Supply Chain by the Numbers

- Aug. 22, 2019 -

  Supply Chain by the Numbers for Aug. 22, 2019

New Jersey Targets Independent Drivers; Target Plans Private Label Foods; Mixed Signals on Freight Volumes; CEOs Going for Corporate Social Responsibility



That is how many New Jersey workers were "misclassified" as independent contractors in 2018, according to a new report last month from a task force appointed by Democratic Gov. Phil Murphy. And a sizable chunk of those workers will turn out to be independent owner-operators in the trucking industry. And perhaps surprisingly, the New Jersey Department of Labor and US Department of Labor signed a joint agreement to step up efforts to address the controversial issue. The agreement and other efforts by New Jersey labor department officials have turned the Garden State into a "misclassification battlefront," according to attorney Greg Feary. "It's political and union-inspired," Feary told the ATA's Transport Topics magazine. "The misclassification issue tends to be a blue state-red state issue." Additionally, "New Jersey has definitely been actively hostile to the independent contractor model in trucking," says Richard Pianka, ATA deputy general counsel, adding that "No question about that. New Jersey is becoming a very difficult environment." Of great concern to the trucking industry is that New Jersey uses the so-called ABC test to determine if an independent contractor should be classified as an employee – a tough standard currently only used in California and still subject to lawsuits.



That's about how many private label food products Target will have on its shelves by 2020, according to an announcement this week. Target already has private label products in apparel and home goods, but this is its first foray into food. The first of the products - which eventually include everything from organic pizza crusts, milk and eggs, hazelnut and peanut butter spreads, frozen veggies, salad mixes and pastas – will hit store shelves Sept. 15, under the Good & Gather brand name. Target says it expects Good & Gather will be a multibillion-dollar brand and the largest of its private labels before long. That just adds to the challenges of traditional branded food companies, which continue to struggle in the face of changing consumer shopping patterns and food preferences (more fresh foods). However, Target has come under criticism for years for its approach to food merchandising. Walmart gets more than 50% of its business from grocery versus about 20% for Target, with Target shoppers tending to buy food as an afterthought, rather than as a destination for a cart full of groceries.



That was the year-over-year change in US freight shipments in July, according to the latest edition of the Cass Freight Index. That is far from an anomaly. "With the -5.9% drop in July, following the -5.3% drop in June, and the -6.0% drop in May, we repeat our message from last two months: the shipments index has gone from 'warning of a potential slowdown' to 'signaling an economic contraction,'" Cass said. Obviously, this is a worrisome sign, as freight volumes are often a leading indicator of the overall economy. But Cass notes that all of these recent negative percentages come against extremely tough comparisons in 2018, and that the Cass Shipments Index has gone negative before without being followed by a negative GDP. And on brighter note, the ATA's Freight Tonnage Index actually jumped sharply in July, up 7.3% year over year, the largest year-over-year gain since April, after falling 1.2% in June. How to square these different data points? We're not quite sure. The data sources are different: freight bills paid by Cass in the first case, ATA carrier member data in the second. Cass looks at multiple modes, ATA just at trucking. So this is something of a mystery.



That's how many CEOs of the US's largest corporations belong to a group called The Business Roundtable, which created waves this week when it decreed that corporations no longer exist only to produce profits for shareholders, but also to serve customers, employees, suppliers, communities and the environment. That is a big change, and shows how Corporate Social Responsibility is on the minds of executives – and how the dynamics are changing. Why this statement now? "One obvious answer is political cover," wrote Joe Cahill of Crain's Chicago Business, adding that "CEOs face a rising tide of public discontent over a world economic system that many consider skewed to favor multinational corporations over ordinary citizens and communities."  Along the same lines, "I saw this, and I thought 'These guys are worried,'" added Erik Gordon, a professor at the University of Michigan's Ross School of Business, noting also growing concerns about income inequality. And all this certainly will and is impacting supply chain practice. SCDigest notes a company's score for CSR now accounts for 10% of a company's total count on the Gartner Top 25 Supply Chains list.

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