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California Intermodal Associates Inc. is closing its doors, citing California's AB5 law and the challenges it posed to their operations.
California Intermodal Associates Inc. (CIA), a family-owned trucking business, is saying goodbye after nearly 25 years. Here’s the scoop:
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.
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.”
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.”
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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