Financial Incentives Needed

By Jim Prevor, Editor-in-Chief, Produce Business

The job of PMA’s transportation task force was thankless, as the problem it was looking to solve — a lack of trucks for fresh produce shipments — was really a euphemism. In the produce trade we all know exactly how to solve a problem caused by a shortage of available product — you pay and pay and pay even more until supply and demand are in balance. We do it every day, with every commodity and, in our heart of hearts, we know perfectly well the same strategy would work with truckers.

Pay more, and truckers who don’t like to haul produce will find it worth their while to do so. In fact, pay more, and more people will become truckers. Guarantee business and you can have truckers hanging around outside your door waiting for orders.

So, in a sense, the issue was never “How can the produce industry attract more truckers to haul produce?” The issue was always “How can the produce trade make hauling produce more attractive without paying more for the trucks?”

The recommendations of the transportation task force are, indeed, as Bryan says, “straightforward and reasonably simple and…inexpensive to implement.” They can be summarized in two words — be nice — and that is perfectly correct because if you are not going to attract truckers by paying a lot more money, the only option is to make yourself preferable to work with in other ways.

Boiling down some of the recommendations Bryan mentions:

Be courteous — Yes, people prefer to work for people who treat them with manners.

Be mindful of time — Truckers prefer to work for people who unload their trucks promptly and maintain good communication when there will be delays.

Get them out of disputes — Nobody likes to get caught in the middle of disputes that are not their problem. Truckers are more likely to work for people who solve their own problems and get them on their way.

Pay them fast — If you don’t want to pay more, at least pay quickly. This may encourage truckers to accept your job over a higher bidder who pays more slowly.

Clearly, the task force came out with reasonable recommendations under the circumstances. Yet, it is also clear the recommendations, while they may give the industry a nudge in the right direction, are unlikely to solve the severe problem that led to the formation of the task force.

Many of the recommendations are more suitable for an individual company than an industry standard. It would be nice if everyone were courteous, but if people didn’t learn that from their mothers, it seems unlikely they will pick it up from a PMA task force.

Some companies, in pursuit of a competitive edge, may elect to invest in very nice facilities for truckers. That is why some shippers and receivers have showers, lounges, cable TV, coffee, and snacks. The report can serve as a useful reminder that these types of things help to attract truckers to your company and the industry.

However, to really change the dynamics that lead truckers not to want to haul produce, you need proposals not for voluntary behavioral changes but for structural change.

For example, sitting around a conference room table, it is easy to suggest truckers should not be unreasonably delayed by a dispute. But if a shipper believes the receiver is obligated to accept the product and the receiver believes he can reject it, that trucker is going to be caught in the middle. There may be waiting time for USDA inspections, and if rejected, the shipper has to find a new home for the product.

Real life is such that when a product is being rejected in Miami, the exigencies of the situation will always trump anyone’s theoretical desires not to delay truckers.

And, long after this task report is filed away, we can count on the fact that some people will pay quickly and some will pay slowly.

What kind of structural changes would make a difference?

Instead of simply urging everyone to be mindful of the trucker’s time and expense, you have to change financial incentives. If it was a standard operating procedure that receivers had a set amount of time to unload after which a per minute charge applied — even people who don’t care about truckers would want to get them out of there.

Bringing truckers into PACA so they could resolve disputes with produce shippers and receivers without the need for lawyers would make doing business with produce firms more appealing.

As I mentioned in my column, Beyond Industry Solutions (Produce Business, October 2005), that Bryan referenced, the real test would be to see if the produce industry were willing to revise the way the PACA Trust provision discriminates against truckers. (Right now if a guy buys $5,000 in nectarines and $5,000 in trucking services to get it to him, then he goes broke leaving only $5,000 to pay the bills, the PACA trust mandates not that each party should get 50¢ on the dollar but that the nectarine farmer should get paid in full and the trucker should get the shaft.)

Tell the truth: Would you want to haul for an industry that sets up rules such as that?

But every temptation has its price and if you abuse truckers with unfair rules, then, a shock of shocks, they won’t want to haul for you, and you will wind up paying higher prices for trucking.

Read the PMA task force report and mind its recommendations. But don’t think it alone will solve the problem.