Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
The chairman of the Senate Commerce Committee said he will not support legislation that contains language reclassifying the air unit of FedEx Corp. under a different set of labor laws, comments that deal a blow to organized labor, FedEx's chief rival, and his counterpart in the House of Representatives—all of whom have been pushing aggressively for the change.
Sen. Jay Rockefeller (D-W.Va.) told Dow Jones Newswires late Thursday that there isn't enough Senate support to assure passage of the controversial provision and make it part of legislation to fund operations of the Federal Aviation Administration (FAA). The language, which would require most employees at FedEx Express to be governed by the National Labor Relations Act (NLRA) rather than the current Railway Labor Act (RLA), is contained in the version of the FAA funding bill passed last year by the House of Representatives. It is not included in the version that subsequently passed in the Senate.
"I know perfectly well if I put that in the bill ... it's not going to pass," Rockefeller was quoted by Dow Jones as saying. Rockefeller told the news service that he personally supports the provision.
Rockefeller's views are significant in that he chairs the Senate committee where the FAA funding bill originated. He is also a member of the political party considered to be more sympathetic to the agenda of organized labor. The Teamsters union has been a vocal proponent of the reclassification.
The controversial language, originally proposed in the House by Rep. James L. Oberstar (D-Minn.), chairman of the House Transportation and Infrastructure Committee, would require all FedEx employees except for pilots and aircraft mechanics to be covered under the NLRA, a law that governs labor-management relations in virtually every U.S. industry, including trucking. FedEx has been treated as an airline since its inception, and its express operations are governed by the RLA, which covers workers in the airline and railroad industries.
The reclassification would enable FedEx Express workers to organize at the local level instead of nationally as one bargaining unit. The change would make it easier to unionize portions of FedEx Express's workforce, which is a key factor in the Teamsters' support of the provision. Teamster officials did not return an e-mail request for comment.
Jim Berard, the chief spokesman for the House committee, said Oberstar and Rockefeller met on June 16 to discuss the FAA funding legislation. However, Oberstar did not disclose whether Rockefeller discussed the FedEx provision, according to Berard.
Up-Hill battle?
Despite yesterday's setback, there are no indications Oberstar is backing off from the fight. The two versions of the FAA funding bill are currently being reconciled by House-Senate conferees, with a final version expected sometime around July 4. Berard said that Oberstar will try to get the provision included in the reconciled version, and that his hand will not be forced by the possibility of a filibuster—a procedural tactic to block a vote—by Republican Senators Lamar Alexander and Bob Corker, both from FedEx's home state of Tennessee.
"Oberstar is not going to be deterred by threats from the Senate," Berard said.
Resistance from the Senate may not be Oberstar's only challenge, however. At this time, House support for the Oberstar measure does not appear to be unanimous. Rep. John L. Mica (R-Fla.), the committee's ranking member, was quoted April 4 on the C-Span television network as saying that "many in the House opposed [the provision] on both sides of the aisle. Let's take the controversial things and put them aside and move forward with this bill."
Mica's comments may reflect some lawmakers' concerns that the FedEx provision jeopardizes the passage of a "clean" FAA long-term funding bill and is preventing the federal government from moving ahead on appropriating badly needed funds to modernize the nation's air traffic control system.
Long-standing dispute
The labor issue has long been a source of controversy in the industry. UPS Inc., FedEx's chief competitor, supports the provision, arguing that workers like drivers or sorters who have nothing to do with airline operations should not be covered under a labor law reserved for rail and air carriers. UPS's own operations are covered under the NLRA; in the early 1990s, the Atlanta-based giant sought its own reclassification under the RLA, but its request was rejected by both the National Labor Relations Board—which oversees the NLRA—and then by a federal appeals court.
FedEx opposes any change to its labor classification, saying the courts have ruled that its air and ground operations are part of one fully synchronized airline, and that one could not exist without the other.
The Memphis-based company has warned that any local work stoppages could have an adverse ripple effect across its entire system, compromising the reliability of its delivery network and forcing it to spend billions of dollars to implement contingency plans, costs that would ultimately be borne by shippers and consumers.
FedEx Chairman and CEO Frederick W. Smith, who has little tolerance for organized labor, has made this a "line in the sand" issue. He has threatened to withdraw a multibillion dollar order for as many as 30 Boeing 777 freighters should the final bill contain language requiring the change in labor classification.
A question of equity
Meanwhile, the debate over the FedEx provision has extended beyond the transportation and congressional realms. The Leadership Conference on Civil and Human Rights, a group co-founded in 1950 by the legendary black labor leader A. Philip Randolph, has issued a report sharply critical of the status quo, saying it continues to deny FedEx Express employees their rights to organize.
In the report, titled "Railroaded Out of Their Rights," the group said, "what is at stake here is not simply the technicalities of federal labor law or competition between FedEx Express and other package-delivery companies. The issue is about equity—the right of almost 100,000 FedEx Express employees to be treated fairly and to have the same opportunity" as other express companies to seek appropriate union representation.
Maggie Kao, a spokeswoman for the group, said it has long-standing ties with organized labor. She added, however, that the report was produced with no input from any trade union or corporation.
