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DRC, an outgrowth of the North American FreeTrade Agreement (NAFTA), was formed in 1999 tooffer mediation and arbitration to buyers and sell-ers in the produce industries of Canada, the UnitedStates and Mexico. PACA, which comes under theU.S. Department of Agriculture (USDA) umbrella,requires U.S. produce companies buying or sellingfresh produce in commercial quantities to belicensed by USDA. By contrast, DRC membership istotally voluntary.

Ken Clayton, associate adminis-trator for the USDA AgriculturalMarketing Service (AMS), Washing-ton, D.C., which administers PACA,notes that when the issue of trans-portation inclusion in the PACA hasarisen at various times, “The rele-vant industry players really justdidn’t rally around it.”

Clayton thinks it will be inter-esting to see what happenswith transportation protec-tion under DRC. Perhapsthere will even be somefocus on what people likeor dislike about the issue.

DRCNot only does DRC, a

private, non-profit organi-zation, handle disputes on

international shipments between Canada, the Unit-ed States and Mexico, but it also covers U.S. domes-tic shipments, as long as DRC members areinvolved.

Pat Hanemann has been involved with DRCfrom the beginning, first as part of agovernment/industry tri-national task force todevelop the program and now as a consultantthrough his company, Farm2Market AgribusinessConsulting, McAllen, TX. A former Northwestapple shipper, Hanemann says, “What we are doingis what PACA has long been asked and has continu-ously refused to do, which is provide dispute reso-lution on transportation issues within the domesticUnited States.”

In February DRC had only seven transportationmembers. However, Hanemann points out, DRChas yet to really market the program to carriers andintermediaries. It also has not yet mediated or arbi-trated on behalf of a transportation member. How-ever, based on its performance in handling buyer-seller complaints (see chart on page 49), he is opti-mistic there will be success involving transporta-tion as well.

Ken Lund, vice president of operations, LaCana-da, CA-based Allen Lund Co. Inc., a transportationintermediary that arranged 125,000 truckloads ofagricultural products and freight last year, saysAllen Lund, which has 27 offices around the coun-try, is the first transportation company to join theDRC.

Lund believes DRC’s inclusion of transportationis especially important since the produce industry’stwo leading credit and rating services have alteredor are considering changing their services. He saysthe Red Book no longer offers arbitration assis-tance, and “The Blue Book is reassessing which waythey want to go with it, but they still do offer arbi-tration and assistance.”

Lund likes DRC because its staff understands

Last fall, when the Dispute Resolution Corp.(DRC) of Ottawa, ON, announced it was pro-viding the same protection for produce carri-ers and transportation that intermediariesoffered buyers and sellers of produce, itaccomplished in six years something the Per-ishable Agriculture Commodities Act (PACA)has not done in 76 years.

DRC Takes On ControversialTransportation IssuesCarriers and intermediaries are finally on equal footing with produce buyers and sellers — if they are DRC members.

B Y B I L L M A R T I N

Pictured (top to bottom): Fred Plotsky, Kenny Lund and Pat Hanemann

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produce transportation. He says organiza-tions such as the American ArbitrationAssociation are not as good as DRC becauseof the tremendous amount of time spentexplaining produce transit guidelines, whatis customary, etc. “We have always wantedPACA to take a stronger look at transporta-tion,” he adds.

Fred Plotsky, president of Cool RunningsLtd., a Kenosha, WI-based transportationcoordinator that arranged 7,000 loads lastyear, advises looking over what DRC has tooffer before making a decision on joining.Several years ago he became so frustratedwith the lack of protection for truckingunder PACA that he obtained a PACAlicense. “I was forced to get a PACA licenseas a produce broker, then take possession ofthe load and sell it from my account. Somereceivers backed off, but it saved my butt. Ithink I used the PACA license two times.”

Plotsky still sees a need for transporta-tion protection under PACA. In the mean-time, he has dropped the PACA license and“chosen not to do business with certain peo-ple who make [unfair] claims. I refuse to dobusiness with them.” He says at one time,Cool Runnings averaged a couple of claimsper month. However, since becoming moreselective with whom he does business, he

may have one legitimate produce claim ayear.

DRC’s Hanemann says the $600 annualmembership fee may prevent most owneroperators and small fleet owners from join-

ing. However, this is a miniscule cost forlarge refrigerated carriers and many trans-portation brokers and freight contractors.

