Unintended Consequences of Uber Boom

There’s been a lot of chatter in California these days about Uber, Lyft and so-called “transportation network companies,” or TNCs – and why not?  After all, these evolving services were “born” in the Golden State, which has earned renown as a beacon and world leader of innovation and technology. Consumers, the media and many politicians have focused their attention on this popular phenomenon as it moves as rapidly as its driver-owned fleet.

UberBut, looking closer at the issue, this baby boomer can’t help but cite a few choice words from a Crosby, Stills and Nash hit: “Traveling twice the speed of sound, it’s easy to get burned.”  What many leaders are now rightly taking into consideration are the unintended consequences of these TNCs – a safe and competitive landscape for consumers, the marketplace and our highways.

Thankfully, many leaders in the State Capitol are realizing that we need to know more about the Ubers of the world – what they do, how they operate, how they are regulated, and what this means for the future. In recent weeks, a joint legislative hearing was convened to focus on just that, and the facts speak for themselves. There was general unanimity that these new technologies are a good thing if done right, but too many uncertainties remain. Will this new service lead to less traffic or more? Does it exclude certain California consumers while favoring others? What are the views and perspectives of both driver and passenger? How seamless is the background check process for all drivers? Many unknowns persist all-around. In fact, the lobbyist for one TNC wasn’t even aware of the rough number of cars they have on the highway.

Much of the emphasis during this hearing and otherwise has been on the fallout this new “app” service has had on other people-moving services, notably taxis and limousines, but there has been little, if any, public discussion about its impact on another major contributor to jobs, the economy and our communities: California’s same-day delivery industry.

These are the mostly mom-and-pop family businesses that deliver vital goods and products like blood, medical supplies, rare construction parts and legal documents to local customer’s door-to-door, business-to-business, in real time. To be clear, the owners of these businesses are not “anti-TNC”, and they realize they must keep up with the times to be competitive. As times change, so must they and their business models to court the customer with best-in-class pricing, cutting-edge technologies and quality customer service. And the majority of these companies are, in fact, doing just that.

We believe in a free and competitive marketplace. That’s not our concern. What is problematic is that the delivery industry, many that have been in existence for 20, 30, 40 years or more and operating on razor-thin margins, are required to comply with specific motorist regulations and requirements while these TNCs are not being subjected to the same level of enforcement and accountability.

The current law requires that delivery companies must possess a Motor Carrier Permit through the DMV to move goods for hire. TNCs are not being held to the same standard and are, in fact, moving products from Point A to Point B with no permit and ignoring the law.

Delivery companies must obtain adequate insurance to ensure that the general public is protected. TNCs aren’t held to that same standard. Not only is this unfair, it puts the lives of millions in our communities at risk.

As our legislative leaders debrief from this recent hearing and consider next steps, we urge them to consider policy that will bring accountability and safety for all of us:

  • A better-defined Motor Carrier Permit that spells out guidelines for transporting both goods and people
  • Reasonable insurance requirements for drivers and companies in the transportation community
  • Improved accountability and uniformity for background checks and fingerprinting for all related personnel to maximize safety for consumers, employees and others on the highways and roads
  • And better clarification and simplification of the definition of “independent contractor” versus “employee”.

The goal here is to identify changes and a proposal that all motorist stakeholders – delivery companies, TNCs, taxi services, livery services and others – have had a role in shaping and support.

Our small business members believe in running the race – after all, they do it every day when they open the doors of their business – but our leaders in Sacramento need to foster an environment that allows all of us to compete on a level – and safe – playing field.

Executive Director, California Delivery Association.

Originally published by Fox and Hounds Daily