Shipping, at least in the US, has an offloading crisis. Two offloading, crises, actually.
One involves offloading goods from ships.
The other involves offloading costs onto the lowest paid workers.
Or so Ryan Johnson claims in his recent Medium piece, "
I’m A Twenty Year Truck Driver, I Will Tell You Why America’s “Shipping Crisis” Will Not End" (Oct 26 or so, 2021). It starts:
I have a simple question for every ‘expert’ who thinks they understand the root causes of the shipping crisis:
Why is there only one crane for every 50–100 trucks at every port in America?
He steps the reader through the bottlenecks in the current shipping system, and then he explains how the money is working. He explains, emphasis mine:
Most port drivers are ‘independent contractors’, leased onto a carrier who is paying them by the load. Whether their load takes two hours, fourteen hours, or three days to complete, they get paid the same, and they have to pay 90% of their truck operating expenses (the carrier might pay the other 10%, but usually less.) The rates paid to non-union drivers for shipping container transport are usually extremely low. [...] I honestly don’t understand how many of them can even afford to show up for work. There’s no guarantee of ANY wage (not even minimum wage), and in many cases, these drivers make far below minimum wage. In some cases they work 70 hour weeks and still end up owing money to their carrier.
I honestly don’t understand how many of them can even afford to show up for work. There’s no guarantee of ANY wage (not even minimum wage), and in many cases, these drivers make far below minimum wage. In some cases they work 70 hour weeks and still end up owing money to their carrier.
So when the coastal ports started getting clogged up last spring due to the impacts of COVID on business everywhere, drivers started refusing to show up. Congestion got so bad that instead of being able to do three loads a day, they could only do one. They took a 2/3 pay cut and most of these drivers were working 12 hours a day or more. While carriers were charging increased pandemic shipping rates, none of those rate increases went to the driver wages. Many drivers simply quit. However, while the pickup rate for containers severely decreased, they were still being offloaded from the boats. And it’s only gotten worse.
Constant readers will remember from my explaining it in "
Why You Can't Find a Therapist, No Really",
it is illegal for independent contractors to strike. It is a violation of the Sherman Anti-Trust Act of 1890.
One of my key points of that series is how the Sherman Anti-Trust Act of 1890 preventing small business owners including independent contractors to strike or otherwise organize for payment increase from their payers (insurance companies and equiv, in healthcare) resulted in therapist payment being driven down so low, that it caused clinics to go bankrupt and massive nunbers of therapists to flee the profession because they couldn't earn a living taking insurance for therapy. (See
Part 3 for the discussion.)
Looks, unsurprisingly, like the same thing is happening in shipping: by relying on independent contractors, carriers can drive wages as low as they want without any resistance except drivers finally refusing to drive at all. Like I wrote about therapists,
This isn't a flock of starlings all wheeling in the sky together by watching one another's wings. It's the creatures of the woods all fleeing in the same direction before the front of a forest fire.
But wait, it gets worse. Johnson explains, emplasis mine:
What is going to compel the shippers and carriers to invest in the needed infrastructure? The owners of these companies can theoretically not change anything and their business will still be at full capacity because of the backlog of containers. The backlog of containers doesn’t hurt them. It hurts anyone paying shipping costs — that is, manufacturers selling products and consumers buying products. But it doesn’t hurt the owners of the transportation business — in fact the laws of supply and demand mean that they are actually going to make more money through higher rates, without changing a thing. They don’t have to improve or add infrastructure (because it’s costly), and they don’t have to pay their workers more (warehouse workers, crane operators, truckers).
[...]
Before the pandemic, through the pandemic, and really for the whole history of the freight industry at all levels, owners make their money by having low labor costs — that is, low wages and bare minimum staffing. Many supply chain workers are paid minimum wages, no benefits, and there’s a high rate of turnover because the physical conditions can be brutal (there aren’t even bathrooms for truckers waiting hours at ports because the port owners won’t pay for them. The truckers aren’t port employees and port owners are only legally required to pay for bathroom facilities for their employees. This is a nationwide problem).
[...]
Nobody is compelling the transportation industries to make the needed changes to their infrastructure. There are no laws compelling them to hire the needed workers, or pay them a living wage, or improve working conditions. And nobody is compelling them to buy more container chassis units, more cranes, or more storage space.
[...]
My prediction is that nothing is going to change and the shipping crisis is only going to get worse. Nobody in the supply chain wants to pay to solve the problem. They literally just won’t pay to solve the problem. At the point we are at now, things are so backed up that the backups THEMSELVES are causing container companies, ports, warehouses, and trucking companies to charge massive rate increases for doing literally NOTHING. Container companies have already decreased the maximum allowable times before containers have to be back to the port, and if the congestion is so bad that you can’t get the container back into the port when it is due, the container company can charge massive late fees. The ports themselves will start charging massive storage fees for not getting containers out on time — storage charges alone can run into thousands of dollars a day. Warehouses can charge massive premiums for their services, and so can trucking companies. Chronic understaffing has led to this problem, but it is allowing these same companies to charge ten times more for regular services. Since they’re not paying the workers any more than they did last year or five years ago, the whole industry sits back and cashes in on the mess it created. In fact, the more things are backed up, the more every point of the supply chain cashes in. There is literally NO incentive to change, even if it means consumers have to do holiday shopping in July and pay triple for shipping.
I recommend reading the whole article.
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