Non-competes a Non-starter
Welcome to the 83rd edition of The LogTech Letter. TLL is a weekly look at the impact technology is having on the world of global and domestic logistics. Last week, I considered whether Hapag-Lloyd’s investment in container sensors will ultimately have an impact on dynamic pricing. This week, I’m highlighting a move to end non-competes in the freight industry.
As a reminder, this is the place to turn on Fridays for quick reflection on a dynamic, software category, or specific company that’s on my mind. You’ll also find a collection of links to stories, videos and podcasts from me, my colleagues at the Journal of Commerce, and other analysis I find interesting.
For those that don’t know me, I’m Eric Johnson, senior technology editor at the Journal of Commerce and JOC.com. I can be reached at eric.johnson@spglobal.com or on Twitter at @LogTechEric.
In 2018, I moved from my old company, American Shipper, to my current one, The Journal of Commerce. Technically speaking, the move wasn’t allowed. I had a non-compete clause in my two-year contract that prohibited me from moving to another trade and logistics publication. I had worked at American Shipper for nearly 13 years and had a fantastic relationship with its then-owner, Hayes Howard. Essentially, the non-compete clause was boilerplate language in the company’s employment contract, but I didn’t know whether it was likely to be enforced.
I sought out consultation with an employment attorney in Florida, the state where American Shipper’s parent company was then based, to get a sense of whether I needed to worry about this clause being enforced. It wasn’t a simple yes or no answer. Yes, technically, the clause could be enforced, but there were extenuating circumstances. I decided, because of my relationship with Hayes, to ask him about it directly. After more than a decade of working for him, and him understanding that a move to the JOC was indeed a great opportunity, he assured me he had no intention of blocking my move in any way. I’m still grateful. That’s what a good leader does, in any organization.
Why do I bring this up? Well, there’s an interesting campaign bubbling up in the world of freight that’s aiming to eliminate non-competes. Led by Steam Logistics, a Chattanooga-based forwarder and broker, the goal of the campaign is to help employees at freight brokers avoid the exploitative nature of non-compete clauses, where it is apparently a particularly big problem. Brokers insert non-compete clauses, ostensibly to stop employees from taking accounts and carrier relationships with them to their new companies. That thinking is problematic from a broker point of view, for a couple reasons: one, it is a self-admission that the broker doesn’t have a mindset built around community knowledge and relationships, but is instead reliant on the knowledge and relationship prowess of individuals. Second, it paints the broker as a paranoid actor, one worried about retaining employees rather than empowering and rewarding them, creating a workplace they would naturally want to remain in.
The situation obviously extends well beyond freight brokerage. Forwarders similarly struggle with employees leaving and taking key accounts or relationships with them. To a certain degree, technology and data providers are the same. It’s understandable that companies would be worried about losing key talent and the business that talent brings in or services. But the inclination to restrict the movement of talent would be better channeled into making their company a more attractive place to come and stay, not a place where workers feel they are indentured servants, bound to a job and a company where they don’t want to be.
The freight industry is generally run by people with a free market mindset, who don’t believe in overly regulated industries (or any regulation at all, in some cases). In that context, it’s bizarre that non-competes are even a thing. Why would companies get the benefit of choosing their own customers and vendors and geographic locations, and not provide employees with similar freedom?
There’s probably not been enough coverage of the root issue, nor of Steam’s efforts to drive it out of the brokerage industry in particular. Some of the coverage around it has in fact been quite hypocritical, in that the companies bringing attention to the matter have enforced non-compete clauses against their own employees. But we’re at a stage where any attention to the issue is better than no attention. Kudos to Steam Logistics for not just highlighting the issue, but for doing something about it. The freight and logistics industry should galvanize around the idea that workers ought to be able to work for whom they like, and that companies should not be in the business of employing people who do not want to work for those companies. Seems pretty simple, to be honest.
Here’s a roundup of recent pieces on JOC.com from my colleagues and myself (note: there is a paywall):
I asked a trio of visibility data providers to weigh in on the Hapag-Lloyd container sensor story. The long and the short of it: more concrete location data of containers is terrific, but shippers need context for that data.
Great data from rate benchmarking provider Xeneta helped frame this story on how ocean procurement has been upended this year. Differing contract lengths, an earlier negotiating period on the trans-Pacific, more use of software. This is a fascinating market going through a big period of upheaval.
Two carriers in two weeks have been dinged by the Federal Maritime Commission for a similar problem: an inability to provide drayage operators with appointments and/or space to return empty containers. This is an archetypal story of how physical constraints (space in container terminals, plus the empty boxes themselves and chassis needed to move them) intersect with technology. Drayage providers use BlueCargo to find empty appointments, but they also check the terminals’ own websites, as well as using email and phoning the terminals.
Blume Global’s cyber outage is well into its second week. My new colleague Teri Errico Griffis reported today that some of its systems are starting to come back online.
Teri also reported earlier this week on the financial impact of a cyber attack earlier this year on Expeditors International.
And here are some recent discussions, reports, and analysis I found interesting:
If LTL is your thing, you’ll want to catch the conversation I had this morning on LogTech Live with Curtis Garrett, chief strategy officer at Recon Logistics. We touched on the market, why LTL is growing and is likely to keep growing, gaps in tech that LTL companies and technology providers are targeting, and Curtis’ use of LinkedIn to explore his perspective on the market.
I also announced this morning that LogTech Live is now moving to twice monthly. Thanks to Sarah Barnes-Humphrey and the Let’s Talk Supply Chain Network, and to show sponsor FarEye, for supporting me on this. Twice the shows, twice the guest, twice the dadjokes! Click here to make sure you’re updated on upcoming shows and to access an archive of past episodes.
A terrific thread on why tariffs have largely not accomplished what they were intended to do, and how the Biden Administration has actually made it worse. I’ll add that PIERS data shows there was more reliance, not less, on imports from China in 2021.
Some upcoming events I’ll be involved in:
I’m leading five sessions on digitization in global ports at the IAPH World Ports Conference May 16-19 in Vancouver, including discussions with FMC Commissioner Carl Bentzel, MSC Chief Global Digital and Information Officer Andre Simha, Hamburg Port Authority CEO Jens Meier, Singapore Port Authority CIO Koh Chin Yong, DP World Canada CEO Maksim Mihic, as well as a group of technology vendors. This is going to be a fantastic gathering of the world’s leading ports, terminals and maritime decision makers. Here’s the agenda, and click here to register.
I’ll be moderating a panel on how the freight industry can gird itself against the threat of cyber attacks at the NITL Virtual Transportation Summit May 24-26. See the full agenda here. Especially pertinent given the Blume incident and another recent attack on Expeditors International earlier this year.
If you’re at Reuters’ Supply Chain Execution conference June 2 in Chicago, come and say hello. I’ll be interviewing Port of Long Beach Executive Director Mario Cordero about the port’s Supply Chain Information Highway initiative.
Disclaimer: This newsletter is in no way affiliated with The Journal of Commerce or S&P Global, and any opinions are mine only.