Supply chain crisis: Driven by deregulation

Corporate media and the Biden administration have focused on major West Coast ports, specifically Los Angeles and Long Beach, Calif., as the pivot points in the global supply chain crisis impacting the U.S. But the problem is far more complex. It involves points of production, methods of global transport, points of entry to the U.S., plus how goods are transported once they are unloaded at these ports.

While increasingly in the news today, the supply chain crisis is not a new phenomenon. Since the early 1970s, developments in high technology have meant that most goods consumed in the U.S. are produced abroad and imported here. The problem, exacerbated by the COVID-19 pandemic, is how these products get transported to U.S. consumers, who are increasingly seeing empty shelves at every turn. 

Whether goods are made in the U.S. or produced abroad and shipped to U.S. ports, every product, on every shelf in every big-box store or in every box left on your doorstep, was delivered there on some type of truck. Truck drivers are responsible for moving 72% of all the goods we consume.

The shortage of drivers due to low wages and poor working conditions is a key factor in the supply chain crisis.

While focusing attention on the ports, corporate media and politicians like President Joe Biden say little about the trucking industry. However, in an interview with KCRW News Oct. 19, Danny Miranda, president of International Longshore and Warehouse Union Local 94, stated that Biden’s proposal to open the ports 24/7 to get supplies moving won’t solve the problem. “We’ve become a storage facility instead of a throughput facility. . . . We are inundated with cargo and moving it as fast as we can.”

If there is no one to pick them up, storage containers sit in the ports, Miranda explained. “They’re stacked; they sit. It’s cheaper for them to sit [on] that ship out in the middle of the harbor than it is to put it on the dock, because there’s no one to come and get it.” (tinyurl.com/36d72ane)

The roadblock Miranda is referring to is the shortage of port truck drivers to collect cargo from giant shipping containers at the docks. Most of these drivers are nonunion and experience some of the lowest pay and worst working conditions in the industry, because government deregulation has allowed them to be classified as “independent contractors” — stripping them of protections under existing government labor regulations.

Deregulation nightmare

In 1935, the Interstate Commerce Commission’s Motor Carrier Act was created to regulate the interstate trucking industry. It set trucking rates; the number of carriers, areas and routes served; what commodities could be carried; and who could be a carrier.

This act of Congress followed the tumultuous and bloody four-month strike of thousands of Minneapolis truck drivers led by Teamsters union Local 574 from May to August 1934. It was a pivotal moment for the Teamsters union as it helped lead to the 1935 enactment of the Fair Labor Standards Act and the National Labor Relations Act (NLRA), which governs labor relations in all industries except railroads and airlines.

Many blame Republican President Ronald Reagan for weakening the U.S. labor movement when he broke the Professional Air Traffic Controllers Organization strike in 1981. But the damage had already started when Democratic President Jimmy Carter signed the Motor Carrier Act of 1980, which overturned the 1935 MCA, deregulating the trucking industry and opening the door to today’s network of big-box stores and online shopping.

Under the 1980 MCA, anyone could haul any goods to any place for any price they liked, while forcing truckers to compete with one another on the price of transportation. While Carter’s MCA slashed the cost of moving goods by truck, its impact on union truck drivers was devastating. 

Drive to the bottom

Deregulation drove down the cost of shipping goods, but neither consumers nor drivers benefited. Any cost savings went directly to the coffers of shipping company owners at the top of this $800 billion industry. The price for trucking got cheaper, but the ability for truck drivers to make a decent living evaporated.

From 1980 to today, median trucking wages sank anywhere from 24% to 50%, depending on the type of truck and where it was driven. Local truck drivers were largely replaced by long-haulers driving 53-foot-long trailers. The majority of nonunion truck drivers on these big trucks are headed to a big-box retailer.

It was the large retail chains like Walmart, Home Depot and Amazon that benefited the most from the 1980 MCA. Deregulation fueled the development of the big-box store system, and later e-commerce, by removing restrictions on how goods could be shipped. Labor costs are so low that companies can now send whatever they want by any route. Trucks now carry huge amounts of goods from ports directly to distribution centers or retail stores. Mom-and-pop stores suffered, but Amazon Prime flourished.

