The President's Column

by Steve Weitekamp

February 2016

I was recently asked by the American Moving and Storage Association (AMSA) to participate in a breakout panel discussion at their upcoming convention.  The issue being reviewed is App-based movers and their effect on the industry.  Just to clarify, when considering App-based movers we are referring to mobile applications that are not directly linked to a brick-and-mortar business but hope to benefit from disruptive innovation.  A business buzzword, disruptive innovation is a change based on new technology or thinking that creates a new market and value network and eventually disturbs an existing market and value network, displacing established market leaders and alliances.  Many want to develop the next app or service that disrupts a long-established industry and controls the flow of trade without the investment in the physical assets (no skin in the game) still required to perform the service.
                Over the last year or so we have received calls from movers contemplating working with App developers either to build a site or be a service provider.  App designers also call looking to either develop or legitimize already existing programs (frequently after coming under initial scrutiny of industry competitors or regulators).  I get it, build an App and get rich without doing any real work, it sounds pretty good.
                It is easy to understand why someone who is not engaged with the operation of a brick-and-mortar moving and storage business might not see the issues with the Uberization of our industry.  At first blush, it might seem positive since it combines mobile technology with potentially dynamic pricing and a supposedly available supply of, firstly, capable and safe labor, and, secondly, of road safe and properly equipped trucks to create a timely and more efficient user experience.  After all, it seems to have worked with the taxi business where the perception of many, taxi operators notwithstanding, is that it has created a more attractive option to the long-standing, licensed, ride-hailing service.
                What could be wrong with that?  Let’s look at just two of many potential issues as they say the devil is definitely in the details (see paragraph 3 sentence 2).  How does the App developer ensure that their partners, the people who are doing the actual moving, deliver labor that can provide a capable moving service and ensure consumer safety?  Who is the responsible party for incidents related to cargo claims and or accidents?
                We could speak to social and economic issues related to disruption of long-standing industries that provide steady employment and support of local communities.  It is easy to understand that without the burden of physical assets that undercutting the fixed costs of a conventional business is hardly a challenge.  Some argue that an on-demand work model means unpredictability and lower total compensation in an insecure environment for the worker.
                Let’s assume, for sake of argument, that none of that is concerning to the App developer.  The simplest argument against an App-based moving model for intrastate work (local or long distance) moving in California is that it is very challenging to do while remaining in compliance with existing law.  For California Public Utilities Commission (CPUC) regulated moving, Brokers and sub-contractors must follow the same regulations and permitting as traditional household goods carriers, as detailed in the code below.

PUBLIC UTILITIES CODE SECTION Chapter 7- The "Household Goods Carriers Act."
5102.  (a) The use of the public highways for the transportation of used household goods and personal effects for compensation is a business affected with a public interest. 5109.  "Household goods carrier" includes every corporation or person, their lessees, trustee, receivers, or trustees appointed by any court whatsoever, engaged in the permitted or unpermitted transportation for compensation or hire as a business by means of a motor vehicle or motor vehicles being used in the transportation of used household goods and personal effects over any public highway in this state. A broker, as defined in Section 5110.7, shall be considered a household goods carrier. 5131.  No household goods carrier shall engage in such business for compensation by motor vehicle over any public highway in this State, except in accordance with the provisions of this chapter which is enacted under the power of the State to regulate the use of public highways.

                As an engaged Citizen, sans law degree, it seems very clear to me that the section of California law stated above does not have any of the qualifiers that some might use to justify illegal activity.  Arguments include “it’s only a single sofa,” or “it represents less than 10% of our business.”  The Public Utilities Code makes no distinction on quantity of items moved or percentage of business performed to require compliance with existing law.  It is also clear that both the booker (see App producer) and service provider (see independent partner of App producer) are required to be active CPUC permitted carriers and to follow all the rules and regulations stipulated in the Household Goods Carriers Act and the 110 pages of the Maximum Rate Tariff 4 (MAX 4).

February 2016 - CMSA Communicator