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The Wall Street Journal | Port-Trucking Firms Run Into Labor Dispute

05.14.16 | Erica E. Phillips, The Wall Street Journal

The nation’s busiest ports are emerging as a key battleground in the legal fight over whether truck drivers should be counted as employees or independent contractors.

Several trucking companies operating at the ports of Long Beach and Los Angeles have filed for bankruptcy protection in recent months, citing mounting costs to settle hundreds of legal claims. These operators haul containers from the docks to rail yards and freight depots, a key journey of just a few miles that allows major retailers and manufacturers to quickly move their imported goods to stores and factories across the country.

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Some trucking companies say the drivers filing legal claims over misclassification amount to a relatively small number in the Southern California industry. “Most drivers aren’t looking to become employees,” said Weston LaBar, executive director of the Harbor Trucking Association, which represents trucking companies at the ports of Los Angeles and Long Beach.

Noel Perry, an economist with FTR Transportation Intelligence, a freight-market analysis firm, estimates that there are about 2,000 port-trucking companies nationally. Drayage companies tend to be small, running 100 trucks or fewer.

Publicly traded logistics company Hub Group Inc. recently closed its Southern California ports operation, a little over a year after converting the local fleet from independent contractors to full-time drivers, citing “unsustainable” costs.

Last month Pacific 9 Transportation filed for bankruptcy protection, citing among its debts nearly $7 million it owes to drivers after losing several claims before the state labor commissioner. Premium Transportation Services Inc., one of the largest port-trucking businesses in Southern California, filed for bankruptcy protection in March, telling the court it couldn’t afford the costs of litigation with drivers. A handful of other port-trucking companies in California have made similar claims in bankruptcy filings in recent years, and some have shut down.

“Unless everybody else is forced to use the same [full-time] labor, these companies won’t be able to raise their prices to pay for it,” said FTR’s Mr. Perry.

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