This is not the first time the group has crossed swords with FedEx. A report released in 2009 attacked FedEx's policy of treating drivers at its FedEx Ground parcel unit as independent contractors, a strategy that the group charged excludes those workers from coverage under labor and antidiscrimination laws.
FedEx has been in legal and tax battles for years over whether its ground parcel drivers should be considered company employees or independent contractors.
Congestion on U.S. highways is costing the trucking industry big, according to research from the American Transportation Research Institute (ATRI), released today.
The group found that traffic congestion on U.S. highways added $108.8 billion in costs to the trucking industry in 2022, a record high. The information comes from ATRI’s Cost of Congestion study, which is part of the organization’s ongoing highway performance measurement research.
Total hours of congestion fell slightly compared to 2021 due to softening freight market conditions, but the cost of operating a truck increased at a much higher rate, according to the research. As a result, the overall cost of congestion increased by 15% year-over-year—a level equivalent to more than 430,000 commercial truck drivers sitting idle for one work year and an average cost of $7,588 for every registered combination truck.
The analysis also identified metropolitan delays and related impacts, showing that the top 10 most-congested states each experienced added costs of more than $8 billion. That list was led by Texas, at $9.17 billion in added costs; California, at $8.77 billion; and Florida, $8.44 billion. Rounding out the top 10 list were New York, Georgia, New Jersey, Illinois, Pennsylvania, Louisiana, and Tennessee. Combined, the top 10 states account for more than half of the trucking industry’s congestion costs nationwide—52%, according to the research.
The metro areas with the highest congestion costs include New York City, $6.68 billion; Miami, $3.2 billion; and Chicago, $3.14 billion.
ATRI’s analysis also found that the trucking industry wasted more than 6.4 billion gallons of diesel fuel in 2022 due to congestion, resulting in additional fuel costs of $32.1 billion.
ATRI used a combination of data sources, including its truck GPS database and Operational Costs study benchmarks, to calculate the impacts of trucking delays on major U.S. roadways.
There’s a photo from 1971 that John Kent, professor of supply chain management at the University of Arkansas, likes to show. It’s of a shaggy-haired 18-year-old named Glenn Cowan grinning at three-time world table tennis champion Zhuang Zedong, while holding a silk tapestry Zhuang had just given him. Cowan was a member of the U.S. table tennis team who participated in the 1971 World Table Tennis Championships in Nagoya, Japan. Story has it that one morning, he overslept and missed his bus to the tournament and had to hitch a ride with the Chinese national team and met and connected with Zhuang.
Cowan and Zhuang’s interaction led to an invitation for the U.S. team to visit China. At the time, the two countries were just beginning to emerge from a 20-year period of decidedly frosty relations, strict travel bans, and trade restrictions. The highly publicized trip signaled a willingness on both sides to renew relations and launched the term “pingpong diplomacy.”
Kent, who is a senior fellow at the George H. W. Bush Foundation for U.S.-China Relations, believes the photograph is a good reminder that some 50-odd years ago, the economies of the United States and China were not as tightly interwoven as they are today. At the time, the Nixon administration was looking to form closer political and economic ties between the two countries in hopes of reducing chances of future conflict (and to weaken alliances among Communist countries).
The signals coming out of Washington and Beijing are now, of course, much different than they were in the early 1970s. Instead of advocating for better relations, political rhetoric focuses on the need for the U.S. to “decouple” from China. Both Republicans and Democrats have warned that the U.S. economy is too dependent on goods manufactured in China. They see this dependency as a threat to economic strength, American jobs, supply chain resiliency, and national security.
Supply chain professionals, however, know that extricating ourselves from our reliance on Chinese manufacturing is easier said than done. Many pundits push for a “China + 1” strategy, where companies diversify their manufacturing and sourcing options beyond China. But in reality, that “plus one” is often a Chinese company operating in a different country or a non-Chinese manufacturer that is still heavily dependent on material or subcomponents made in China.
This is the problem when supply chain decisions are made on a global scale without input from supply chain professionals. In an article in the Arkansas Democrat-Gazette, Kent argues that, “The discussions on supply chains mainly take place between government officials who typically bring many other competing issues and agendas to the table. Corporate entities—the individuals and companies directly impacted by supply chains—tend to be under-represented in the conversation.”
Kent is a proponent of what he calls “supply chain diplomacy,” where experts from academia and industry from the U.S. and China work collaboratively to create better, more efficient global supply chains. Take, for example, the “Peace Beans” project that Kent is involved with. This project, jointly formed by Zhejiang University and the Bush China Foundation, proposes balancing supply chains by exporting soybeans from Arkansas to tofu producers in China’s Yunnan province, and, in return, importing coffee beans grown in Yunnan to coffee roasters in Arkansas. Kent believes the operation could even use the same transportation equipment.
The benefits of working collaboratively—instead of continuing to build friction in the supply chain through tariffs and adversarial relationships—are numerous, according to Kent and his colleagues. They believe it would be much better if the two major world economies worked together on issues like global inflation, climate change, and artificial intelligence.
