In late May the crush for transportation to fill Memorial Day orders was at a fever pitch. That proved to be a harbinger of things to come as June and July saw a very tight transportation situation.
In fact, recently Chuck Thomas of Thomas Produce Sales in Nogales, AZ, told The Produce News, “In May and June, I saw some rates I’d never seen before. Trucks were getting from $8,500 to $8,800 to go to the East Coast from Nogales. I heard of some $10,000 rates from Salinas to Boston and New England. It was unbelievable.”
Robert Goldstein, president and owner of Genpro Inc. in Rutherford, NJ, confirmed that the transportation demand-supply curve was very strong in the early part of the summer, but he said rates have eased somewhat, though they are still strong. He indicated that hours-of-service regulations have added to the typical strong demand situation that occurs every summer. Tighter regulations have made it more difficult for solo drivers to make the cross-country trip in less than six days. Consequently there is a premium for trucks with team drivers that Goldstein said can get from the West Coast to the East Coast in 60 to 72 hours, if all goes well.
“Good capacity is at a premium, and that is always in short supply,” he said.
He said it is often a situation of truckers having to “hurry up and wait to get loaded and then hurry up and wait to get unloaded.”
Lance Ditcher, president of LD Logistics in the Bronx, NY, agreed that the hours-of-service regulations are taking their toll. “It is now very difficult for a Wednesday pickup (out West) to make a Sunday delivery (on the East Coast). Travel times have changed a bit.”
Ditcher said it is also a case of simple inflation. “Every year rates seem to get a little bit higher,” he said. “And this year the situation was definitely tighter in June and July.”
Adding to the situation is stricter California emission laws that have some trucks avoiding the Golden State. “That absolutely happens,” said Ditcher. “If California is going to make it tougher and you might get a ticket, some drivers want to go someplace else.”
Goldstein has noted the same situation. But he said some of those firms that reallocated their assets away from California because of the stricter regulations are now coming back since they have had a turnover in equipment and their new equipment is in compliance with those rules. “California has tougher laws, but it also has some desirable freight at the premium rates,” he said.
Moving forward both Ditcher and Goldstein expect a fairly stable supply-and-demand situation with regard to transportation as summer ends and fall begins. The heavy fruit production from California’s San Joaquin Valley will begin to wane as the days become shorter and the demand for equipment should ease a bit. But neither transportation expert expects a complete reversal of the current situation.
“Rates are still holding pretty well and I think good capacity is going to continue to get a premium,” said Goldstein.
“Moving forward, I think we are going to stay pretty close to where we are right now,” said Ditcher. “Rates (for cross-country refrigerated hauls) are in the $6,000 to $7,000 range, and I think they should stay in that range through September and October.”