and gas and supplies. So, at the end of the day there were some weeks when Dominic’s paycheck was actually negative. That is, he had to pay Prime for the privilege of driving a truck for them. And you know, of course, there are state and federal minimum wage laws, but Prime says that these laws don’t apply to it because they labeled Dominic as a contractor, and you know, it’s not just Prime, but we’ve seen this with other companies in the industry that have done the same thing. And like some of these other companies, we think that Dominic wasn’t actually an independent contractor, that he was called an independent contractor but in fact we believe he was just a regular employee like anyone else. You know, the company controlled his schedule, they controlled his work, Dominic couldn’t work for any other trucking company, and so we think that these state and federal minimum wage laws apply to Prime. And we also think that there are probably lots of other drivers working for the companies that were in the same boat as Dominic, which is to say that we think there are likely a large group of these drivers that Prime called independent contractors and, therefore, thought they didn’t have to pay minimum wage to these drivers. And so, you know, a few years ago now, Dominic sued Prime on behalf of himself and on behalf of all of these other drivers saying that Prime has to follow the state and federal minimum wage laws and pay these drivers what they’re owed. And what Prime said is, no you can’t sue us. Prime said, you know, took out this contract that they had Dominic sign in order to drive for them, and they said, look at this contract we made you sign. In this contract, we put in a clause in the fine print saying that you are giving up your right to go to court, that you can’t sue us. If you have any problem, you have to go to this thing called arbitration. What arbitration is, is it’s a private process. It often costs much more than court, its often secret, and there’s very, very limited opportunity to appeal.
Lenay: Right
Jennifer: And so, Prime said, you can’t do the court thing. You have to go do this arbitration thing. And prime also said, that in this fine print contract that they had Dominic sign just to drive for them, not only do you have to go to arbitration, but we put in this clause that says you can’t join together with any other drivers to bring your claims together. Each person, if they want to sue us, has to go it alone. So, Prime tried to get Dominic kicked out of court for this reason. But as it turns out, the Federal Arbitration Act, which is the federal law that Prime asked the court to use when they enforced this arbitration clause, has an exemption for the contract of the employment of transportation workers.
Lenay: ok.
Jennifer: Yeah, and so truck drivers are transportation workers, turns out…
Lenay: Yes
Jennifer: And we said, hey this law you’re trying to use it has this exemption for exactly the kinds of people you’re trying to use it on and what prime said is well not so fast, this exemption applies to, the text of the exemption says that it applies to the contracts of employment of transportation workers. and what prime wants to argue is that because it labeled Dominic an independent contractor, his contract isn’t a contract of employment. and so that’s the fight. it turns out that if you go back to when the law was originally written, which is 1925, it’s super clear that the phrase “contracts of employment” meant everybody’s agreement, including those of independent contractors. and it wouldn’t make any sense, right, for congress to write a law that only applied to companies who properly labeled their workers employees but allowed companies that did illegally misclassify their workers to get around the law, like that doesn’t make any sense.
Lenay: Right
Jennifer: So that’s what the supreme court is deciding now. The supreme court… we haven’t even gotten to, you know, the underlying, the real question in the lawsuit of, does Prime have to pay its workers minimum wage? Because all of the fight so far has been about, can Prime kick its workers out of court?
Lenay: Ok. And so, when the supreme court reaches their decision, what are like, the two options, I guess, that they could say?
Jennifer: There’s actually three options they could say.
Lenay: ok.
Jennifer: They could say what Prime wants them to say, and what Prime wants them to say is that this law that we’re using to try to force drivers into arbitration, whether this law applies, depends only on what we call our drivers. So, if we call our drivers independent contractors, then the law applies regardless of whether the drivers actually are independent contractors. Nothing about the drivers’ actual work matters. All that matters is what we say. Alright, and that would of course incentivize companies to manipulate what they call their workers, right. So, that’s one option. The second option is what we’re arguing, which is, look if you go back to what these words meant when the law was passed, congress was clearly trying to exempt all transportation workers. Congress didn’t care, you know, whether the transportation worker was an independent contractor or not. The whole point of this exemption is that congress was really worried that people in the transportation industry were striking and interrupting commerce. So, like, there were a bunch of railroad strikes, which meant that fruit was rotting on trains and stuff like that.
Lenay: Right
Jennifer: So, congress wanted to be able to resolve these kinds of disputes as a group. They didn’t want these kinds of disputes going, you know, to these individual, private forums where everybody had to fight one on one with the employer, because then the workers would just all strike and that would cause problems. And so, what we say is, look, you know, if you look at what these words meant at the time, if you look at what congress is trying to do, then it’s clear that congress is trying to exempt all transportation workers regardless of whether they were independent contractors or employees, because all transportation worker, you know – it doesn’t matter whether they’re drivers, independent contractors, employees – if all truck drivers you know, walked out the job tomorrow that would be a huge problem.