And such relations could play a significant role in strengthening world peace, particularly in light of ongoing tensions over Taiwan. Because, as Kent writes, “The 19th-century idea that ‘When goods don’t cross borders, soldiers will’ is as true today as ever. Perhaps more so.”
Hyster-Yale Materials Handling today announced its plans to fulfill the domestic manufacturing requirements of the Build America, Buy America (BABA) Act for certain portions of its lineup of forklift trucks and container handling equipment.
That means the Greenville, North Carolina-based company now plans to expand its existing American manufacturing with a targeted set of high-capacity models, including electric options, that align with the needs of infrastructure projects subject to BABA requirements. The company’s plans include determining the optimal production location in the United States, strategically expanding sourcing agreements to meet local material requirements, and further developing electric power options for high-capacity equipment.
As a part of the 2021 Infrastructure Investment and Jobs Act, the BABA Act aims to increase the use of American-made materials in federally funded infrastructure projects across the U.S., Hyster-Yale says. It was enacted as part of a broader effort to boost domestic manufacturing and economic growth, and mandates that federal dollars allocated to infrastructure – such as roads, bridges, ports and public transit systems – must prioritize materials produced in the USA, including critical items like steel, iron and various construction materials.
Hyster-Yale’s footprint in the U.S. is spread across 10 locations, including three manufacturing facilities.
“Our leadership is fully invested in meeting the needs of businesses that require BABA-compliant material handling solutions,” Tony Salgado, Hyster-Yale’s chief operating officer, said in a release. “We are working to partner with our key domestic suppliers, as well as identifying how best to leverage our own American manufacturing footprint to deliver a competitive solution for our customers and stakeholders. But beyond mere compliance, and in line with the many areas of our business where we are evolving to better support our customers, our commitment remains steadfast. We are dedicated to delivering industry-leading standards in design, durability and performance — qualities that have become synonymous with our brands worldwide and that our customers have come to rely on and expect.”
In a separate move, the U.S. Environmental Protection Agency (EPA) also gave its approval for the state to advance its Heavy-Duty Omnibus Rule, which is crafted to significantly reduce smog-forming nitrogen oxide (NOx) emissions from new heavy-duty, diesel-powered trucks.
Both rules are intended to deliver health benefits to California citizens affected by vehicle pollution, according to the environmental group Earthjustice. If the state gets federal approval for the final steps to become law, the rules mean that cars on the road in California will largely be zero-emissions a generation from now in the 2050s, accounting for the average vehicle lifespan of vehicles with internal combustion engine (ICE) power sold before that 2035 date.
“This might read like checking a bureaucratic box, but EPA’s approval is a critical step forward in protecting our lungs from pollution and our wallets from the expenses of combustion fuels,” Paul Cort, director of Earthjustice’s Right To Zero campaign, said in a release. “The gradual shift in car sales to zero-emissions models will cut smog and household costs while growing California’s clean energy workforce. Cutting truck pollution will help clear our skies of smog. EPA should now approve the remaining authorization requests from California to allow the state to clean its air and protect its residents.”
However, the truck drivers' industry group Owner-Operator Independent Drivers Association (OOIDA) pushed back against the federal decision allowing the Omnibus Low-NOx rule to advance. "The Omnibus Low-NOx waiver for California calls into question the policymaking process under the Biden administration's EPA. Purposefully injecting uncertainty into a $588 billion American industry is bad for our economy and makes no meaningful progress towards purported environmental goals," (OOIDA) President Todd Spencer said in a release. "EPA's credibility outside of radical environmental circles would have been better served by working with regulated industries rather than ramming through last-minute special interest favors. We look forward to working with the Trump administration's EPA in good faith towards achievable environmental outcomes.”
Editor's note:This article was revised on December 18 to add reaction from OOIDA.
A Canadian startup that provides AI-powered logistics solutions has gained $5.5 million in seed funding to support its concept of creating a digital platform for global trade, according to Toronto-based Starboard.
The round was led by Eclipse, with participation from previous backers Garuda Ventures and Everywhere Ventures. The firm says it will use its new backing to expand its engineering team in Toronto and accelerate its AI-driven product development to simplify supply chain complexities.
According to Starboard, the logistics industry is under immense pressure to adapt to the growing complexity of global trade, which has hit recent hurdles such as the strike at U.S. east and gulf coast ports. That situation calls for innovative solutions to streamline operations and reduce costs for operators.
As a potential solution, Starboard offers its flagship product, which it defines as an AI-based transportation management system (TMS) and rate management system that helps mid-sized freight forwarders operate more efficiently and win more business. More broadly, Starboard says it is building the virtual infrastructure for global trade, allowing freight companies to leverage AI and machine learning to optimize operations such as processing shipments in real time, reconciling invoices, and following up on payments.
"This investment is a pivotal step in our mission to unlock the power of AI for our customers," said Sumeet Trehan, Co-Founder and CEO of Starboard. "Global trade has long been plagued by inefficiencies that drive up costs and reduce competitiveness. Our platform is designed to empower SMB freight forwarders—the backbone of more than $20 trillion in global trade and $1 trillion in logistics spend—with the tools they need to thrive in this complex ecosystem."