Posts Tagged “Keeping It Fresh”
By Kenneth Cavallaro, Jr., ALC Boston
Trucking recession? According to a recent Bank of America survey, demand for trucks is actually down 58%. Consumers are spending less money on material items such as televisions and clothing and instead funneling more of their hard-earned funds towards services, reports the U.S. Bureau of Economic Analysis. Kantar’s Entertainment On Demand streaming analytics reveal streaming subscriptions are up 88% since the beginning of 2022. More people are using companies like DoorDash and Grubhub for food delivery. Meanwhile, electricity prices are expected to climb on an average of 20% across the United States this winter and natural gas costs are predicted to increase 36% according to the U.S. Energy Information Administration, presumably further leading to less discretionary spending on material items. What does this mean for the trucking industry?
Our industry is all about supply and demand. The latest data from S&P Global Market Intelligence shows freight rates have continued to fall as global trade volumes slow due to shrinking demand for goods. Freight rate forecasters utilizing the Cass Index have indicated that “freight rates are leveling off and set to slow sharply in the months to come.” So yes folks, we are truly in a trucking recession. Thankfully, with 70% of all goods in the United States moved by the trucking industry, this will eventually resolve. The last recession hit in 2007 and lasted almost two years.
So where do we go from here? Federal investment in our country’s roads, highways, and bridges over the next four years will make it easier for trucks to make on-time deliveries. Drivers will likely see their lives improved by programs like our innovative ALC tracking app, which creates an easier flow of information and allows better estimating on loading and unloading times once they reach shippers or receivers. In addition, our app supports better tracking and provides us with an easily accessible timeline of how the customer’s load is progressing.
Transportation of produce and other refrigerated items leads to even higher rates, partially because of increased fuel usage during wait times for loading and offloading, as the load must be kept at a precise and constant temperature. In addition, wait times are frequently increased when produce coming fresh from the field needs time to cool or produce coming off the truck must undergo quality inspections. Situations such as these increase the amount of fuel the truck requires to keep the reefer running, causing the rates for produce transportation to soar higher than rates to transport non-perishable goods.
With many trucking companies struggling due to the harsh conditions of the current market, company mergers are coming more into play. More trucking companies will likely move in this direction in 2023 if the market does not improve. This would allow more companies to stay afloat, instead of lessening the amount of trucks on the road. Continued urbanization will also allow truckers to traverse parts of the country that were previously off-limits, allowing deliveries to reach more people in less time. There will always be peaks and valleys as we ride this trucking rollercoaster, so buckle up, pull down the lap bar, and hang on for dear life because it is going to be a bumpy ride.
Kenneth Cavallaro, Jr. is a Senior Transportation Broker in the Boston office. He began his career at the Allen Lund Company in February of 2019. Kenneth has been in the transportation industry since May of 1999. He holds a Bachelor of Arts in Communications from Salem State University.
By Shelby Perez, ALC San Francisco
Guam is a small island territory, 3,950 miles away from the nearest American state, 5,806 miles away from my office in San Francisco, and the place I call home. I was born and raised on Guam knowing that food was expensive and that if there were supposed to be six variations of one product, we’d only have two of them on the shelves, always marked up 31% or more. I never understood why romaine lettuce was $10 for a bag of three heads or why “real milk” from California was $9 a gallon. I knew fuel for the giant ships that brought them into the port was probably expensive, but I never considered what it took to get that food onto the ships in the first place.
I am brand new to this industry. I’ve been at ALC for only about five months now and I’ve jumped in headfirst working on one of the company’s largest accounts. This has completely shifted my perspective on what it takes, not only to get goods across the country, but whatit must take to get goods 5,000+ miles across the ocean.