Lenay: Right, yeah.
Jennifer: It’s the same. If you don’t have drivers you can’t get your stuff anywhere. And so, our position is that the court should hold that the exemption applies to everyone. And then there’s a middle position, that the court could hold, which is what some lower courts have held, which I think is more correct than Prime’s position but not exactly the right one. Which is that the court could say, it’s not that the exemption applies to all drivers. and it’s not what the company calls the driver, but what matters is whether the driver is actually, in fact, an employee. And so that’s sort of in between the two positions that we and Prime are arguing for, which is to say that we look at what they’re actually doing. I think that makes more sense than letting companies just call their drivers whatever they want and decide for themselves whether the law applies. I don’t think that’s what the law actually, like the words of the law, actually mean or what congress was intending.
Lenay: and what does the supreme court’s decision mean for truck drivers going forward? I mean what, you know, you said there’s three options that they could probably choose from so how will that impact truck drivers?
Jennifer: Yeah, I mean… so if the court says that all that matters is what the company says you are then companies who already have lots of incentives to misclassify their drivers and independent contractors will have one more incentive to do that. It means that companies who do illegally misclassify their drivers will have federal law that they can use to kick those drivers out of court, which practically speaking means that fewer drivers will be able to go to court to bring their claims. If Dominic wins, and if the court holds that the law means what it says, that the law doesn’t apply to any transportation workers no matter what they’re labeled, then that means that Dominic will be able to continue with his case in court, which hopefully will help both him but also lots of drivers like him who have the same problem at Prime. You know, when I think about this case the thing that I think is really important about it is I think it shows how important it is for drivers to be able to band together to fight for what they think is right… to have their day in court, to get fair wages. If Dominic is able to bring a class action in court it means that he can put his name on a lawsuit, and lots of people who might not be comfortable putting their names on a lawsuit, because you know, maybe they still work for prime and so are afraid of retaliation or maybe there are other reasons that they couldn’t put their name on a lawsuit, or if they had to sue alone they couldn’t afford to do it. Dominic can put his name on a lawsuit and stand up for all of those people at once if he’s able to bring a class action in court. And that’s the kind of thing that Prime and companies like it, when they try to enforce their arbitration clauses, they’re trying to stop. They’re trying to prevent drivers from being able to do this, to shunt them into a secret forum where often they say you can’t band together with your fellow drivers. You have to go it alone. And lots of people won’t be able to do that. And so, I think that’s the thing I think is really important about this case and this kind of case, is that it allows drivers to band together and I think in general, both in court and we’ve seen it, you know, there’s recently been attempts to pass legislation that would be harmful to truck drivers; and truck drivers and others banded together to fight it. I think it shows the importance of the power that drivers have when they band together and how hard some companies are fighting to prevent them from doing that and how important it is for them to be able to do that.
Lenay: Thanks again to Jennifer for all of that information. It will be interesting to see what the highest court of the land decides.
Troy: Yeah and let’s keep the countdown rolling. Our second top trucking trend for 2019 is the continuation of ELDs and the improved analytics that will come along with it. I had the chance to sit down with Dean Croke, who is the chief insight officer at Freightwaves.com, and he had a lot of really cool points. You owner operators, small companies, out there, are really going to be able to take advantage of ELDs next year. So, let’s listen to what Dean had to say.
Dean: I think they’ll be some ink that’ll be lined out as people move through to the end of 2019 and become compliant completely with ELDs. There’s a grace period, if you recall, where they had to leave off the older style electronic devices where they essentially have to become compliant by December 19. I think it is 2019, and they have to have the upgrades on those devices. I think that’ll be the big change. The difference in the two devices are essentially that the older style ELD you could change the geo-fence as to when the driver, the truck, started on duty driving. So, the current ELD device, as soon as you go over five miles an hour, I think that’s the case for most of them, it triggers an automatic movement to on duty driving on line three. So, with older devices there was a way you could actually increase that speed threshold to 20 miles an hour and maybe a one mile radius so that you could do moves around a truck stop or a shipper location without it triggering an on-duty event. That’s the essential difference. I think with ELDs that’ll be the big change from a technology perspective. I just think generally speaking though, most carriers now have probably got ELDs and already adapted to them. Personally, I don’t like the underlying regulations. I think being compliant to onsite regulations won’t make fleets any safer, so my theory is that if I was having to run ELDs today, and I do have an ELD in my truck, just for the record, I find the data that comes off the ELD device will be really, really interesting. It already encouraged carriers to not think so much about being compliant to the regulations but finding ways to use the ELD data to understand how to operate their business more profitably. Because there’s some really good data points in the ELD data stream that tell you about you know, trip speeds, trip timing, dwell time, you know, how much dwell time you have between loads, what lanes you might find the most profitable, the ones where you have a higher average road speed, where you had the least traffic, and a lot might already know that intuitively, but for some fleets where they don’t have a lot of data, the ELD data stream for them could be really, really insightful. Especially those smaller fleets where they don’t necessarily have a lot of visibility into what their trucks are doing. So, ELDs, they’re a very rich data source. If you said what was going to be the one big trend next year with ELDs, beyond the need to be compliant with the regulations for the old devices, I think it will be a lot of the people that have these devices will find ways to generate more insight from the data that comes off them. I think that’s going to be the big change next year.
