Heading into spring, the horticulture industry appears to be faring quite well and industry members are optimistic, says Tal Coley, director of government affairs at AmericanHort.
However, the trucking industry, which has an impact on growers, has been hurting. Payrolls declined for the third straight month in September 2019 — that time by 4,200 jobs — and layoffs are continuing in 2020, with startup NEXT Trucking Inc. having laid off about 70 employees in mid-January, according to The Wall Street Journal.
As another chaotic spring season approaches, here’s what growers should know about shipping their product.
Renting vs. owning trucks vs. working with a carrier or broker
Some growers own trucks, while others rent them, and others work with a common carrier or broker. A combination of shipping methods can also sometimes prove useful.
Coley says he has seen more large growers with their own fleets while medium- or smaller-sized growers often utilize common carriers.
If growers don’t already own trucks, it will cost a lot of money to buy them, and meeting safety and emissions standards can also be a hassle. In addition, “Insurance costs are skyrocketing from everything I've read, mainly because the payouts from lawsuits as a result of these accidents has gone way up, so in turn, the insurance rates have gone up,” he says.
Olson's Greenhouses in Raynham, Massachusetts, calculated that even having to maintain trucks it already owned would prove a poor investment. Co-owner Matt Piscitelli says the greenhouse had its own fleet when he bought the business in 2006. Since then, they’ve “gotten out of the trucking business.”
“They had trucks, and we slowly, as we could, as the trucks reached their limited lifespans, we scrapped the trucks, sold the trucks, traded the trucks and moved to basically a three-truck fleet just to keep things simple,” Piscitelli says. Olson’s does still own one tractor, two trailers, one 26-inch box truck, a 14-inch box truck and an F350 dump truck.
Olson’s has 5 acres of greenhouse production, 1 acre of high-tunnel production and 65 acres of outdoor mums, cabbage and kale production. It has seasonal increases in sales during mid-April to mid-June, and again from late August to early October. During these periods, Olson’s rents trucks from Penske and Ryder, and works with one self-employed driver who has his own tractor. One of Olson’s employees also has a commercial driver’s license (CDL), which the company paid for, in addition to training.
Olson’s relationships with the rental companies are established, and those companies know what to expect ahead of the busy seasons, Piscitelli says. Olson’s gives the companies 60 days’ notice for rentals.
In addition, in the event of an issue, the rental companies have one extra truck ready for Olson’s in the busy seasons.
Piscitelli says working with rental companies eliminates the headache of maintenance. “It takes the burden off of our operations team [of] having to look at a truck, figure out a truck, drop a truck off to get it fixed, to get it repaired, to rent a truck in the meantime, because you can't go down a truck in the middle of a season,” he says.
Nicholas Moser is chief of distribution at Willoway Nurseries, based in Avon, Ohio. Willoway has 550 acres of field production and 450 acres of container stock, including 32 acres of greenhouse production.
Unlike Olson’s, which doesn’t ship outside of 150 miles from its greenhouse, Willoway ships to customers in about 25 states. When using its own six trucks and six year-round drivers, it stays within a 500-mile radius of the nursery.
For longer shipments, Willoway works with both carriers and brokers. The carriers supply drivers and power units that attach to Willoway’s trailers, and the brokers supply power units, trailers and drivers, Moser says. During the busy spring season, Willoway has about 28 to 30 trucks on the road.
Because it ships long distances, Willoway has been impacted by the electronic logging device (ELD) mandate, Moser says. The mandate went into effect in December 2017 and requires drivers to have ELD technology installed to track their Hours of Service (HOS).
“Being that our freight is a little different, with being that it's live, just a nursery stock, it's not just a widget in the back of the truck,” Moser says. “Time is everything to get it offloaded.”
Willoway has been looking at its routes to see how it can improve efficiencies, such as matching its delivery times with the times that customers request and seeing when it could use fewer trucks. It uses a third-party database to help with routing.
On the carrier and broker side, Moser says, “We really try to develop great relationships with the companies that we work with that are carriers for us, so that we understand what we're looking at year-round. We kind of give them the expectations of what we expect by season.”
Labor in trucking
For as long as driving remains a predominantly human task, trucking will directly relate to another issue that is frequently on growers’ minds: labor.
“Qualified drivers are hard to come by,” Moser says. “Anybody that we've looked at that we feel are very good drivers — they're secured in their spots, even though we've seen quite a few companies shutting their doors down.”
In California, a new labor law is further complicating trucking. In September 2019, state lawmakers passed Assembly Bill 5 (AB5), which says workers are employees, rather than independent contractors, unless hiring businesses can prove otherwise through multiple specific points.
AB5, which took effect Jan. 1, has been the cause of numerous legal disputes, including a lawsuit by the California Trucking Association against California Attorney General Xavier Becerra, according to Land Line, the official publication of the Owner-Operator Independent Drivers Association.
As the work of independent drivers in California remains under a microscope, one grower in the state told Coley that, on advice of counsel, it isn’t using an independent driver this spring as it has in the past, Coley says.
“Right now, [this type of law] is only in California, so I think the big question is, ‘Does that proliferate to other states?’” Coley says. “I am not aware of any other state putting anything out there like that. That's why we're monitoring it. We don't really get involved in state-level issues, but it is affecting our industry.”
Piscitelli says he prefers using a Form 1099 with independent-contractor drivers rather than a Form W-2 that is used for employees.
“It's always much easier for us to 1099 someone because you don't have to match the Social Security and Medicare, so that's always a bonus,” he says. “You don't have them on payroll, so you don't get charged for the payroll processing. As long as the person has a company and they are insured and they are licensed, I really find doing a 1099 with drivers is the best way to do it.”
Ideas for better distribution
While regulations and the state of the trucking industry may make it appear that trucking solutions are out of grasp for growers, industry experts say an eye for detail can help.
Piscitelli points out, for instance, that it’s important to use trucks with operational lift gates as not all retailers and landscaping companies have loading docks and forklifts. Olson’s works with both Ryder and Penske to ensure the trucks can fit the right cart sizes and the lift gates can sustain the weight of carts, plants and water.
“Weight is always an issue when you're shipping, but no customer wants to get a truck full of dry plants,” Piscitelli says. “I'd rather have quality, watered, healthy plants land at somebody's gate than save a couple dollars on having to unload a dry truck and save a few dollars on gas. Quality of product delivery is very important to us.”
“Weight is always an issue when you’re shipping, but no customer wants to get a truck full of dry plants.” — Matt Piscitelli
Willoway Nurseries also tries to service all its customers with carts so it can help them with some of their labor in offloading, Moser says. The nursery can usually fit about 49 carts on a 53-foot trailer.
Moser also notes that because carts have wheels, which help in loading and offloading, they can also move around in a truck. Logistic posts and E track equipment can tie down carts and prevent them and their contents from falling, so growers can look for those when calling to rent trucks or work with carriers.
Some large growers have proposed that hub-and-spoke distribution models or green industry distribution centers could further improve efficiencies, Coley says.
“Building those relationships with those companies are really key to understanding what you're looking at to ship out, how many trucks you're going to really envision yourself needing each week during that peak season, and just making sure that you have them ready,” Moser says. “Because at the end of the day, we all need to put our best foot forward and get these trucks shipped.