Posts Tagged “C.H. Robinson”
C.H. Robinson/Robins Fresh has been accused of “illegal and deceptive” business practices in a lawsuit by a number of U.S. and foreign growers.
According to press reports, the lawsuit was filedby a group of farmers in mid-January in federal court in Minnesota asking for a total of $1.1 billion for allegedly overcharging shipping costs while pocketing the additional profits and underpaying farmers for various types of produce from both North America and South America.
The lawsuit reportedly claims that these freight profits exceeded $1,000 per load of produce.
Filed January 16th, the complaint claims C.H. Robinson/ Robinson Fresh of Eden Prairie, MN :
- Represented fees from growers as their own donations to breast cancer organizations;
- Structured the transportation of consigned produce in a way — termed freight topping — that benefited C.H. Robinson rather than growers;
- Contracted for an additional reduction of 2 percent of freight charges and did not pass the savings on to plaintiffs;
- Received rebates from seed suppliers and didn’t pass them on to growers; and
- Received rebates from pallet company CHEP USA but did not pass them on to growers.
The plaintiff’s lawsuit was filed by Craig Stokes, of Stokes Law Office, San Antonio.
- David Moore, doing business as Moore Family Farms;
- Terry Lusk, Jason Lusk and Justin Lusk, doing business as JTJ Farms;
- Kevin Rentz, Amanda Calhoun Rentz, Dennis Bruce Rentz and Karla Jo Rentz, doing business as Rentz Family Farms;
- Kevin Coggins, doing business as Mek Farms;
- Bowles Farming Co. Inc.;
- Agropecuaria Los Americanos S.C. de R.L. de C.V.;
- Phil Sandifer & Sons Farms LLC;
- JMB Farm LLC;
- Powe Farms Management LLC
- CA Comercial S.A.C.;
- Global Fresh S.A.C.; and
- Pepas Tropicales Del Peru S.A.C;
C.H. Robinson has until early March to respond to the complaint in court, but the company issued a statement to trade newspaper The Packer February 10 stating the “complaint was designed to capture media attention, and it contains an enormous amount of self-serving falsehoods as well as blatant mischaracterizations and fabrications about our company, teams and the actual agreements signed by the growers themselves.”
C.H. Robinson plans to oppose the plaintiffs’ plan to pursue class-action status of the lawsuit.
“We deny any and all allegations of wrongdoing and look forward to vigorously defending our actions, as well as filing legitimate counterclaims against the growers.”
In the company’s statement, C.H. Robinson said it loaned several of the growers listed in the complaint money to finance their businesses.
“Now that the money is due to be repaid, these growers are using this complaint to avoid paying their debts. C.H. Robinson will assert its right to collect the significant amounts it is owed by the growers,” according to the statement.
Stokes said plaintiffs are seeking class action status from the court, and that claims of freight topping could apply to “hundreds if not thousands of growers.” Stokes said he was aware of only one grower plaintiff who owes money to C.H. Robinson.
Stokes alleges that C.H. Robinson inflated freight costs and included that number in the delivered cost to the buyer.
“So you take the delivered cost, minus the freight inflated by (X percent), and then that number was reported to the grower as the f.o.b. price,” he said.
While contracts with growers clearly spelled out the sales commission charged by C.H. Robinson, Stokes said the contracts made no mention of C.H. Robinson making money on freight.
“If you are going to charge for something, you put it in the contract and get permission,” Stokes said. “Tell the grower how much you’re going to mark up the truckers’ invoices and get the growers’ permission.”
C.H. Robinson said in its statement that the company did not violate any expressed or implied duties to the growers.
“We are proud of the work we do with our teams, growers, and customers throughout the world, and we look forward to putting this entirely meritless complaint behind us,” said Michael Castagnetto, President of Robinson Fresh, a division of C.H. Robinson.
Truck brokers, freight forwarders, as well produce grower/shippers and receivers could face fines totaling as much as $10,000 per violation and per day if refrigeration equipment on the trucks they hire is not in compliance with new California regulations becoming effective with the New Year. The penalties apply even if the trucks are only passing through California and do not stop in the state. The rules apply under California’s Health and Safey Code.
