Now that the dust has somewhat settled we thought it appropriate in this blog to provide clarification, and hopefully eliminate some of the misconceptions and confusion over the use of the Electronic Logging Device (ELD) and how the Hours-of-Service (HOS) is administered by the Federal Motor Carrier Safety Administration (FMCSA) to agricultural commodities, specifically produce.

Many of you have reached out to us over the past several months asking whether or not your carrier is subject to the HOS while enroute to load, waiting, or departing fully or partially loaded at your facility is exempt from HOS. 

The exception is contingent upon the definition of the word “source.”

The “source” is the point at which an agricultural commodity is loaded onto an unladen commercial motor vehicle.  The location may be any intermediate storage or handling location away from the original source at the farm or field, provided the commodity retains its original form and is not significantly changed by any processing or packaging.

The answer has a few scenarios to consider, before we can clearly state yes the carrier is exempt.

Scenario 1: If you are the first point of pick-up

1) A carrier unladen and heading to your facility to pick up an unprocessed exempt agricultural commodity is exempt from HOS when it reaches a point within 150 air-mile radius of your facility (172.6 statute miles)

2) A carrier remains exempt from HOS while operating when a 150 air-mile radius of your facility; providing it does not pick up any non-agricultural commodity

3) Any transportation to pick up additional agricultural within a 150 air-mile radius of your facility is also exempt from HOS, and remains exempt until such time the carrier passes beyond a 150 air-mile radius from your facility

Scenario 2: If you are not-the first point of pick-up

1) If you are not the first point of pick-up, the carrier continues to be exempt from HOS as long as   your facility is within the 150 air-mile radius of the point of first pick-up, and it has not loaded any non-exempt agricultural commodities

2) The carrier will remain so with any additional pick-up points until it passes beyond the first facilities 150 air-mile radius limitation.

Scenario 3: Intermediate Points

This scenario takes into consideration points of consolidation and subsequent transportation. A new source for a new trip may be identified, and the 150 air-mile radius for the exception will be around that new source.

 As an example a forward distribution point may be treated as a “source” in addition to the location at which the agricultural commodity was first tendered to the carrier, e.g., packing or cooling facility. This is based on the fact that the original transportation terminated once all agricultural commodities have been offloaded at a delivery point.

For a diagram of how the exemption works please click HERE; click HERE for a fact sheet issued by the FMCSA, which we encourage you to provide to your carrier which will be both educational and may also be provided to any law enforcement officer during a roadside check.

If you have any questions or need further clarification, please do not hesitate to contact Ken Gilliland at [email protected] or Matt McInerney at [email protected]

Many Western Growers members will routinely request help with providing an internal check list of questions for shippers to ask when produce arrives at contract destination and there has been an USDA or CFIA inspection secured. Such a document is a best practice in order to establish an expected discipline with your sales staff to, as a matter of routine, ask the correct questions, and determine compliance with the terms of the sales contract.   

The following are some suggested questions (you may have others) that are basic fact checking before making a determination on whether a commodity complies with contract at destination:

• Is the inspection location the same as in the negotiated contract?
• Who ordered the inspection and what was the request date and time? 
• Where was the inspection performed (on/off trailer, applicant warehouse, city, state)
• What was the ship date?
• What was the arrival date?
• What was the date and time of the inspection?
• How many cartons shipped?
• How many cartons inspected?
• What were the pulp temperatures?
• What was the label on the product inspected? Review inspection for any other coding, ID numbers, or other markings listed on the inspection to help you match the load shipped.
• Look at condition defects only (separate quality and grade defects)
• Does it make good arrival?  (Good Arrival Guidelines)
• Review portable temperature recording unit and download of TRU (trailer refrigeration unit).

The above are the crucial observations that need to be made before you consider any sort of business decision to adjust the sales contract, and most can be obtained from the destination inspection certificate, as well as your retained shipping documents.  It is prudent to get these questions immediately answered upon arrival and act in the best interest of your company and growers whom you represent. (Notice of Complaint Form)

Familiarity with the reviewing of USDA inspection certificates and CFIA inspection certificates will be the foundation to determining compliance of your produce under the terms of the negotiated FOB or Delivered sales contract. Western Growers staff can assist with a timely review of any type of inspections (in-house and federal) and provide an ongoing real-time resource. The power and knowledge of understanding how to quickly assess an inspection and separate condition defects from the quality defects, will empower the sales staff with the tools to maximize returns to the farm. Western Growers regular members can utilize the services of Trade Practices to review and help you interrupt your inspections, please email Ken Gilliland, [email protected] 949-885-2267  or Bryan Nickerson, [email protected] 949-885-2392.

As every company knows (or should know), establishing a weekly/daily routine to review your accounts receivables, defines best in class sales operations. Those companies that have a coordinated approach from both sales and accounting staff to encourage adherence to payments terms, routinely have a reduced bad debt experience and increased cash flow. Hoping that your invoices will get paid is a flawed and antiquated business approach. When it comes to A/R, the longer you wait to collect, the more difficult it may become to collect. A payment is delinquent as soon as the due date has passed. Therefore, be ready to deploy established internal outreach efforts by contacting your customer reminding them of the payment terms, and that the account is now past due and must immediately be paid. The best person in your company to make this initial contact with your customer is the salesperson who has the ongoing day-to-day interaction with the customer’s buyer, who presumably is still making daily purchases.  Keep in mind that a payment beyond the agreed terms could be a sign of a potential problem. We have a favorite saying here at WG’s Trade Practices; “Slow pay eventually ends up as No pay”. Early and often attention to  immediate contact seeking payment consistent with contract payment terms will allow you to make an informed business decision to ongoing selling to that customer. Put another way, you want to be that squeaky wheel that gets the attention.

If you do not receive a prompt response to your payment request, a follow-up call by sales or your accounting staff is now in order. Use precise language that makes clear you require payment, with a date certain expectation.  Remember, if your customer is late with payments to you, they are also delinquent on invoices with other suppliers. Do not allow your customer to raise capital for their operations on your balance sheet. Use all available resources to determine if the customer has had a fundamental change in business operations.  Do you regularly review Blue Book updates on your customers? Are there other references the customer may have provided you before you started doing business that you can check with?

If a slow or no-pay cannot be resolved in a timely manner, do not hope the check is in the mail. Time is not your friend when it comes to getting paid, in which case you could end up being faced with multiple slow or no-pays.  If you are unable to secure the cooperation of your customer after your initial contact(s) don’t let what started out as a small problem turn into a big problem.  Please do what many WG shippers do by reaching out to the Western Growers Trade Practices Department for assistance.  As a Western Grower regular member, we are here to assist you in securing payment on your behalf. Since 1966, the Trade Practices Department have routinely corresponded on behalf on individual regular members to assist with slow pay and disputed shipments. Our goal, is for a charging a negligible fee, we contact the customer directly with the goal of getting your past due invoice paid, and also at the same time maintaining the established business relationship you have with your customer.   The fact that your customer ignored your request may be a warning sign of potential collections issues.  After you have exhausted efforts in securing payment, involving Western Growers ensures that your customer is aware that you pay close attention to your accounts receivables and that their payment practices are being regularly monitored.

To conclude a successful sales transaction, collection of the money, that clears banking channels, is the final (and maybe most important) step.  Let Western Growers be your outsourced partner in helping your company ensure successful transactions.

Please contact any of the Western Growers Trade Practices team members Ken Gilliland, Bryan Nickerson, and Matt McInerney