Since my first in-person interview, I have been told many times that farmers and truck drivers are the backbone of America. The more time I spend learning about the industry and working with the many people that help move goods across the country, the more I’m discovering just how true that statement is and how many other people it takes to support them, including us here at ALC. During the height of COVID-19, while everyone was panic buying toilet paper and all the flour and sugar off the shelves to support our newfound baking hobbies; farmers, production line workers, truck drivers, and grocery store employees were working hard to keep the shelves stocked at the cost of their health and safety. I’ve heard so many stories about how my co-workers were working hard to find trucks
Whether it was buying pizza for their carriers, or sending candy and thank you cards, anything to show their appreciation for great service during a time when you would expect most people to be looking out for themselves and their families. ALC and their carriers and customers not only survived,
|but they also thrived, enough that they could hire me this year! I’m proud that I am now a part of this team. I’m proud to know that the people I work with were a part of the network that helped keep America in business, and helped me perfect my banana bread recipe last year too. I’m proud to know that ALC, our carriers, and our customers were able to pivot and adapt to the circumstances of our world. They’ve proven more than ever that they are smart and hardworking people who are ready to take on tomorrow’s challenges and I am fortunate enough that I get to learn from their experiences and carry them with me towards the future as well. Guam is a faraway land for a mainlander and it’s beginning to make sense why that one bag of romaine and one gallon of milk might set me back $20. But who knows, with the experience I continue to gain at ALC, maybe I could be the one to figure out how to get the romaine and milk for $9 on Guam- or maybe all 15 flavors of Cheerios!||.|
Shelby Perez graduated from Saint Mary’s College in 2020 with a degree in Business and East Asian Studies. She started at ALC San Francisco in May 2022 as a Broker’s Assistant with the national retail store team.
By Yanni Mathelier, Transportation Broker, ALC Orlando
On Wednesday, September 28, 2022, Hurricane Ian made landfall in Florida as a powerful Category 4 storm. Maximum sustained winds were around 150 mph as it hit the Southwest coast. Bringing in close to 20 inches of rain to the state with tons of flooding which ruined many homes, infrastructure, and farm fields. The Orlando office deals with many produce customers shipping out of Florida. The impact of Hurricane Ian has caused many customers to either lose crops and deal with flooded fields or have to replant for the next season. Missing a season in the farming industry can be devastating, detrimental to the farmer, and takes a hit on the transportation industry, therefore affecting consumers.
Ian mainly hit farms across Southwest Florida, and the trickle-down may be felt in grocery stores across the nation, as Florida is a critical spot for farming in the winter when other places are too cold for operations. Florida is one of the world’s largest producers of citrus. The issue most farmers are having down south when it comes to these fruits, is that the trees were badly damaged during the hurricane. This creates a time frame issue that can affect Florida’s economy as the industry already faces increased labor costs and competition from foreign imports. These crops will take a minimum of two seasons for the groves to recover to pre-hurricane production levels.
The question that follows: Is Florida’s citrus industry on a ticking clock? We will soon start to see a rise in citrus prices and lower production numbers. This is something in transportation we must follow as it could negatively affect the capacity in Florida, and as discussed before, the trickle-down to the customer would be inevitable.
Yanni Mathelier is a Transportation Broker and began his career at the Allen Lund Company in March of 2022. Yanni has been in the transportation industry since January of 2021. He graduated from the University of Central Florida with a Bachelor’s in Business Administration.
By Dave Comber, ALC Madison
Most of us have enjoyed cranberries one way or another. Whether drinking one of the varieties of cranberry juice, as a salad topping, as an ingredient in a dessert, or as the cranberry sauce staple in the holiday season meal in the U.S. We have all at least tried cranberries in one form or another. Have you ever thought about all it takes to get cranberries from the farm to our households? The season to harvest cranberries is upon us now in full swing to get them to us for the holiday and the remainder of the year in all varieties, we enjoy them on a regular basis.
Cranberries are one of the few types of berries native to the U.S, with Wisconsin and Massachusetts producing more than 90% of the cranberries grown in the country. As most in the transportation industry are aware, shipping produce is no easy feat, and
transporting cranberries is no exception. Cranberries need to be handled with care.
The cranberry harvest begins in mid-September for most cranberry-producing states and runs through mid-November. Harvesting dry and wet cranberries are accomplished in two ways. Dry harvesting is a popular way for many small farmers as it doesn’t require as much coordination and machinery as wet harvesting. A device similar to a lawn mower pulls the berries off of the vines and into burlap sacks. While this is an easier method, a greater percentage of cranberries do get damaged. Wet harvesting is a method used by
large farms that work with major juice companies like Ocean Spray. Bogs are closed off and flooded with about 18 inches of water. Water reels are sent off on the water to stir up the plants and knock the berries off the vine. Cranberries have little pockets of air in them, so they float to the surface of the water. Nets and floating barricades are then used to move the berries to where they can be collected.
Before cranberries can be shipped they need to be carefully packaged for their journey. Cranberries have tougher skin than most other berries, but they still need to be handled with care. There are a couple of methods used to package them. They can be packaged in plastic bags with holes to vent out excess moisture, or in clamshell packaging. They then need to be placed in sturdier boxes that can support the weight of them being palletized. If shipping cranberries in bulk, they are put in plastic or fiberboard bulk bins to be placed in the truck.
