Remember only a few summers ago when produce trucking rates from California to the East Coast were hitting $10,000? It hasn’t even come close to that in 2015 – and there appears to be a number of factors why.
As we head towards the Labor Day weekend final shipments to receivers for the holiday are now underway, if not already delivered. Don’t expect major rate increases.
East bound coast to coast rates in the summer of 2014 that were in the $8000 range are closer to $6500 this summer.
Here’s my take on why produce trucking rates are off.
***Less California Produce Volume. The 5-year California drought is beginning to take its toll on agriculture and it’s going to get a lot worse unless the El Nino weather pattern in the Pacific Ocean changes things this winter.
The San Joaquin Valley is being hit relatively hard by the drought and it is adversely affecting volume on many crops ranging from cantaloupe and honeydew and other melons to stone fruit, tomatoes and citrus. In the Salinas Valley, which has not suffered from the drought as much as in the San Joaquin Valley, all types of lettuce volumes have been like a roller coaster this summer.
The highest rates from California to the East Coast this year have been in the $8,000 range, and those were only for a limited amount of time.
***Rail Competition. While the railroads provide only limited competition, it still has an affect of produce trucking rates. After all, the rail rates are based trucking rates and often offer 10 to 15 percent less to haul. Still, we’ve seen a couple of rail related companies go out of business this year. The railroads have a history of dropping produce related services for other, less perishable products.
***Rules and Regulations. The insanity of excessive rules and regulations from both the federal and state levels continues, and it is having disasterous effects on owner operators. Rates are not keeping up with increasing costs of operations, although lower fuel prices have helped. Still, when you have the California Air Resources Board and their emission standards and other business killing rules, plus the feds pushing to implement Electronic on-board Recorders, not to mention many others, it all adds up.
***Qualified Drivers
The lack of qualified drivers continues to be a problem, although it could become a lot worse when the economy turns around. Attracting young people into the trucking industry continues to be a challenge. It’s a hard life and there’s certainly easier ways to make a living.
***Mexico. Over the past 20 years more and more produce is being grown in Mexico, and much of it is being driven by investments from American farming operations. Mexico has cheaper labor and less government interference in their operations. At the same time there is less produce being grown in California — Bill Martin.