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Large Trucker Protests Over California's Gig Worker Law AB5 Shut Down Port of Oakland Terminals

David Paul Morris | Bloomberg | Getty Images
  • Truckers are protesting California's gig worker labor law, known as AB5.
  • An estimated 70,000 truckers who own and drive their own trucks fall under this law.
  • Port of Oakland is the eighth-largest port in the U.S.
  • Australian wine and meat, aluminum from South Korea, furniture, electronics, and clothing are common imports.
Trucks at the entrance to the Port of Oakland in Oakland, California, US, on Thursday, July 14, 2022. Truckers servicing some of the US's busiest ports are staging protests as state-level labor rules that change their employment status begin to go into effect, creating another choke point in stressed US supply chains. Photographer: David Paul Morris/Bloomberg via Getty Images
David Paul Morris | Bloomberg | Getty Images
Trucks at the entrance to the Port of Oakland in Oakland, California, US, on Thursday, July 14, 2022. Truckers servicing some of the US's busiest ports are staging protests as state-level labor rules that change their employment status begin to go into effect, creating another choke point in stressed US supply chains. Photographer: David Paul Morris/Bloomberg via Getty Images

The Oakland International Container Terminal (OICT) management closed operations on Wednesday at the Port of Oakland due to the independent trucker protests over California's gig worker law, known as AB5.

The Port's other three marine terminals are effectively shut down for trucks as well, the Port of Oakland told CNBC, while there are some vessel labor operations underway.

This is the third-day truckers have protested California's gig worker labor law, which was sparked by the rise of gig economy platforms like Uber, Lyft and DoorDash. A two-year legal stay was recently lifted when the Supreme Court decided not to hear a case which would have protected truckers from the impact of the law.

AB5 requires companies that hire independent contractors to reclassify them as employees, but there are some exceptions in the law across industries. The majority of truck drivers in California are owner-operator and many in this job category are concerned about their future. An estimated 70,000 truckers who own and drive their own trucks would fall under this law and they do not want to become an employee or part of a union in order to work.

These are the largest trucker protests to date over the law.

One of those protesting is Bill Aboudi, owner of AB Trucking. "So far there has been no contact with the governor's office. It seems the governor is not concerned about taking American workers' rights away," Aboudi said. "These are independent, small businesses that choose to operate their own trucks, and now that right is taken away from them. They do pay taxes, they do have insurance. It's their choice to do that."

CNBC reached out to Governor Gavin Newsom's office asking when the enforcement of the law would begin, as well as if truckers have a way within the law to remain independent. In an email to CNBC, the Governor's Office of Business and Economic Development (GO-Biz) Director Dee Dee Myers stated that with the federal courts rejecting the trucking industry's appeals, "it's time to move forward, comply with the law and work together to create a fairer and more sustainable industry for all."

Governor Newsom's office wrote in a separate email to CNBC, "We also suspect the landscape may change (independent drivers becoming their own authority and/or then existing firms becoming an employee/driver model)."

West Coast trucking and the supply chain

At the Port of Oakland, over 2,100 trucks go through the terminals each day. It is the eighth-largest port in the country, importing a wide range of items, from Australian wine and meat to aluminum from South Korea, furniture from China, clothing and electronics.

The protests, which blocked the terminal gates, forced some longshoremen not to navigate through the crowds for fear of their safety. Dockworkers can refuse to enter a marine terminal if they feel "unsafe" or endangered in any way."

"The workers stood by on health and safety, as is permitted in our contract when conditions at the terminals present a risk," said Farless Dailey III, ILWU Local 10 President.

Port of Oakland officials tell CNBC that as a result of the lack of longshoremen to work at the terminals, there were closures. ILWU labor came to work this morning at SSA terminal, they said, however, once they arrived, some ILWU members chose not to enter the terminal. Without a full complement of labor, SSA decided to close its operations today.

The International Longshore and Warehouse Union and Pacific Maritime Association continue to negotiate over a new contract to replace one that expired July 1, and both have pledged to not to strike or have a labor lockout.

There are three other marine terminals at the Port of Oakland, with waterside operations underway. However, truck gate activity is either minimal or shut down depending on the terminal.

As a result of the protest, productivity has diminished and there are rising wait times for containers, according to CNBC Supply Chain Heat Map data provider Project44.

CNBC has been told by multiple sources the protests at the Port of Oakland will continue through Friday.

Last week one-hundred truckers protested at the ports of Los Angeles and Long Beach but because of the size of the ports, the impact was not as severe as Oakland. An estimated 15,000 trucks move through these ports daily, more than seven times the trucking capacity of Oakland. But even with their immense size, the ports of LA and Long Beach have been severely congested and any trucker disruption would only add to the massive container congestion.

The problem at these West Coast ports has been rail wait times are around 11 days. Trucking containers represented less than 40% of all long-dwelling containers at the ports. Because of the railroad container pile-up, land capacity at the Port of LA is currently 90%. Any delays in trucks picking up containers would only add to the congestion.

Container congestion takes boxes out of the supply chain for re-use and that drives up container prices because you have fewer containers available.

Correction: An estimated 70,000 truckers who own and drive their own trucks would fall under the gig worker law. An earlier version of this article misstated that figure.

The CNBC Supply Chain Heat Map data providers are global freight booking platform Freightos, creator of the Freightos Baltic Dry Index; logistics provider OL USA; supply-chain intelligence platform FreightWaves; supply chain platform Blume Global; third-party logistics provider Orient Star Group; marine analytics firm MarineTraffic; maritime visibility data company Project44; maritime transport data company MDS Transmodal UK; ocean and air freight benchmarking and analytics firm Xeneta; leading provider of Research & Analysis firm Sea-Intelligence ApS; Crane Worldwide Logistics, and air and freight logistics provider SEKO Logistics and Everstream Analytics.

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