Cranberries do not typically require any temperature regulation if they are being transported short distances. Frequently cranberries are transported only short distances from the farm to where they are being processed. However, if transporting cranberries in very cold or hot temperatures, or if shipping directly to stores at greater distances from the farm, then cranberries need to be transported in a refrigerated (reefer) trailer. Cranberries transported in a reefer should be kept at a temperature of 36 to 39 degrees Fahrenheit. Cranberries generally can be stored for up to three to four months if kept at this temperature. Outside of these temperatures, cranberries can become damaged. If cranberries are kept too warm they will deteriorate and begin to rot within a few hours. If cranberries get too cold, they will turn brown and the inside will become tough and rubbery. It’s important that the temperature remains at the proper temperature to avoid any damage upon delivery.
As we get closer to the holiday season in the U.S., we think about all the good food we are going to enjoy with family and friends. More than likely, we will have cranberries in one form or another at the holiday meals. Enjoy and remember all it took to get cranberries from the farm to your dinner table.
Dave Comber is the manager of ALC Madison and has been with the Allen Lund Company for eight years. He worked for three years as the assistant manager, before being promoted to his current role. Comber brought with him over 20 years of management and customer service experience within the transportation industry from Northern Freight Service, Inc. and Schneider National, Inc. Comber attended Lawrence Univercity in Appleton, WI and earned a B.A. in Liberal Arts with a Major in History.
By Hunter McDade, ALC Dallas
Shippers and manufacturers are relocating in incredible numbers to Mexico as of late. Economic growth in Mexico has caught the attention of many U.S. manufacturers and shippers. Mexico has steadily improved transportation networks, has a young educated workforce, global commerce, and reduced costs.
The most glaring advantage is the cost and quality of the workforce. The average base salary for entry-level manufacturing workers in Mexico is approximately $3.50 per hour. Well below the federal U.S minimum wage of $7.25 per hour. Just because the pay is lower, however, does not mean that the quality of work is less. Mexico graduates on average 130,000 engineers and technicians annually. Lower labor rates also mean lower operating expenses, including costs for industrial space.
Proximity is another main benefit of manufacturing in Mexico. Shipping and supply chain management costs are much lower than in other international commerce such as Asia, Europe, and India. Mexico shares 52 access points which an estimated over 70 million automobiles transit yearly. We also have to consider the United States-Mexico-Canada Agreement (USMCA). The agreement between the three countries encourages free and fair trade and drivers of economic growth in North America. This agreement offers few obstacles for international business and reduces the cost of moving goods internationally.
Improvements in transportation networks, available workforce, and reduced costs have contributed to more produce being transported from Mexico to Texas. Each year the number of produce shipments from Mexico increases. 2007 was the first year Mexico shipped more than 100,000 truckloadsof fresh produce through Texas. The latest reported number was for 2020 when approximately 289,354 truckloads of produce crossed the border. It will be interesting to see updated numbers.
The trade agreement and the completion of the Durango-Mazatlan Highway in 2013, connecting the west coast and east coast of Mexico with a contiguous freeway, have been huge factors in these numbers rising. Fresh produce needs to be transported with care and efficiency, building highways such as the Durango-Mazatlan cuts down travel time, which means fresh produce being delivered promptly and freight savings in the transportation industry.
Hunter McDade, transportation broker, graduated from Ouachita Baptist University in 2019. Upon graduation, McDade began his career working in the transportation industry. He has been with ALC for over one year.
By Derek Robinson, ALC Savannah
As August is moving along, kids are back to school, summer is passing by, and fall is quickly approaching, the time is near. Pumpkin season. Here in Georgia, that harvest calendar runs from September 15th through November 15th , only a short five weeks!
Pumpkins are a part of the gourd family, which includes watermelon, cantaloupe, cucumber, zucchini, and honeydew. Northern Georgia has the lion’s share of acreage, over 600, of the pumpkin crop, though southern farmers are picking up the pace to join their neighbors to the north. Illinois does hold the
record as the pumpkin king, in 2020 they increased the area used to grow pumpkins to 15,900 acres, producing over twice as many as their next closest competitor!
In the next few weeks, drivers will begin positioning down to the southeast, pack their bags, finish pre-trips and start their engines. It has been a hot summer in the South, and many of us are hoping for a cooler fall and smoother roads to travel. Depending on the size of the crop, the harvest will move up
from Georgia and head north and the drivers and workers will follow.
