Chain of Greed

2018 Business ProposalThe Distribution Operations:Walmart’s Crown JewelIt comes as little surprise that a company that dominatesthe retail landscape would also dominate the business ofmoving goods from one location to another. Logistics haslong been a focus of Walmart management; as companyleadership once explained to Wall Street analysts, “Themisconception is that we’re in the retail business, we’re inthe distribution business.” 40 Walmart’s early focus on rurallocations meant challenges for getting goods to stores,and the company’s first public offering was to financedevelopment of a private distribution system. 41 The companyships approximately 80 percent of its merchandisethrough 133 distribution centers, 105 of which it ownsand operates, one it owns but operates through anotherentity, and 27 that are owned and operated by other companies.42“The misconception is that we’re in theretail business, we’re in the distributionbusiness.”Many of these third-party providers are themselves enormouscompanies with tens of thousands of employees,but questionable employment practices. Among them isSchneider National, with 210 facilities world-wide totaling10 million square feet, revenues of $3.7 billion, andmore than 18,000 employees supplemented by nearly2,000 so-called “independent contractor” drivers. 43 Driversand mechanics employed by Schneider have filedsuits alleging illegally withheld wages, failure to providemandated meal and rest breaks, and withholding accruedvacation pay upon termination. 44 Schneider alsooperates several distribution centers handling Walmart’sgoods across the country, including one in Mira Loma,California, which is solely dedicated to moving Walmartmerchandise. 45 Workers in multiple Schneider-operatedwarehouses fulfilling Walmart orders have described asystem where a piece-rate calling for pay per trailer led toconstant speed-ups in the work, where bathroom breakswere insufficient, and never-ending physical labor resultedin lasting injuries. 46Nine other Walmart centers located throughout theSoutheast are managed by Swift Transportation. 47 Swift,which has been the subject of lawsuits alleging unfair paypractices, 48 was also recently compelled to pay a $4 millionsettlement to the Port of Los Angeles for failing to live upto the requirements of the Port’s Clean Trucks Program. 49Analysis of the government’s 2005 Contingent Work Survey(CWS) indicates that of those who self-reported workingas temporary helpers, laborers and hand materialmovers, one third were assigned to trade/transportationclients. 50 These workers perform an enormous amount ofphysical labor very quickly, and the centers function nonstop.One third-party warehouse manager, ASW Global,estimates that in its two Walmart facilities, workers movenearly 1,000 truckloads a week, shifting 22,000 palletsout of the warehouses at “a high velocity.” 51In its annual “Global Responsibility Report,” Walmart’sPresident and CEO Michael Duke promises, “[W]e arestrengthening our commitment to transparency andholding ourselves accountable for what we do within ourcompany and for our communities.” 52 In choosing unscrupulouscontractors to perform such a core part of itsbusiness, Walmart is belying those promises by pretendingit has no role in determining the conditions underwhich they work.Just as Walmart’s employment practices toward its directemployees undercut fairer working conditions in otherretail outlets, its logistics model has shaped the entireindustry, compelling shippers to adopt strategies to constantlycut prices as Walmart competitors demand thesame efficiencies the retail giant enjoys. Indeed, its grocerycarriers confirm that they operate equipment specificallydesigned to Walmart’s specifications; according toindustry sources this fleet may be as large as 5,000 refrigeratedtrailers. 53 At the same time, Walmart increasinglydemands its shippers do tasks that were once considereda retailer’s responsibility, including placing price stickerson goods or packaging them so that they can go directlyonto the salesroom floor. 54 Outsourcing and other contingentwork models like “permatemping” have becomeincreasingly standard in the industry. Just as Walmartcontracts with companies like Schneider and Swift, 55other companies too are turning to third-party logistics08