The Chairman's Corner

By Thomas McCarthy

October 2019

I come to you once again from 30,000 feet flying home from what very well could be the last or at least my last Personal Property Forum (PPF). The tone set by the military from the beginning was adversarial. We came into a room where we were divided; tables reserved in the front for the military representatives and all of us service providers in the back with no tables to work from.

But let me take a step back; the day prior, many of us arrived early to attend an industry pre-meeting. One of the things discussed was the fact that the Associations were excluded from both the new Executive Working Group (EWG), a new initiative that started at this PPF as a CEO-to-CEO level meeting, as well as the hotwash that follows the PPF. Historically, the associations have been invited to participate to be a voice of the whole industry at the hotwash.

As representatives arrived from the EWG, they told us about what they had discussed in their meeting and gave us an idea of what we might be discussing the following day. One point of contention about the EWG was if you were not invited, and many of us were not, do those that were invited, now have a competitive advantage? I think many of those there would do a great job representing all of us, but still it gives you pause.

Back to the PPF…now we make our way to the back of the room and the meeting begins with the military representatives telling us that they cannot and will not discuss the Global Household Goods Contract. Everything related to that is “pre-decisional” and therefore please do not ask any questions about it.

They then proceeded to talk about the past peak season as we normally do at this time of year. Industry was saying how having refusals allowed us more capacity. The JPPSOs all said they got nothing out of it, and they all had to work overtime because of it and saw no additional capacity from their point of view. Well, they are operating with a false understanding of what industry capacity is and how their ‟capacity” continues to erode. They had, in my opinion, less capacity this summer than last summer, and we warned them about that at the last PPF in the spring before summer hit. They do not seem to realize the holding pattern they put many agents in with the outsourcing initiative that they refuse to talk about.

So then I ask you, what is the point of talking about the pros and cons of refusals and whether the overtime is worth the capacity? Why talk about system enhancements and new initiatives for a program that in less than two years may not exist?

Steve Weitekamp, Jeanette Homan, Alan Freese and I each made our way up to the microphone to let them know what this is doing to agents and TSPs, and I don’t know if anything we said made a difference, which I find very disheartening. They have their marching orders and if their marching orders say to drive the bus off a cliff with everyone onboard, then so be it.

If this wasn’t enough, Governor Newsom signed AB5 into law effective January 1, 2020. This codified the Dynamex ruling that in order to use a contractor, they cannot be engaged in the same business the unclarified question is how does this impact our industry?. Some may feel that there is an argument for using independent contractors that are righteous, by that they have their own CAL-T authority, own equipment, own employees, and several other items that meet the Borello standards that define a small independent business. Then there is a possible argument for a business-to-business relationship. But again, you have to be on the right side of the line.

While this rule was meant to target companies like Lyft and Uber, both said they do not think that this rule applies to them and will fight this in the courts when the time comes, and it surely will. Steve brought this issue up at the PPF when he was up on the industry panel and basically said if you think that labor is hard to get now…Crickets...

In my opinion, the only thing that was of benefit was the opportunity to talk to other companies about the GHC. We were talking about the different companies that are requesting information for submitting a bid. Companies like JB Hunt, who is a freight hauler but is looking to bid on this program. Let’s say they get the award, so does that mean everything is crate and freight on their trailers? Does the traditional van line driver have a place in their program? But again, since this is all pre-decisional, we can’t discuss these concerns.

The conversation was strictly kept to the last peak season and looking ahead to next season. The Navy & Marine Service representative scolded all the TSPs in the room that they needed to find agents to serve some of their harder-to-service areas; for example, China Lake.

I am not certain how they expect us to provide service and increase capacity in those hard to reach areas like China Lake when the financial incentives to go there are gone. In fact, with this program they have put the local agents that serviced China Lake out of business. I think my favorite person who got up to speak from industry was a gentlemen who services the southeast and Fort Moody. He told them over the summer he had a million pounds of capacity, but missed the minimum performance score by 0.035% and nothing could be done. On top of that, the two agents that service that base are about to close as they are ready to retire and their kids want nothing to do with moving. That means yet another military base will lose its local service providers.

I think my column this month was more of a rant than anything, but you know I am passionate about what we do. I am also about 400 words over budget, so I leave you with this, in vino veritas.

October 2019 - CMSA Communicator