Trucking Concerns

If you think your distribution costs are high now, just wait until new government regulations become effective later this year! What? You didn’t hear?

I love the free market. I love it when barriers to enter a market are low, and the most cost-savvy companies offer the most competitive rates. Competition in the marketplace goes a long way toward keeping the prices of goods and services contained.

When the free enterprise system is allowed to operate with minimal interference, consumers benefit.
Unfortunately, government regulations will soon be imposed that may constrain the free market that most of us hold dear. The regulations may eliminate much of the competition that keeps trucking healthy.

The issue at hand is the government’s desire to place new standards on truck drivers and trucking companies. While safety is important to all of us in the industry, the regulations may have some unintended economic effects on the industry.

Readying For Regulations

The federal government’s plan, which has been in the works for six years, will bring the nation’s truck capacity to its lowest point in recent history. These regulations are expected to go into effect in November and industry estimates show the number of trucks available to you, the shipper, could fall as much as 20 percent. So, if you think truck capacity is tight now – and that rates are high – just wait until these regulations go into effect.

Current truck capacity is down already, and rates are up, due to the following:

• Banks will not finance trucking company startups.

• Banks are drawing in credit lines for existing trucking companies.

• The available driver supply is falling (baby boomers are retiring).

• The poor economy has forced more truckers into bankruptcy than any year on record.

Eventually, the free market would “fix” these problems. In a free market environment, the rising rates caused by low-truck capacity would entice people to start new trucking companies or expand existing ones. Banks would be happy to lend because trucks would be in demand and rates would rise. As the economy came out of the recession, shippers would continue to demand more and more trucks to move goods all over the country – and the trucking business would expand. As more truckers entered the market, transportation prices would stabilize and ultimately fall due to higher competition. The cycle is then complete, only to be repeated again over a 4-to-7-year period.

If you are thinking that this is Economics 101, you are right. However, the government’s plan may hinder this normal cycle, and that could cause your transportation rates to go through the roof – and potentially remain inflated for a long time to come.
For clarification, the FMCSA (Federal Motor Carrier Safety Association), which licenses truckers and truck brokers, has regulating authority to an extent never seen before in the industry. Under the moniker CSA 2010 (Comprehensive Safety Act 2010), the government’s plan is to flush out all the truckers and brokers it labels “unfit to operate.”

The existing SafeStat system, which measures truckers’ safety records, contains four Safety Evaluation Area (SEA) categories. The CSA 2010 system will divide carrier and driver safety performance data into seven categories: 1) unsafe driving; 2) fatigued driving based on hours of service (HOS) compliance; 3) driver fitness/health; 4) controlled substance or alcohol; 5) vehicle maintenance records; 6) improper loading of cargo; and 7) crash indicators.

Expect A Driver Shortage

While on the surface this seems like a good idea, the effects are going to be profound. For example:

• Drivers will be “scored” – even for a warning or a leaky tire, not just a ticket. The scores are based on a rating system of 1-10, with 10 being the highest, most severe rating. Operating while driving under the influence will warrant a rating of 10. A leaky tire warrants a rating of 8. Drivers with high ratings, or companies that hire marginal drivers, will be pushed out of the industry. Drivers who are fired for an accident or two (even small ones with no damage or speeding tickets) may not be hired by another carrier.

• Electronic On-Board Recording devices (EOBRs) will monitor how many hours a driver has been “on the clock” (which includes loading and unloading time). As soon as his time is up (currently about 11 hours per day), he is forced to park and take a rest, even if four hours of his time was spent driving and the rest was spent waiting to load or unload. This rule will reduce the number of hours the driver is available to drive. For growers, this means your loads that have 15 stops will be rejected by carriers unless you are willing to pay a hefty fee for each additional stop.

• The cost of running a truck will increase due to the mandatory annual safety training and testing. The EOBRs alone will cost $1,500 to install in a truck (every truck). The costs of mandatory training, safety directors and driver checks will increase costs even more.

• Carriers will be forced to get rid of older tractors and trailers in favor of newer, more “EPA friendly” ones (which, of course, cost much more). If carriers cannot meet the new guidelines regarding equipment, they will need to cease operating that truck or trailer until they can.

• Drivers who are deemed “unfit” (even for mechanical failures of their equipment) will be forced to stop driving until enough time has passed that their ratings are no longer “unsatisfactory.” Should the driver choose to deliver his load after receiving an “unfit” rating, he will be fined no less than $11,000 per day.

The bottom line is simple. Drivers and carriers willing to haul plant loads will become fewer and farther between. Live goods loads generally consist of multiple stops. With the imposition of an 11-hour day (with no cheating possible), drivers will not be willing anymore to sit idle while being loaded or unloaded – and not getting paid. Instead, they will choose loads with only one delivery so they can spend those 11 hours on the road making money.