Allen Lund Company has been hauling pumpkins out of Georgia for decades now, working with many of the same drivers’ year in and out. We have built some close relationships, knowing about their trucks,
where they came from, their family, and what their plans are for Halloween. Family is important to us here at Allen Lund. This fall take a day, carve a pumpkin, spend some time laughing and smiling with your loved ones and make sure to thank the farmers who grew it and the drivers who moved it for you!
Derek Robinson is a business development specialist in the Savannah office and has been with the Allen Lund Company since 2015. Robinson attended Savannah Technical College, specializing in Aviation Structural Mechanics.
By Brandon Huebler, Transportation Intern, ALC Cleveland
One of the current, major transportation issues is rising fuel prices, surging from the lack of Russian oil and high inflation. The average price per gallon for diesel has almost doubled, in the past year from $3.24 to $5.77, leaving the transportation industry scrambling. There is plenty of uncertainty within the industry regarding where prices will go. How much will the rising prices actually affect freight rates? More drivers have been asking for fuel advances here in the Cleveland office. So, it would seem that the diesel rates could be affecting the freight rates in many cases.
This rise in fuel prices hurts every industry though, not just the transportation industry. One example of an industry that is being indirectly affected by rising fuel prices and high inflation is the food retail industry. Studies show that grocery store food prices have increased 8.8 percent from the same period last year.
In looking at the USDA site regarding food prices, they cited the following specific increases – fresh fruit prices between 8.5 and 9.5 percent, cereal and bakery product prices between 7.0 and 8.0 percent, nonalcoholic beverage prices between 7.0 and 8.0 percent, and other food prices between 7.5 and 8.5 percent. In a move made by the current administration, a federal tax holiday will remove the 24-cent tax on diesel fuel.
What effect this will have on overall transportation costs is yet to be seen. The reality is that when the cost of moving freight increases, the cost of the items that are being moved will become more expensive.
By Robert Johnson ALC Richmond
Anyone who has worked in this industry has heard these words before: “I’ve been here three hours burning fuel, do you know when they’ll load/unload me?”
It’s never easy to talk a driver into being patient after telling them their load is ready, or the receiver has a dock door waiting. Delays at shipping or receiving run out the working clock on a driver’s ELD, burn diesel fuel unnecessarily on power units, and reefer units as well, should they be loading refrigerated items. With the push in the past few years for sustainability, keeping emissions low, and the ever-present argument for global warming, this topic has become a cornerstone of manufacturing operations across the globe.
“How do we do better with our sustainability?” Personally, I’ve seen more questions about sustainability and similar action plans when receiving RFI’s for manufacturer’s freight bids than I ever have before. With normal power units burning up to one gallon/hour while idling, and reefer units burning on average one gallon/hour while running – it can be costly to sit. With the national average for diesel at $5.71 (as of this writing), carriers’ fuel bills have the potential to impact their overall operating costs, in a large way. Additionally, carriers who haul refrigerated and perishable freight must run their reefer units on the ‘continuous’ mode, as opposed to ‘cycle’ or ‘stop-start’ mode, and will incur even greater fuel costs. Those micro situations turn into macro costs, and environmental impact, when we look at the bigger picture five or ten years down the road. On the flip side, greater fuel costs sure beat the alternative of an expensive temperature rejection and subsequent claim from trying to save a buck or two by running a reefer on ‘stop-start’ mode.”
One suggestion, per the DOE, states depots, shippers, and receivers alike can install external power plug-ins for reefer units, and a temp-controlled waiting area for drivers if wait times are unavoidable, to aid in truck and trailer emissions savings.
Per Statista, “The United States is by far the largest producer of transportation emissions worldwide”, with medium and heavy trucks accounting for 22% of CO2 emissions produced nationwide.
The question is – how much of this could be combated with a combination of lower dwell times at shippers and receivers alike, and the ability to plug into an electrical source to idle when necessary? And, if the impact study is as positive as we believe it would be, how do we begin to streamline communication between so many moving parts within the supply chain?
Robert Johnson has been with the Allen Lund Company since October of 2016 and is currently a Business Development Specialist in the Richmond office. Johnson attended Longwood University and earned a Bachelor of Science degree in Exercise Science. Robert is currently participating in an in-house management training program with ALC.
By Timothy Lanctot ALC Rochester
Vegetable and fruit markets, as well as many other areas of the food industry, have had to tackle a wide range of stressors and supply chain complications over these past two years. Weather-related factors, such as drought, flooding, colder than normal spring temps to name a few, have played a part in low crop production here in the Northeast.
