Our nursery spent quite a bit of time in the months of January and February this year doing the winter nursery show circuit, and I must say, the mood and pulse of all the shows was positive and in some cases, utterly frantic.
As the economy and our industry have turned around, plants have become an extremely hot commodity. Furthermore, since we collaborate with nature and her seasons to produce our products, we can’t simply push a button and have more plants produced.
These factors combined foretell a strong nursery market into the future. That means more plants that need to be shipped to our customers. The question on everyone’s mind is, “What is freight going to cost me?” Freight cost is very important to Oregon growers, because many of our markets are distant. Freight can therefore become a significant factor in our customers’ pricing decisions.
Unfortunately, freight cost is something we have little control over. It is determined by supply and demand, which is a function of several factors: fuel prices, regulation, labor cost, and equipment cost and maintenance. The recent fuel price correction should lower operating costs for both rail and trucks, but increased regulation of emission controls on equipment could act to increase their respective operating costs.
As nursery owners, we can take some steps that may help us minimize freight costs. At our tree nursery, truckload rates seem to be lower earlier in the year. I think there are simply more trucks available for hire at that time. Early shipping is a great alternative if your product is going to a more moderate climate that can accept plants late winter or early spring. However, it will not work for our customers who expect a more severe winter.
I don’t have much experience with shipping by rail. I have heard from other growers that it can be very economical, although perhaps not as flexible as shipping by truck. Some growers have also stated that more recently, train availability has been lessened by the increased demand for rail shipment of oil.
Another way to help with freight costs is to avoid shipping “air.” By this I mean that we should ensure that our truck shipments are full to capacity.
We should not let truckloads leave below capacity, or with empty floor space. At our nursery, we try to do this as best we can, but oftentimes we have or need extra space going to a certain geographical area. In these cases, we will try to reach out to other growers who may have or need space themselves. There is even a partial loads forum, for OAN members only, where information can be shared. You can access it at http://nurseryguide.com/Forums/.
This give-and-take is an aspect of the nursery business that is not so common in other types of businesses. We work together with our competitors, our neighbors, to get our products to customers who we often share.
This is one of the reasons that the nursery business is remarkable. Could you imagine Coke and Pepsi sharing trucks?
As an industry, we can also leverage our numbers through the OAN to have comment and input into legislative and regulatory issues that may affect transportation.
These issues affect the price of oil, with taxes and restrictions on exploration and distribution. These issues affect the cost of transportation equipment when they require upgrading to new, costly vehicles. And lastly, these issues affect the cost of transportation labor by changing the duration of the operators’ workday.
The sales environment we are all experiencing is a pleasant change, but more plants will require more trucks, trains and airplanes. I encourage you to reach out to your neighbors and share ideas on how we can minimize our freight costs and make our great Oregon plants even more attractive.