“In order for a broker to become of mem-ber of the DRC he has to conduct himself asa principal,” Hanemann emphasizes. “Ifthere is a dispute by the trucker, the brokeris a principal. If there is a dispute with theshipper, the broker is a principal. He has toguarantee payment to the trucker and guar-antee satisfaction to the shipper. That is notsomething a lot of brokers want to do. Weknew we were going to be keeping a lot ofbrokers out, but if you can’t have a judg-ment against someone, then there’s notmuch point in being a member.”

Robbie Goldstein, president of Newark,NJ-based Genpro Inc., which has eightoffices around the country and arrangedover 30,000 loads last year, says becausetruckers receive no protection under PACA,DRC “is definitely a plus. DRC is good. Any-thing that can help the arbitration and havefair trade is better, especially in produce,when it has been lacking for so long. Youkeep the lawyers out of it. That is the bestway to do it.”

PR IMARY BENEF IC IAR IESGoldstein believes both small fleet owner

“What we are doing is

what PACA has long

been asked and has

continuously refused

to do, which is

provide dispute

resolution on

transportation issues

within the domestic

United States.”

— Pat HanemannFarm2Market

Agribusiness Consulting

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Contact: Jeff • Andy • Curt • Dan • Tom

815-372-9300 • 800-323-3730Corporate Headquarters: 8 Greenwood Ave. • Romeoville, IL 60446

• Nationwide Transportation Logistic Service— Including

• Produce Marketing— Growers, Shippers, Importers

G T B

Specializing in SoutheasternProduce Shipments

Bobby Grist

P. O. Box 487State Farmers Market • Tifton, GA 31793

800-647-3698229-382-8211

Fax: 229-386-5046

Serving 48 States

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a big opportunity to see how it works.”

EAS ING TRUCK SHORTAGESOver the years Lund at Allen Lund Co.

has seen the poor image truckers have ofthe produce industry. “The No. 1 reason dri-vers leave (the trucking industry) is notwages. It is their treatment at the docks andon the road,” he states. “If people in theirnormal jobs were treated the way drivers aresometimes treated, you would see that [129percent driver] turnover rate in some otherindustries. It doesn’t do well on the docks tohave poor treatment of drivers who are try-

M A R C H 2 0 0 6 • P R O D U C E B U S I N E S S 49

DRC FactsCOST$600 a year

MEMBERSHIPCanada buyers/sellers 831U.S. buyers/sellers 321Mexico buyers/sellers 57Buyers/sellers from other countries 20Intermediaries/Carriers 7

Total 1,236

HISTORY1994 — North American Free Trade

Agreement (NAFTA) treaty calls for anextension of Perishable Agriculture Com-modities Act (PACA) -type commercial dis-pute resolution services betweenbuyers/sellers of fresh produce throughoutthe NAFTA region.

1997-1999 — Tri-national task force,headed by the U.S. Department of Agriculture, Ag Canada and Secretaría deAgricultura, Ganadería, Desarrollo Rural,Pesca y Alimentacion (SAGARPA) to designthe new system.

2000 — DRC established.

COMPLAINTS• 676 complaints opened• 664 closed• 12 pending

CLOSED FILES• 102 arbitrations with average number

of days: 199• Average Value: $9,180• 562 without arbitration — average

number of days: 48• Average Value: $3,922.

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and owner operators will benefit if they areusing a broker who has protection in atransportation dispute where mediation andarbitration is available. “They can’t affordthe legal fees. They can’t even afford theclaim,” Goldstein states.

Hanemann agrees, pointing out thatuntil now, owner operators “have been atthe bottom of the hill” when it comes to pro-duce dispute resolutions. “When a disputeoccurs and transportation is involved, asoften as not, the final resolution involvesclipping the freight invoice. The carrier real-ly has no recourse.”

It is the carrier who usually suffers, heobserves. The broker simply passes theclaim on through, and the broker’s only lossat the worst, is the commission. However,the carrier has lost his haul. “So we think theprimary beneficiary is the trucker, because

they now have a PACA-like dispute resolu-tion system that is accessible to them, whichPACA has never had. It is enforceable, fair. Itis rule-based and inspection- based. It is onethey enter into with equal standing with theshipper and/or the receiver.”

AMS’ Clayton thinks including trans-portation in DRC is a good idea. “It is a goodcontext within an ongoing operation to tryand see how it works. See what the folksthink about it. See if folks are getting a bene-fit from being part of an arrangement whereyou try to resolve things as informally aspossible outside the court system. It will be

Corporate HeadquartersGenpro, Inc.

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Specializing in perishable freight management

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