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Sky-high rates for trucks fail to materialize as forecast

by Tim Linden | August 26, 2011

Truck rates were high all summer, but the supply-demand situation never reached the critical stages that were predicted last fall.

In the pages of The Produce News, as well as in other publications, a dire situation was predicted for this summer last spring. Fuel rates had topped $4 per gallon, and the unstable political situation in the oil-rich countries in the Middle East pointed to even higher rates as the year progressed.

“We also thought that there could be a shortage of equipment and that California’s regulations [which were added costs for truck owners] would keep some trucks out of California,” said Chad Lenaburg, transportation manager for Sierra Agricultural Transportation Co. in Visalia, CA. “At times, the rates did get high, but they didn’t climb as high as we thought they would.”

He said that California had a much colder spring and early summer than usual, which delayed production of many crops and decreased demand for equipment. He said that the volume finally hit in August, but the pre-summer predictions of $10,000 freight rates from coast to coast did not materialize.

Mr. Lenaburg said that the later-than-expected volume should create more business into the fall, and he is expecting good business at least for the next several months. “As the Labor Day holiday approaches, the [supply] situation should tighten up a bit. But as we move through September, it should settle down. We are looking for a busy rest of the year with reasonable rates.”

Robert Goldstein, president of GenPro Inc. in Rutherford, NJ, was one logistics expert who did not expect the rates to spike to unheard-of levels this summer. “I saw the predictions in your paper, but I never thought [a $10,000 rate] was going to happen. Coming out of the gate [around Memorial Day], there was a big rush for trucks and the rates were aggressive, but it didn’t look to me that the rates were going in that direction.”

Mr. Goldstein said that good, strong rates have prevailed all summer, but they have been manageable. He expects more of the same for the next several months.

Jose Oseguera, general manager of Oseguera Trucking Co. in Los Angeles, who handles hauls within California only on a spot-market basis, said that it has been a very good summer with strong business throughout. He said that the early part of the year was very slow, but by pounding the phones, Oseguera was able to book a good amount of business all summer long. “We found a lot of new customers this year, which helped us out a lot,” he said.