Truck rates soar and no immediate relief expected
Produce truck rates are up 70% or more compared with a year ago, and industry sources don’t think relief is coming anytime soon.
In the U.S. Department of Agriculture’s Fruit and Vegetable Truck Rate Report for May 4, truck shortages were noted in Nogales, Ariz.; all districts in California, Colorado, Florida, Michigan, North Carolina and central Washington.
Slight shortages were noted in Georgia, Oregon, Idaho, south Texas and the Columbia Basin of Washington.
USDA-reported May 4 refrigerated produce truck rates compared with 2020 were:
- Nogales, Ariz., to Boston: $9,200 to $10,600, compared with $5,300 to $6,700 a year ago;
- Salinas-Watsonville, Calif., to New York: $10,000 to $10,800, compared with $5,800 to $6,200 a year ago;
- Southern California to Chicago: $7,500 to $8,600, compared with $3,800 to $4,700 a year ago;
- Yakima Valley and Wenatchee District, Wash., to Philadelphia: $8,600 to $10,000, compared with $5,600 to $6,500 a year ago; and
- Vidalia, Ga., to New York: $4,300 to $5,200, compared with $2,600 to $3,200 a year ago.
Already elevated truck rates were pushed higher with the convergence of floral imports into South Florida for Mother’s Day demand, accelerating volume of Southeast U.S. produce shipments and an early Department of Transportation Road Check Week, said Noah Hoffman, vice president of North American surface transportation for C.H. Robinson, Eden Prairie, Minn.
The delayed produce season in the Southeast is accelerating, which also diverts trucks from the rest of the country down to Florida.
Beyond those factors in Florida, the U.S. Department of Transportation held its annual DOT Road Check Week May 4-6.
This time period, Hoffman said, brings about a drop in truckload capacity as some drivers remain off the road to avoid checks or are forced off the road due to violations discovered during checks.
Beyond May, demand for refrigerated trucking will increase in the summer season, owing to higher domestic output during the summer and a gradually strengthening economy, he said.
Hoffman said comparisons with year-ago truck rates are complicated by the big swings in freight demand during the early weeks of the pandemic in 2020.
Hoffman said the structural constraints of adding more truck capacity could translate into upward pressure on transportation rates for the next year or so.
The supply of truck drivers has not kept up with demand, especially considering that competing industries have taken some drivers off the road, he said.
Hoffman said the volatility of truck rates is causing some shippers and receivers to look at shorter duration contracts for transportation or incorporating some variable pricing strategy into contracts.
Short supply in freight and trucking has skyrocketed rates, said Walt Dasher, chief operating officer of Glennville, Ga.-based G&R Farms, a year-round grower, packer and shipper of sweet onions.
Dasher said he thinks this challenge stems from several COVID-19 pandemic effects: government economic stimulus programs influencing employees to stay home, struggling owner-operators retiring or taking buyouts, and higher retail demand overall.
“It’s really bad right out there at the moment. It’s extremely challenging,” Dasher said. “I think a lot of it has to do with economics. You just have to ride it as it is and manage as best you can.”
John Pandol, director of special projects for Delano, Calif.-based Pandol Bros., said truck rates are usually cyclical, with each year bringing stories of “truck shortages.”
“In the food waste discussion, I’ve never heard about lack of transport being an issue,” he said. “I’ve seen fields abandoned for overproduction, lack of market, low grade, no workers to harvest, and maybe this year lack of packaging, but not because of lack of trucks or ocean containers.”
On the other hand, Pandol said both ocean containers and trucks seem to have shortages, and in both cases, it seems to be more of a “driver shortage” than equipment shortage.
Pandol said the most freight-sensitive items are watermelons and mixed melons. For those items, the freight can be more than the f.o.b. price.
Pandol said a challenge for the artificial intelligence community would be to build a prediction model to have the capacity and drivers in the right place at the right time, essentially predicting volume and its distribution.
The industry’s driver shortage, Pandol speculated, could be related to a number of factors, including:
- Government stimulus money;
- Driver fears of COVID-19;
- Competing driving jobs closer to home;
- Failed drug tests by drivers/operators;
- Job opportunities in construction; and
- Competition with non-refrigerated loads because of frustration with loading and unloading delays for produce.