As stated previously, we are already seeing higher rates and lower capacity due to the economic climate. The drivers and carriers out there want more and more money because, frankly, they can get it. You might not be willing to pay their rates but there are desperate shippers out there who will. Once the new government regulations are phased in, rates will rise further, and quickly, with no free market mechanisms to correct them.

When the economy eventually does pick up again (it will one day) and shippers are looking desperately for trucks to move the increased amount of freight out there, the rates in some parts of the country will almost certainly double. That is exactly what happened in certain parts of the country during this spring – rates doubled in some areas and the carriers were in complete control of our destinies.

At a trucking conference I attended recently, one large national carrier CEO said during his keynote speech, which included some large national shippers, “During the last decade you, the shipper, controlled the rates and we struggled to make money; the next decade is payback time.” Be prepared.

Leave a Reply

2 comments on “Trucking Concerns

  1. The ugly part of this is that this only affects American Drivers Canadian and Mexican Drivers do not have to meet our standards. while the Canadians usually have safe trucks. the Mexican drivers are usually driving junk. I used to be a driver and they scared eveyone out there!
    growers can get strraight trucks that fall under these guidelines.

  2. The ugly part of this is that this only affects American Drivers Canadian and Mexican Drivers do not have to meet our standards. while the Canadians usually have safe trucks. the Mexican drivers are usually driving junk. I used to be a driver and they scared eveyone out there!
    growers can get strraight trucks that fall under these guidelines.

More From Finance/Operations...
Feature image The 2015 Perennial Plant Of The Year, Geranium x cantabrigiense ‘Biokovo.’

August 27, 2015

The Perennial Plant Association’s Regional Symposium Will Be This October In Dallas

The Perennial Plant Association plans to hold its Regional Symposium October 5 in Dallas, Texas, in conjunction with the All-America Selections/Home Garden Seed Association's Summer/Fall Summit held October 5 to 8.

Read More
september_grow_rodale institute

August 25, 2015

Hospitals Are Getting Into The Organic Food Business

Growers investing in the organic food movement could serve a growing new area with vegetable transplants and starts, as well as produce, as hospitals begin to prescribe healthy diets and nutrition, and even go so far as to grow their own food. As part of a new phenomenon among progressive hospitals, health professionals are beginning to realize that without health and nutrition, programs and techniques may be done in vain or worse — obsolete. As more patients seeking a healthy diet turn to nutritionists, who recommend sugar-free, alkaline diets to prevent disease and aid in recovery, hospitals recognizing this trend are taking action. St. Luke’s Hospital in Bethlehem, Pa., recently contracted with the nearby Rodale Institute to manage an organic farm, established in 2014. The hospital, part of a six-campus network, aims to provide excellent healthcare, part of which includes educating patients about the benefits of a plant-based, organic diet. […]

Read More

August 21, 2015

Proven Winners Announces Roadshow Events For 2015

Proven Winner's Roadshow Events, held across North America, provide growers and retailers with the opportunity to learn how to grow Proven Winner's newest varieties and receive information about industry trends.

Read More
Latest Stories
AmericanHort logo

August 20, 2015

David Savoia To Serve As AmericanHort’s Interim P…

Following Michael Geary’s announcement that he has resigned as president and CEO of AmericanHort, the association has announced that CFO and Senior Vice President for Operations David Savoia will serve as interim president and CEO while the board conducts a search for a new staff executive. Craig Regelbrugge, the senior vice president for advocacy and research, will support Savoia with the association’s external affairs. Geary announced August 12  that he will be leaving his position after September 30 to serve as CEO of the Society for Marketing Professional Services, an organization dedicated to creating business opportunities in the architecture, engineering and construction industries. “As some of you know, I grew up connected to the horticulture industry so this was not an easy decision for me,” Geary said in an eMail. “I have loved working with our organizations and our talented members, staff and partners. However, my choice to return full time to Washington, D.C. will allow me […]

Read More
Geary-Michael

August 18, 2015

Michael Geary Is Leaving AmericanHort

AmericanHort president and CEO Michael Geary announced last Wednesday that he will be leaving his position at the end of September to serve as CEO of the Society for Marketing Professional Services. “I am writing to share with you that on October 8 I will begin a new professional chapter as CEO of the Society for Marketing Professional Services, an organization dedicated to creating business opportunities in the architecture, engineering and construction industries,” Geary said in an email. His last day with AmericanHort will be Sept. 30, 2015. “As some of you know, I grew up connected to the horticulture industry so this was not an easy decision for me,” he said. “I have loved working with our organizations and our talented members, staff and partners. However, my choice to return full time to Washington, D.C. will allow me to be closer to my family and aging parents and to re-engage with another industry […]