Then of course with the pandemic, labor forces have had to deal with smaller than normal crews / staffs. The cost to the consumer has continued to increase to offset these factors, U.S. consumers paid increased prices for fresh / frozen vegetables and fruits from November 2019 to November 2021. Roughly an increase of 3.5% for frozen vegetables / fruits and approximately a 5.7% increase for fresh vegetables / fruits.
Over that same time period, you can start to see patterns for eating food at home as opposed to eating food away from home or a restaurant. Prices for food items eaten at home has increased by 10.4% overall and prices for food eaten out has increased 9.8%. These price patterns suggest that prices for vegetable and fruits here in the Northeast, have been less unstable, relative to other food sectors.
The Northeast is an economically important region for the production, and certainly the consumption, of many vegetable and fruit products, both fresh and processed. In the nine states that comprise the Northeast region, vegetable crops alone have generated an annual total farm value of approximately $800 million in recent years.
In 2022, as well as for the foreseeable future there are three major factors that will continue to shape the vegetable / fruit industry in the Northeastern United States.
First, at the farm level, the constant supply of productive and qualified labor continues to be the number one issue for all growers. Especially with fresh vegetable / fruit production, labor is the greatest factor in production costs. Of course, ongoing improvements in technology and the substitution of automated, robotic and intelligent machines for workers will continue to occur at the farm level. This change could lead to long run price reductions in production costs and improvements in crop quality.
Second, the consolidation of distribution and related businesses in the middle of the supply chain. There is widespread speculation that we will see additional structural change leading to greater industry concentration. This is part of a trend, but it has also been fueled by COVID-19, which has led to a reduction in the number of produce buyers and increased consolidation among major food retailers given their capacity to adapt to an evolving marketplace, including the expansion into online sales.
Farms in the Northeast will continue to have access to fewer and fewer buyers as more and more mergers and acquisitions occur. This will put added pressure on wholesale and farm-level prices. While at the same time, fewer buyers and increased consolidation among food retailers will increase market power for these food distributors when dealing with consumers. As a result, we could see higher prices for vegetables / fruits in supermarkets, throughout the “fresh” season.
Third, trends in the consumption of vegetables and fruit in the Northeast will be driven largely by income. Recessions and / or pandemics have the capacity to decrease nutritional intake and consumers would resort to more calorie-dense “comfort” foods. Although, some households during COVID-19 have shown to increase the time spent planning and preparing meals at home, there is evidence that this has led to an increase in overall dietary quality and a high vegetable and fruit consumption.
A large share of vegetables (approximately 40%) are typically consumed away from home in the foodservice sector, and any rebound of the foodservice industry is expected to increase overall vegetable consumption. As sited in the 2022 Northeast Vegetable Crop Outlook publication, “Frozen vegetable sales in the food retail market increased dramatically in 2020 and some of that increase was sustained in 2021; this suggests that COVID-19 allowed some consumers to rediscover frozen vegetables and that this category may end up having long run benefits from the pandemic.”
During the pandemic, many consumers became less interested in certain credence attributes (such as how or where the food was grown). It is expected that we will see a resurgence in demand for local and / or organic fresh produce, and this presents a real opportunity for Northeastern producers that are able to supply these markets.
By Zach Griebling, ALC Denver
Last year in the summer of 2021, Lake Mead and Lake Powell, two of the largest reservoirs in North America, reached an all-time low. Over time there have been different megadroughts that have occurred throughout history, the one we are currently in has lasted over 22 years. During these unprecedented times ranchers and produce farmers have dealt with water shortages as well as wildfires.
In February 2022, the federal government announced that they would not be deliveringwater to farmers in California’s agricultural belt which provides roughly 25% of our nation’s food. The federal government operates the Central Valley Project in California, a complex system of dams, reservoirs, and canals. This is the fourth time in the last decade that farmers of the San Joaquin-Sacramento River Delta have received no federal aid from the government.
With the uncertainty of the amount of water that will be available to farmers this year, we could see loads out of California drop, creating problems for carriers on the West Coast that depend on produce out of this area to support their business. California growers may need to shift their plans for acreage in the state if they have an option elsewhere. Other growing regions will need to pick up the slack because some crops traditionally grown in California will likely come from more local areas, which will further strain transportation needs. We will be watching to see how Mother Nature may affect rates not only in California but around the country.
Zach Griebling is a transportation broker in the ALC Denver office.