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How labor disputes impact shipping rates and the trucking industry

Many truckers are independent contractors.
/ Industry News & Trends /

By: Phil Sneed

America relies on trucks for the majority of the freight shipments that traverse the nation each day, and the demands placed on an already overloaded trucking industry are likely to increase in the years to come. In the midst of the national struggle against constrained trucking capacity, the past year brought another discussion to the fore: labor disputes within the shipping industry that slowed many elements of commerce to a grinding halt. 

For the companies that rely on shipping every day, labor disputes in shipping represent a massive disruption in service that can create huge gaps in product rollouts and profitability. The owners of companies that rely on shipping must understand how labor disputes can interrupt their service and how they can avoid feeling the impact of future strikes. 

A multifaceted problem
The strike that caused so many problems for shippers early in the year happened at ports across the West Coast and actually had little to do with the truckers themselves. Instead, the dispute was between the shipping companies and dock​workers who load and unload the boats and trucks. This disagreement resulted in the closure of 29 ports, according to the Los Angeles Times, and an incredible loss of work. 

While the dispute was often characterized as a strike from truckers, or the shipping industry as a whole, the dockworkers' strike actually cost truckers a substantial amount of money. CNNMoney noted that the number of truck drivers who defaulted on payments on their trucks jumped once the port strike took effect. Without the goods to move, truckers in the area were forced to stand idle, waiting for shipments that were never released from the port. 

That's not to say the trucking industry didn't have an effect on the strike. The ports were already operating under a huge backlog, according to the L.A. Times, because there are simply not enough trucks to move all the goods. The increased pressure caused by the driver shortage likely contributed to the dockworkers' desire for improved compensation. This type of labor dispute, which is tied to, but not a result of, the trucking industry's issues, can make shipping rates more expensive and increase the strain on an already overloaded system. These types of disputes can actually have a larger impact on shipping rates than actual strikes by drivers. 

Strikes at any part of the supply chain present a problem. A strike at a port can drive up shipping rates.

Driver strikes have less impact
Actual strikes by drivers can be worked around relatively easily because of widespread fragmentation in the trucking industry. A strike is currently underway at a southern California port, according to NBC News, but this dispute is unlikely to have the same impact as the port shutdown, because the truck drivers are the ones striking. Truckers from four companies are allegedly striking, but the impact of the effort remains unclear. 

Truckers are often independent contractors, even if they work as part of a larger organization. The industry is composed of many small companies, so even if a strike occurs, it is possible to find other viable alternatives. 

This type of situation illustrates the need for logistics management services that can provide in-depth knowledge of the situation facing the shipping industry in various regions and maintain a network of carriers that can handle changes in demand or scheduling necessitated by strikes throughout the supply chain. Shipping is a highly complex industry, and it helps to have a centralized body that can unify all the disparate parts.

The need for unification becomes even more pronounced when labor disputes occur. They are an inevitable part of the shipping industry, and strong logistics can help an organization sidestep the potential problems these disputes cause.