Truck Rates Show Big Increase and May Not be Over, According to New USDA Report

Truck Rates Show Big Increase and May Not be Over, According to New USDA Report

A13Refrigerated truck rates on the spot market for fresh produce reached 40-year highs at the end of 2017 and early 2018.  At the same time fruit and vegetable tonnage approached record levels.  Meanwhile, the spike in rates may not be over, according to the USDA’s Agricultural Refrigerated Truck Quarterly, a 31-page report published in March.  Continued economic growth may also encourage the upward push on rates.

All sectors of the trucking industry were affected in a similar fashion  by the driver shortage, capacity issues and higher rates, which  squeezed the transportation for fruit and vegetables.  Because of less truck capacity, many are concerted about widespread disruptions in the supply chain.

Trucks account for around 70 percent of domestic freight tonnage, and trends showed the sector was heating up with the U.S. economy in the fourth quarter.

The American Trucking Associations (ATA) reports fourth-quarter 2017 tonnage of all truck freight, was up 3.7 percent from the previous quarter and 8.1 percent higher than the fourth quarter of 2016. Total tonnage for 2017 was up 3.8 percent from 2016, which was the biggest annual increase since 2013.

Diesel fuel rates in the fourth quarter were $2.87 per gallon, up 9 percent from the previous quarter and 16 percent above the fourth quarter of 2016.

Additionally, the USDA reported refrigerated fruit and vegetable shipments in the fourth quarter of 2017, at 7.72 million tons, were the third-highest on record.  The quarter trailed only the 2016 mark of 8.05 million tons and 7.99 million tons in 2011.

Total refrigerated fruit and vegetable shipments for all of 2017 were a record 33.6 million tons, up 0.5 percent from33.4 million tons in 2016.

Driver Shortage

The ATA estimates if current trends continue the driver shortage of 48,000 positions in 2015 could grow to 175,000 positions by 2025.

The electronic logging device mandate has been disruptive for many carriers, with many shipping point districts reporting shortages immediately after the December 18 ELD deadline.

Fourth-quarter fruit and vegetable truck rates of $2.55 per mile for routes from 500 to 1,500 miles were up 25 percent over year-ago levels, and rates of $2.52 per mile for routes of 1,500 miles to 2,500 miles were up 24 percent over the fourth quarter of 2016.

Coast-to-coast reefer truck rates on January 10th exceeded $10,000 per truck from several Western districts.  For example, January rates from Idaho to Miami were as high as $10,200 per truck, up from $6,800 the previous year.

Truck rates in late March were down from January historic highs, but were still higher than in 2017.

At Nogales, AZ, imported Mexican produce rates were in the $5,800 to $6,800 range to New York City on March 27, down from $6,000 to $7,000 on March 8 and well off the rates of $9,000 to $9,800 reported in mid-January.

March produce trucking rates were still above the same time a year ago, when trucks from Nogales to New York City were in the $5,000 to $5,200 range.

The next quarterly report will be issued in late May for refrigerated trucks hauling fresh produce.