Troy: And once again that’s Dean Croke. If you want to hear more of what he has to say, feel free to check out some of his articles he has written on freightwaves.com.
Lenay: Alright. The third trucking trend of 2019 to keep an eye on is autonomous trucking. We’ve talked about that a few times here in 2018, but it’s definitely something that is going to continue to evolve in the coming year as well as technology in the cab of your truck. I got to sit down with Ben Schill from Paper Transport, so here’s what he had to say about autonomous trucking.
Ben: Yeah, so, specifically, I think the whole industry, we’re going to see significant investments from a technology perspective in our industry. And there’s a number of things that will be behind the scenes and, you know, connectivity between carriers and shippers and how we interact and do business and provide visibility. However, I believe there’s some significant impacts that that is going to have on professional drivers as well. You know one of the things that I’m really excited about is, there’s all this talk about autonomous trucks and what’s happening with vehicle to vehicle communication. You know, when I look at what’s happening on that front, and how that’s going to affect our drivers, I think it’s some of the most exciting technology from a safety perspective that is starting to hit us and be part of how we do business. So, I think, you know, when you start thinking about how smart these trucks are getting in terms of collision mitigation systems and smart cameras and the ability to actually connect with other vehicles, I really view that as an awesome opportunity for our industry to continue to become safe, more safe, and you know, it’s less about an autonomous truck that’s going to operate without an operator. I don’t believe that’s around the corner, but I truly believe that we’re going to start moving in the direction of other industries, such as you know, the airline industry or the locomotive industry, where there’s more automation around certain aspects that ultimately leads to a safer work environment for our professional drivers and the motoring public. I think there’s a lot of technology around the truck that you’re going to continue to see, as well as the number of trucks on order right now. And as these trucks come onto the roads, we’re going to see fresher and fresher technology, specifically around safety.
Lenay: And that was Ben Schill. He’s the vice president of Paper Transport. If you want to learn more about his company you can check it out in our show notes.
Troy: Alright, thanks Lenay. Let’s throw it back to Dean again for number 4. He’s talking about macroeconomics and the trucking industry on a global scale. There’s a lot of geo political issues going on right now that’s going to impact you truckers in 2019. So, let’s hear what dean had to say.
Dean: There’s no question that there are some signs that is a global slow down. We’re looking at decreasing oil prices, the container shipping rates all around the world are decreasing, there is geopolitical activity in the middle east that’s pointing towards a slowdown in oil production. So, I just think generally, I don’t know that 2018 will be a year that I would say will continue next year. I’m somewhat cautious in my outlook for next year. I don’t think things will be as good next year as they are this year, so this year is not a year I would use for comparison. For operators out there thinking they’ll have the same demand, I don’t think that’ll be the case next year. I think the prices that flatbed carriers and reefer van operators have been able to generate this year… I don’t think they’ll be there next year, and there’s a few reasons why. Notwithstanding the fact that the driver shortage will be an ongoing dilemma for the industry, I just think that the global growth and the economic growth here in the US will be affected by a couple things. I think the tariffs that we’re seeing introduced on china, that’ll jump to 25 percent on January the first. I think that’s going to have a big impact on freight generally. There are definitely signs of a slowdown in the range of what we saw in 2014. I think that’s going to be, the flow and effects of this trade will affect consumer demand into the new year. I think that’ll be a big impact. The trade news this morning… the trade war news this morning wasn’t good in that the Trump administration wasn’t able to generate any positive use out of current talks and that they didn’t think that there’d be any change in the tariff deadline on January 1, moving to 25 percent before the end of the year, so I mean, some are going what does that mean? Well right now we’re seeing a massive inflow of containers, shipping freights, from Asia into the west coast of the United States to beat the tariff on January 1. All of the freight that carriers normally hall around the country, dry freight, for Q1, that’s sort of driven by Chinese market, all that freight’s going to be before Christmas or before January 1. So, it means that the normal flow of freight volumes will be affected in Q1 by this influx of container freight coming in now, and that will have a flat on affect across the whole country. So, I see some disruption in the volume of freight early in the new year. We haven’t seen freight volumes pick up since the start of October, so we still see some instability in the market in that way. I still think there’s some markets where there’s not a lot of capacity so truck operators can find lots of opportunity. You know, Las Vegas today is a market where you’ll get a backload out very quickly. El Paso there’s a lot of container freight coming up through Mexico into the El Paso market where you could get a load on the stock market out of there with a pretty good rate and then have very little down time. I think there’s certain markets around the country, like you know, a lot of cheese comes out of Wisconsin this time of the year. About 40 percent of all cheese gets pushed out of Wisconsin in November and December, so reefer rates are pretty high up there right now. You can run into that market and get a backhaul out of there pretty quick. So, there’s certain markets where there’s a lot of activity, but generally speaking, I see capacity sort of tied into some markets but, capacity, for most of the year shippers are saying capacity can strain. They’ve had trouble finding trucks most of the year, is what shippers generally say. I think that’s going to change, so I think that we’ll turn to more 2017 levels, might be a better way to describe this, but certainly I don’t see the same trends flowing over into 2019 as we’ve seen this year.