The regulations stem from the California Air Resources Board (CARB) and covers truck and rail owners and operators, plus any “hiring entity” using their services.
These issues were dicussed during a recent web seminar sponsored by Western Growers, Irvine, Calif., the California Grape and Tree Fruit League, Fresno, and C.H. Robinson Worldwide Inc., Eden Prairie, Minn. Also participating was Rodney Hill, an air pollution specialist from CARB who helped develop the rule.
As an example of rule violations, Hill said a truck loaded in Arizona and traveling through California on its way to a delivery point in Oregon could be fined, even though no deliveries are made in California. The rule applies because the truck is operating within the state. It doesn’t matter where the truck is licensed.
Hill Compliance for hiring entities shouldn’t be too difficult, though, according to Hill and others in the Web seminar.
Matt McInerney, Western Growers executive vice president, said due diligence and documentation are the keys to keeping produce companies out of trouble. Hill agreed with that assessment.
“Begin changing your contracts now so you will be ready Jan. 1,” McInerney said.
“For those of you who have pre-printed pads of bills of lading, I know you want to use up what you have. But you should get new ones printed, or get a stamp made with the right language so you can add it to the forms you have on hand.”
Hiring entities and loading dock personnel, Hill said, will not be expected to inspect refrigeration equipment to see if it is compliant.
However, if the equipment is not compliant and the hiring company’s contracts and other documents don’t have language showing it required the carrier to use compliant equipment, citations and fines will be issued, Hill said.
The hours of service rule changes are not major, but they are confusing. A greater focus is needed on prevention of stolen produce loads, and there are discussions of alternatives to using trucks to haul produce, but the alternatives are not that impressive in most cases. These are just a few of the topics addressed at the United Fresh Produce Convention, held May 1-3 at the Dallas (Texas) Conventi0n Center. The session was titled Examining Today’s Transportation Challenges and Alternatives. (To read more about this session see the report published on May 3rd)
Dan Vache’, vice president of the United Fresh Produce Association describes hours of service as a top concern of the produce indutry.
Gary E. York, general manager, C.H. Robinson Co. Worldwide Inc. describes the hours of service rules as “complicated”, specifically noting that twice a week driver’s are not allowed to drive between 1 a.m. and 5 a.m.
“If more drivers were able to operate 1 a.m. to 5 a.m. it would mean less drivers on the road during high traffic hours,” York adds.
A member of the audience points out the hours of service regulations were altered for safety reasons, “but in some cases the changes make it less safe.”
Another audience member asks the panel about compliance of rules and regulations for truckers. York replies that technology is helping to improve compliance and will do more so in the future.
On the topic of stolen loads, Vache’ relates there are no good answers, “but we have to police ourselves.” For example, if a truck shows up with a load of nuts, the receiver or buyer needs to know from where it came.
There also is a lot of contraband crossing the U.S. border from the Southern hemisphere and being distributed throughout the USA and Canada. Vache’ notes the U.S. and Canadian governments are working together to reduce this problem.
With the seasonally high volume of produce, less available refrigeration equipment and rising rates, the topic of alternatives to truck transportation are addressed. Panel members indicate there are certain commodities and routes for transporting produce other than truck, but it is limited.
Alex Crow, national trucking manager, Hellman Perishable Logistics, says, “I don’t think we can replace trucks on certain routes, but we can do some things like with Washington state to Chicago on certain items (like apples, onions and potatoes).
York indicates railroad service has improved, pointing out a rail delivery from Washington state to Chicago can occur within 12 hours of what a single truck driver can deliver. Rails are now delivering loads to the East Coast in six days.
However, York adds that a problem with rail service is the lack of intermodal equipment. There also is the challenge of rails being able to compete with trucks when it comes to backhauls, or return loads. Rails remain an option, are slowly increasing their volume, but York doesn’t see any significant improvements in the next three to five years.
