December 22, 2005

OAN launches transportation corporation

Wilsonville, Ore. — The Oregon Association of Nurseries Board of Directors announced this morning its unanimous approval to launch Advantage Oregon, a transportation management services corporation that will provide long-haul freight management services to Oregon producers and processors of perishable products. The OAN will file today the necessary paperwork with the Oregon Secretary of State to incorporate Advantage Oregon. Service will commence in the spring of 2006.

“Under the collaborative framework of Advantage Oregon, we will leverage the enormous freight buying power of Oregon agricultural shippers and use the latest in transportation management software to drive cost efficiencies and service improvements for the benefit of our out-of-state customers,” said John Aguirre, OAN executive director.

According to Pete Brentano, president of the OAN and co-owner of Brentano’s Tree Farm in St. Paul, Ore., Advantage Oregon will focus on “increasing the availability of trucks and drivers during peak shipping seasons and improving service reliability through contracts with qualified national and regional carriers.” He added that contracted freight arrangements will also help growers and their customers better anticipate and manage freight costs, “because terms, conditions and service parameters will be spelled out in black and white.”

In August 2005, the Oregon Legislature passed legislation that Governor Ted Kulongoski signed into law that appropriated $600,000 in the form of a forgivable loan to support the launch of Advantage Oregon. This fall, the OAN Board of Directors worked with a team of consultants led by Josh Hinerfeld of Cambium Strategy to develop the Advantage Oregon plan.

During the past few years, growers of nursery stock and Christmas trees have grappled with a worsening capacity crunch in long-haul trucking. With limited, seasonal shipping needs, these growers do not ship enough loads throughout the year to attract the attention of major truck companies. As a result, most growers of nursery stock rely on brokers to procure trucks on the spot market, generally with only a few days notice. Consequently, freight rates can vary dramatically from week-to-week during the nursery and Christmas tree shipping seasons and many growers do not know who will haul their loads and have little advance notice as to when a truck will show up.

Advantage Oregon will address these challenges by putting out for bid the combined freight business of many nursery and Christmas tree shippers and awarding that business to the most competitive carriers. In addition, Advantage Oregon will seek to serve other Oregon shippers of perishable products. The nursery industry alone spends approximately $110 million with motor carriers to haul plants to destinations outside of Oregon and Washington.

“For many West Coast agricultural producers who have to ship to the East Coast, the cost of freight and the lack of truck availability has become a competitive liability,” Brentano said. “We asked ourselves, ‘Can Oregon agriculture work together to develop a better transportation option for our growers and their customers?’ We think the answer is yes. We believe Advantage Oregon can turn a liability into a competitive advantage.”

In April through August 2006, Advantage Oregon will focus on serving nursery growers shipping full truckload quantities of plants, and the OAN wants Advantage Oregon ready to serve Christmas tree growers for their 2006 shipping season. By 2007, Advantage Oregon will offer a complete array of transportation services to nursery growers and to other sectors of Oregon agriculture.

“Through Advantage Oregon agricultural shippers can combine their seasonal shipping needs with shippers in other seasonal sectors, and together we can develop a year round business opportunity that’s attractive to trucking firms,” Aguirre said. “Significant freight volume over the greatest number of months possible will mean better freight rates and service.”

Within a year Advantage Oregon will offer a freight consolidation service for those shipping less-than-truckload quantities of nursery stock and other goods. The freight consolidation service will decouple the local consolidation activity from the long haul transaction. Advantage Oregon will partner with a local logistics firm to provide a transfer yard where long haul carriers can drop empty trailers and pick up full trailers for a return trip to the Midwest or East Coast. The other element of this plan is to use local drivers to ferry the empty trailers among individual shippers to consolidate loads. Alternatively, those Oregon shippers located in geographically remote locations can use a local driver to haul a trailer to the transfer yard and have Advantage Oregon’s long haul carrier pick up the load.

“By establishing a local transfer yard, small shippers will have an opportunity to benefit from point-to-point freight rates that they couldn’t otherwise obtain from large national and regional carriers,” Brentano said.

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