Read More

August 15, 2015

Ball Horticultural Co. Buys Conard-Pyle/Star Roses And …

Ball Horticultural Co. plans to add Conard-Pyle/Star Roses and Plants to its family of breeding and distribution companies, according to a press release dated August 14, which announced the company’s recent acquisition of the famous introducer of Knock Out Roses and other perennials and woody plants to the market. Ball plans to capitalize on the expertise of its Ball Ornamentals woody ornamentals division, as well as Conard-Pyle’s market-leading position as a top rose breeder to strengthen its product line. The sale is scheduled to close by the end of September 2015. Conard-Pyle’s in-house breeding division NovaFlora, along with its intellectual properties and the distribution, production and administration facilities of its wholesale division are also part of the acquisition. NovaFlora is the driving force behind the Star Roses and Plants brand. “Conard-Pyle has been the leader in roses in its market and has been actively diversifying its offering with other woody […]

Read More
cannabis, marijuana plant

August 7, 2015

Big Banks A Step Closer To Financing Cannabis — Or Not

A key Senate Appropriations Committee passed a bill on July 23 that allows the nation's capital to establish regulated medical marijuana stores and lets banks provide financial services to state legalized marijuana dispensaries.

Read More

July 30, 2015

Spread Your Risk Beyond Spring Sales [Opinion]

Growers who participated in Greenhouse Grower’s 2015 Spring Crops Recap Survey said they have had enough of the uncertainty that the weather brings. They said it’s time to build up sales in other seasons like fall so we’re not so dependent on spring. As a couple of wholesale growers, both from the Southeast, very eloquently stated, our industry has mastered squeezing everything we can out of the spring season. And while this year happened to be a very successful one, thanks to the improving economy and elevated consumer confidence, they said, “now is no time to celebrate.” “Spring is still Christmas in the horticulture industry, but we have done such a good job focusing on spring that we have neglected other seasons,” one grower said. “Having so many eggs in the spring basket is dangerous. Fall will never be what spring is, but having a solid second season is in […]

Read More
Berns_Roberto Lopez_Purdue6

July 22, 2015

Cultivate’15 Greenhouse Learning Tour Showcases G…

Growers took advantage of the Greenhouse Learning tour held Saturday, July 11 at Cultivate'15 to see the strategies and technology two successful growing operations are using to tackle production challenges and come out ahead of the game.

Read More
thermoflor

June 16, 2015

Philip Schaafsma To Represent Thermoflor In The U.S.

Philip Schaafsma is a new sales representative for Thermoflor, a company with a lot of experience building garden centers worldwide. The history of the Dutch construction company Thermoflor goes all the way back to 1877. Since then, the company has been through a lot of changes, from simple conservatories to complex glass and steel turnkey projects. With a new sales representative, Thermoflor is well equipped to service the American market. Previously, Petitti Garden Center (Avon, Ohio), Chuck Hafner (Syracuse, N.Y.), Jacob’s Garden (Ottowa Lake, Mich.), Hicks Nurseries (Westbury, N.Y.) and Holes (Alberta, Ca.) were all built by Thermoflor. After a period of absence, the company is now  represented in the U.S. and Canada by Schaafsma, who has more than 40 years of experience in retail lawn and garden, greenhouse growing and the floral industry, and is a former board member of the Garden Centers of America. Schaafsma is the former owner […]

Read More

June 15, 2015

Hortica Insurance To Become Member Of Sentry Insurance …

Upon completion and approval of an affiliation agreement, Hortica Insurance (Florists' Mutual Insurance Company) will become a member of the Sentry Insurance Group, based in Stevens Point, Wis. As a member of the Sentry Insurance Group, Hortica keeps its name and brand and will continue doing business from its current headquarters in Edwardsville, Ill.

Read More
Cal-Poly fields

June 2, 2015

Cal-Poly Students Seek Continued Industry Support To Sa…

Agriculture students and faculty at California Polytechnic State University, San Luis Obispo, want industry members to continue to stand with them in their effort to preserve Class 1 agricultural land from being repurposed. The university recently released an update to its Master Plan that indicates that almost all of its orchards, horticulture facilities and field sites could be repurposed for buildings, including residential and/or recreational space. According to Joel Leonard of Students For Agriculture, an organization of Cal-Poly students in favor of saving the land, the Master Planning Committee will be meeting over the summer to form a final version of its plan and present it once more to the public in the fall, before it is submitted for final approval to the California Board of Trustees. Students For Agriculture’s goal in the meantime is to increase awareness and rally industry supporters to continue to send their input to the planning committee. Visit studentsforag.com to see more […]