Unions bore the brunt of deregulations

Union membership has plummeted, faced with competition from low-wage nonunion carriers. Forty years ago, the Teamsters had over 2 million members, representing the majority of truck drivers. Today they represent around 2% of truck drivers — around 70,000 workers. UPS was the only significant trucking company to unionize since deregulations began.

A provision of Biden’s infrastructure bill awaiting Congressional action would allow the training of 3,000 additional drivers — ages 18-20 — to drive tractor-trailers across state lines. But this provision would only further increase competition within the trucking industry, where currently drivers must be 21. The problem is not a shortage of drivers; it is the erosion of wages, benefits and job safety resulting from deregulation. 

How serious is the problem? According to NPR’s Planet Money, long-haul truckers have had an annual turnover rate of over 90% for decades [according to the American Trucking Association], and conditions for entry-level jobs are terrible. Long-haul drivers, who often work 60 to 70 hours per week, are paid not by the hour but for the miles they drive. The average pay is 52.3 cents per mile, and drivers are not compensated for the time it takes to load or unload their trucks, increasing tensions between drivers and warehouse workers. (tinyurl.com/f3xa2hb5) 

Union shops mandate that drivers be paid while they are waiting for loading.

Many drivers have to cover the cost of maintenance, insurance and fuel for their trucks. With all these added costs, their earnings amount to less than the federal hourly minimum wage of $7.25. Many drivers end up in the red, because they lease trucks from major trucking companies. Over 40% of truck drivers are people of color; 10% are women.

Truck driving is considered one of the most dangerous jobs in the U.S. With incomes based on the miles driven, long-haul drivers can average up to 125,000 miles per year, forgoing sleep to cover the distance. Excessive fatigue is the leading cause of trucking accidents. According to the National Highway Traffic Safety Administration, 892 long-haul drivers or their passengers died in 2019.

Control over the ‘last mile’

To better understand the crisis centered around ports of entry in California, you need to look at the companies responsible for the “last mile” of transport between ports and retail markets. A major player is Greenwich, Conn., based XPO Logistics involved with port, freight and warehouse workers. They link together the transportation of goods from ships to stores.

XPO’s former chief executive Louis DeJoy is currently U.S. Postmaster General. He’s the same DeJoy postal workers say is destroying the U.S. Postal Service while seeking to privatize it.

By misclassifying its workers as “independent contractors,” XPO provides services to some of the world’s largest corporations including IKEA, Home Depot, Target, Verizon, Starbucks, Nike and others and has stripped tens of millions of workers globally of their rights and benefits. They further deny them the right to unionize under the provisions of the NLRA, which does not recognize contractors as workers.

XPO workers in Europe are facing similar problems. In France, where drivers are unionized, XPO reneged on its promise not to slash jobs for at least 18 months after purchasing a competitor. Similar struggles with XPO are happening in Britain, Spain, Belgium and the Netherlands.

Teamsters General President Jim Hoffa addressed the problem of companies like XPO while in Washington, D.C., to meet with Biden Oct. 13. Hoffa stated: “One of the major problems with the current state of logistics is the shortage of port truck drivers. They are not paid a living wage and are largely treated as indentured servants. And that will continue until this country deals with the issue of misclassification, which allows them to be subjugated by companies.

“If people can make an adequate wage with good working conditions, they will come to work. But that means they must be treated as employees, who are allowed to organize with a union so they can negotiate proper compensation, benefits and workplace safety. Nothing will change until that happens.” (facebook.com/teamsters)

In June 2020, long before corporate media appeared to notice supply chain problems, Teamsters locals in 30 cities protested to demand state governments and employers provide enhanced safety measures for workers in the country’s food supply chain. Their demands included paid sick and family leave, hazard pay, access to PPE and testing capacity. Over 5,000 food supply chain workers had tested positive for COVID, and more than 20 have died from the virus.

Just imagine the impact if all 3.5 million truck drivers in the U.S. not only followed the Teamsters’ example by protesting but withheld their labor to win their demands. For that to happen nonunion drivers have to organize.