Troy: Yeah, and a big thanks to Dean again. Just to clarify, after that interview was recorded Donald Trump did actually strike a deal with China that would lower the tariff to 10 percent, which definitely good, but we spoke to Dean again off the air and he said that won’t have any effect on quarter 1. However, it could have an effect on the following quarter.
Lenay: So, for our fifth and final trucking trend to look out for in 2019, Ben brought up an interesting point that he thinks that we’ll see an increase in work life balance for truck drivers. Right now, drivers are used to being on the road for the long haul, and there seems to be a shift to give drivers more of a work life balance so that they can be at home more with their families. Here’s what he had to say about that.
Ben: I guess I’ll hit on what I believe is probably going to be one of the biggest changes that professional drivers are going to start to see and that is I think we’re really going to see an accelerated shift toward more frequent home time. Whether it’s home daily or home multiple times a week, I really am seeing a shift in the market right now, specifically with new drivers coming into the market, kind of demanding home daily jobs. With the economy where it’s at and unemployment at near record lows, there’s lots of opportunities outside of our industry for people to make decent money and have work life balance. So, we’re not just competing with other carriers in terms of finding great professional drivers, but we’re really starting to compete with other industries that are offering a better work life balance. I see an accelerated shift, really over the next year or so. I think it’s already coming a lot faster. Just anecdotally I can say, you know, we hire some drivers right out of a select group of established driving schools and I would say 18 to 24 months ago it was not uncommon to tell those new students, ‘hey, you need to go over the road, you have to kind of cut your teeth, if you will, and after you get some experience then you’ll be eligible for some home daily roles.’ And I think that the industry operated in that fashion. And like I said, you know, now, up the last six to twelve months, when you’re in talking to new candidates that are coming into the industry, they’re not even going to talk to you if you’re not offering – now that’s a general statement – a lot of them are kind of demanding home daily opportunities and they’re going to forgo significant earnings to be at home with their family and have the work life that they want. I think we’re going to see an accelerated shift toward more frequent home time. I also believe that that’s going to lead to a significant pay variance between drivers that are willing to run either regionally or longer, and be on the road for five plus days – I think you’re going to see the wage levels of those individuals rise significantly. At the same time, you’re going to see a creation of more home daily jobs.
Lenay: So that wraps our trucking trends for 2019. Just to recap, the five things that we think you guys should keep an eye on for 2019… the first one is that supreme court case that Jennifer Bennett shared with us involving a truck driver and the trucking company. The second one was Dean Croke talking about ELDs and what could mean for data collection in the future. Our third trend was Ben Schill talking about autonomous trucking and how that will evolve in the coming year. Let’s see… number four, Dean talked about macroeconomics. Then wrapping it up with number five, we had Ben again talking about a work life balance. And just a reminder, we’ll have our interviewees listed in the show notes so you can check that out if you want to ask them any questions or get to know more about them.
Troy: That wraps up our trucking trends for 2019 podcast. Lenay, here’s to another year of recording a podcast with you.
Lenay: I know. I bet you can’t wait for 2019… a full year with me on the show.
Troy: Of course. And once again, a big thanks, happy holidays to everyone listening. I hope you truckers enjoy your holiday season. I’m your co-host Rroy Diffenderfer
Lenay: And I’m your favorite co-host Lenay Ruhl
Troy: And this has been BigRigBanter.
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