Read More
Cal-Poly fields

May 27, 2015

Cal-Poly Students And Faculty Ask Industry To Help Save…

California Polytechnic State University, San Luis Obispo, has released an update to its Master Plan that indicates that almost all of its orchards, horticulture facilities and field sites could be repurposed for buildings, including residential, and/or recreational space. According to a letter from Scott Steinmaus, the horticulture and crop science department head, the proposed changes directly affect the current orchard plantings and other long term plans for the department. The department is committed to making sure that its facilities remain invaluable teaching environments that enable its students to learn about crop, fruit and horticulture production, food safety and pest protection, in addition to providing sites for externally funded research projects that benefit the industry. Industry members are invited to submit comments to the university. According to Steinmaus, a recent eMail to the Cal-Poly community from the university president indicates that all of the input gathered through the end of May will be studied by the planning […]

Read More
people-of-Battlefield

May 13, 2015

Battlefield Farms Receives MPS-A Qualification

Battlefield Farms, Inc., in Rapidan, Va., has been awarded the MPS-A qualification after becoming a participant for MPS-ABC in 2010. After four years of showing effort and improvement, the company has been awarded the qualification.

Read More
Barry_Sturdivant_columnpic

May 8, 2015

How To Survive Succession Planning And Resolve Conflic…

If you work in agriculture, you most likely work with family-owned businesses. This is especially true within the greenhouse industry. I’m fortunate to work for a company that specializes in financing and supporting such businesses. Family-owned businesses often have a level of commitment and support that helps during lean times. This is important for a company exposed to seasonality and events that are sometimes beyond management’s control. Business owners and management are constantly looking for solutions to the unique issues faced by these small but complex businesses. Specifically, how these issues affect the transition from one generation to the next. There are many family enterprise success stories, cases of harmony, health and longevity. Yet it’s no secret that family businesses can struggle with governance, leadership transitions and even survival. According to the Family Business Institute, only 30 percent of family businesses last into the second generation, 12 percent remain viable […]

Read More

April 30, 2015

North Creek Nurseries Welcomes Nikki Drake As New Finan…

Nikki Drake will fill the role of new financial administrator at North Creek Nurseries, with responsibility for the accounting department. She will also serve on the strategic planning committee.

Read More
Andy Huntington Pleasant View

April 29, 2015

Pleasant View Gardens Promotes Andy Huntington to Natio…

Pleasant View Gardens recently announced that Andy Huntington will be the company’s National Sales Manager. Huntington, who has years of horticulture industry experience, will oversee national territory and inside sales departments, while fostering strong partnerships with customers. “Our relationships with customers are central to all that we do at Pleasant View,” Huntington says. “In my new role, I am excited to work with a broader base of broker, grower and retail partners to understand their business needs. Pleasant View’s goal is to be so in tune with our customers that we are able to anticipate their problems before they arise.” Huntington has a history of growing sales and forming long-lasting relationships with a diverse customer base. For the past two years, he has been working as a territory account manager for Pleasant View Gardens, responsible for young plant liner sales in New England and New York. Prior to that, Huntington was […]

Read More
PittMoss on Shark Tank

April 22, 2015

PittMoss Wins On Shark Tank

Mont Handley, president and CEO of PittMoss, appeared on ABC’s Shark Tank on April 17 to try to get the “sharks” to invest in his peat moss alternative. Three investors from the TV show contributed $600,000 to PittMoss for a 35 percent stake in the company. Check out this clip from ABC’s website in which Mark Cuban, Kevin O’Leary and Robert Herjavec discuss getting on board with the product. PittMoss is an alternative to sphagnum peat moss, made up of a mix of proprietary additives and recycled paper rescued from landfill space. Handley founded the Pittsburgh-based company in 1994. What started as a small experiment grew into a full-fledged business with the help of funding provided by an EPA SBIR grant and Pittsburgh’s Idea Foundry. Today, PittMoss is available to commercial greenhouses and nurseries from Michigan to Maine to North Carolina, with plans to grow. To learn more, visit PittMoss’ website, or check it […]

Read More
Syngenta logo

April 15, 2015

Syngenta Names Chris Freeman Senior Key Account Manager…

Chris Freeman is the new senior key account manager for Syngenta Flowers, Home & Garden's Commercial Sales business in the Americas, effective March 2015. Freeman, who joined Syngenta in 2006, carries more than 25 years of experience in the agriculture and floriculture business.

Read More
Lake Buchanan_LCRA

April 10, 2015

USDA Designates Areas Of West And Southwest As Drought …

The ongoing drought has resulted in disaster area designations in counties across nine Western and Southwestern states, including Texas, where some reservoirs are at or near historically low levels.

Read More

April 9, 2015

Altman Plants’ Online Cactus Shop Shows Strong Sa…

Altman Plants recently opened its new Cactus Shop, an online retail store that sells a variety of cactus and succulents. The store is a take-off of Altman’s original wholesale business, as the company started as a mail order catalog.

Read More