California Trucking Firm Says Closure Due to Controversial AB5 Law

California Intermodal Associates Inc. is closing its doors, citing California's AB5 law and the challenges it posed to their operations.

California Trucking Firm Says Closure Due to Controversial AB5 Law
Photo by Sander Yigin / Unsplash

California Intermodal Associates Inc. (CIA), a family-owned trucking business, is saying goodbye after nearly 25 years. Here’s the scoop:

  • Quick Facts:
    • Company Closure: CIA is winding down due to California’s AB5 law, CEO says.
    • Years in Operation: Nearly 25 years serving California’s logistics needs.
    • Lasting Impact: Known for handling 53-foot containers across the state.

The AB5 Challenge

Why AB5?

Gabriel Chaul, CEO of CIA, blames AB5 for their closure. The law restricts using independent contractors, which spiked CIA’s operational costs by up to 30%, Chaul claims.

Operational Shifts

Switching Gears

The company had to convert its owner-operators to a fleet of employee drivers. Chaul explains, “We had a hard time maintaining drivers...they were enticed by competitors using owner-operators.”

Economic Impact

Costly Compliance

Compliance increased CIA's costs significantly, leading to a decrease in customer interest. Chaul reflects, “It seems like as soon as our customers knew we were complying...there was no incentive to use CIA anymore.”

Looking Forward

Despite efforts to adapt, the uneven enforcement of AB5 has left CIA in a tough spot, with Chaul stating he can't continue to dig himself a deeper hole.

As California continues to enforce AB5, other companies might face similar fates.

Source: FreightWaves

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