Flush with increased earnings as the coronavirus pandemic has caused Americans to get delivery of everything from groceries to facemasks, Amazon is looking to acquire autonomous vehicle (AV) technology company Zoox in an effort to boost their footprint in the self-driving and electric powered vehicle market.
Zoox is developing SAE Level 5 automated self-driving taxis which can maneuver through busy city streets. The Zoox website claims, “Zoox is driving autonomously in ways that no one else has shown. We are applying the latest in automotive, robotics, and renewable energy to design an a…zero-emissions vehicle from the ground up to solve the unique challenges of autonomous mobility.”
Amazon has reportedly offered less than $3.2 billion for the company, below the company’s stated value in 2018. The acquisition would add resources to Amazon’s attempt to strengthen its expanding logistics and delivery network.
Amazon has recently invested $530 million in AV startup Aurora Innovation as well as another significant investment in electric car manufacturer Rivian which will produce 100,000 delivery vans for Amazon within the next ten years.
Wall Street analysts indicate that Amazon could save $20 billion a year in delivery and shipping costs if it can develop a reliable self-driving technology. Experts also predict that with such technology, Amazon may look to compete with Uber and Lyft by rolling out a cab-hailing platform utilizing a fleet of AV cabs.
Amazon is also hoping to capitalize on existing Level 4 AV technology which can already be used to haul freight cross country with self-driving long-haul trucks. Zoox has been working toward SAE Level 5 which delivers true autonomy with emergency safety features and protocols to ultimately deliver someone or something from one place to another in a completely driverless environment.
Recent earnings reports from Amazon show the retail goliath saw sales climb 29% in North America and 18% internationally at the beginning of 2020. The company’s stock has also risen, although investors were leery of the fact that Amazon would need to absorb approximately $4 billion in costs related to the pandemic.
Truck drivers will not be part of Utah’s recent travel advisory which requires adults who enter the state to complete an online form asking whether they have been exposed to the novel coronavirus.
In efforts to slow the spread of the infectious disease COVID-19, Governor Gary Herbert released an executive order that establishes a protocol for those crossing the border. All adults must fill out a form within three hours of entry about their current health situation and the potential risks of infection.
Originally, truck drivers were included in the executive order but later were exempted along with other essential workers such as airline personnel and first responders. It took the Nevada Trucking Association (NTA), in league with the American Trucking Associations, Utah Trucking Association, and the Federal Motor Carrier Safety Administration, to point out the governor’s edict was unconstitutional.
In a press release, the NTA said, “We appreciate the governor’s office for recognizing the operational burden the requirement puts on the trucking industry and others that are responding to this public health emergency.”
NTA leaders correctly pointed out at the time of the Utah governor’s original announcement that such “an impediment to interstate commerce” had been one of the key reasons why the United States Constitution replaced the Articles of Confederation in 1789. The founding fathers were worried that states could block commerce for any variety of reasons which could be judged as discriminatory.
With New York, California and Washington experiencing a high number of infections from the coronavirus, trucking spot rates in those areas have increased and carriers are even rejecting loads into places where the virus has hit the hardest. In addition, load times at many warehouses have increased.
Rates to haul from Los Angeles to Seattle, including fuel, are up 9.6% in one week alone. Rates from Dallas to Los Angeles are up 27%, although those rates had cratered in February. Many truckers are now turning down some loads to New York where more than 15,000 cases (and growing exponentially every day) of the virus have been detected. In particular, less-than-truckload (LTL) jobs are being rejected because those loads tend to cause drivers to have to enter and exit their trucks several times for various deliveries.
In the New York area, carriers are adhering to a COVID-19 policy by not taking signatures for delivery, not doing inside deliveries and practicing social distancing (staying 6-feet away from others). Some carriers are also turning down shipping loads into the major ports of New York and New Jersey centered around Elizabeth, NJ. Rejections are up to 16% in New Jersey, compared to 13% across the rest of the nation.
While all of this is happening, wait times have soared at many warehouses with freight brokers unable to verify appointment times. The average wait times are now at 159 minutes and can be as much as 322 minutes for loading and unloading in the Philadelphia market. This is leaving many carriers to turn down high spot rates because the wait times are simply not worth it.
Ruling that not all arbitration clauses within contracts between transportation fleets and independent contractors are binding, the U.S. Supreme Court recently decided in favor of owner-operator Dominic Oliveira in a class-action lawsuit against Springfield, Missouri based New Prime, Inc. which has contracts with more than 5,000 independent drivers. In a unanimous 8-0 decision, the Supreme Court said that New Prime could not force Oliveira to settle disputes through arbitration despite an agreement between the company and its drivers which included an arbitration clause.
Oliveira argued that New Prime did not pay its drivers lawful wages even though they were essentially treated as employees. According to the 1926 Federal Arbitration Act, courts must enforce arbitration clauses in contracts between businesses and employees. A major exception to this law, however, is that it does not cover transportation workers, and this is exactly what the court focused on in opinions written by Justices Neil Gorsuch and Ruth Bader Ginsburg.
When Oliveira began employment with New Prime, he was expected to fulfill both an apprenticeship and a term as a “trainee” where he was paid only about $4 an hour. When he completed his training, he was designated as a contractor and required to lease his truck from New Prime, buy his own equipment and purchase his own gas. Oliveira claimed that during some months his paycheck from New Prime would enter negative numbers because of deducted costs. Oliveira sued, arguing he was, in fact, an employee, due all the benefits of that status including having his complaints heard in court.
In the majority opinion, Gorsuch argued that “all work was treated as employment” and the law should recognize work agreements between employees and contractors the same way. Looking to the future, especially as the U.S. economy transitions, Ginsburg focused on laying the groundwork for future litigation, saying that Congress needs to “design legislation to govern changing times and circumstances.”
The decision has been hailed by both drivers and independent workers in other trades as a victory, allowing them to settle disputes in court instead of through arbitration. Most experts believe that workers are at a disadvantage when their cases go to arbitration. Another result of the ruling may be that America’s courts will at some point need to decide whether truck drivers deserve minimum wage pay for non-driving duties. In October, an Arkansas Federal Court ruled that a driver should be paid for every hour he spends in his truck while not sleeping, up to 16 hours a day.