An audience member comments there are transportation problems in moving potatoes out of Idaho. The challenge is getting the equipment to Idaho to make the hauls.
Concerning the CSA safety enforcement systems for trucks that used to be known as SafeStat, Vache’ says in the future the scores will have more meaning as the government is better able to track carriers.
“It’s going to force carriers to be more selective in the drivers they hire,” Vache’s states. “It is going to revolutionize the industry. It will result in liability becoming a bigger issue for carriers. Technology will result in more efficiency to the industry, but more liability.”
If you want to know how produce trucking issues are viewed by some folks in the produce industry, you should have been at the annual convention of the United Fresh Produce Association, held in Dallas. Specifically, the session was held on May 1st by wholesalers/distributors and titled Examing Today’s Transportation Challenges and Alternatives.
The 60-minute meeting was held in the same Dallas Convention Center that will host the Great American Trucking Show August 23-25.
Among the issues dealt with were the driver’s shortage, detention, and hours of service. (Within the next few days I’ll provide more coverage on the session ranging hours of service to stolen loads and dicussions of alternatives to trucks for moving produce).
On the program was moderator, Ron Carkoski, head of Four Seasons Produce, Inc.; Alex Crow, national trucking manager, Hellman Perishable Logistics; Ken Nable, president of Kington and Associates Marketing, LLC; Dan Vache’, vice president, supply chain management, United; and Gary York, general manager, C.H. Robinson Worldwide, Inc.
Concerning the availablity of drivers, Crow noted there was only a “moderate” shortage of drivers — amounting to about 200,000. “We need to treat drivers as professionals. We are feeling the shortage,” Crow related. His logistics company had even hired professional “head hunters” to find more drivers. “We (as an industry) expect drivers to be professional, but often don’t treat them like professionals.”
Crow believes the driver shortage results from issues such as not paying them enough, to excessive waiting times for loading and unloading. “With the multi pick ups and multi drops we have to let the customers (receivers) know they need to pay (extra) for that.”
York at C.H. Robinson concurs. He points out driver salaries trail other occupations and many would be truckers chose higher paying jobs in construction and elsewhere.
“In 2004 we saw 1.6 million housing starts. Today there are about 600,000. Housing starts next year are projected to be about one million, and “drivers tend to go where the work is. As the economy improves, the driver shortage will increase, and transportation will cost more in driver wages.”
Vache’ of United, who has an extensive background with in-tranist temperature recording devices (such as Ryan Instruments and SensiTech), adds, “Drivers are tired, not just of being treated like second class citizens, but third and fourth class citizens. They are away from home a lot and they have families to support. What can we do to make it more attractive for drivers to enter trucking?”
York urges shippers and receivers to work on efficiency in reducing wait times at the docks. There also needs to be faster turn around times between loads. He notes while detention charges certainly are not “mainstream” in the produce industry, detention charges are being applied more than in the past.
A benefit for drivers will be advances in technolgy, York believes, which can be used to expedite action on loads involving claims. Technology can help “lay the blame” in a claims dispute and thus reduce the amount of claims arising.
Regarding efforts to increase gross vehicle weights for Class 8 trucks from 80,000 to 97,000 pounds, no one expressed much hope Congress will deal anytime soon with this issue.
Vache’ says increasing truck weight limits will be safer because of the industry continues to improve its safety record, equipment is better, etc. Heavier loads will also reduce the number trucks on congested highway.
York calls the idea of bigger trucks “appealing.”
Nable adds that heavier trucks will reduce the “footprint.” In other words, it would be good for the environment.
While the panel emphasizes the pros of increasing weight limits, the downside from a driver’s point of view were largely ignored. For example, increased weight limits will result in more wear and tear on trucking equipment, consume more diesel fuel, and result in higher costs of operation for the trucker. Will the produce industry willingly increase rates accordingly? Most truckers I have talked to believe they will be expected to haul the heavier loads without additional compensation. The prospects of the produce industry increasing freight rates for hauling heavier loads was not addressed by the panel.