Posts Tagged “Keeping It Fresh”
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.
By Jenilee Curley, ALC Phoenix
A drought can adversely affect many sides of the supply chain industry, in particular, produce.
In areas that rely on rainfall for agricultural production, a drought can reduce crop harvest numbers and greatly affect farm profitability. Droughts can also affect the amount of snowfall and water flow needed for diversions to transport water to irrigated farmlands. These nfluences can lead to undesirable outcomes across all levels of the economy.
On a local level, farm income is reduced and the food processing sector is negatively impacted. On a national level, produce experiences price increases. The drought the Western U.S. is now experiencing has a lot to do with climate change and has had an enormous bearing on the agricultural industry. In particular, the Southwestern states of California and Arizona, where about two-thirds of the country’s vegetables, fruits and nuts are produced.
According to the California Department of Food & Agriculture, “California alone averages $50 billion in annual revenue in the agriculture industry.” In the past year, the drought has caused a $1.2 billion direct loss in California agriculture.
The snowfall in Nevada and Colorado mountains are a big contributor to the Colorado River, but with hotter weather in recent years, the snow melts a lot sooner in the year. This has consequently led to snowmelt contributing less and less water with each succeeding year.
The Colorado River is the core of the Southwest. Since the 1920s it has been providing water and power to seven states, including the 30 Native American tribes that reside in the Colorado River Basin. Until recently, the river has been running dry due to the severe drought. Lake Powell and Lake Mead are amongst the largest reservoirs in the United States. In 2000 they were full, but today only sit at 30% capacity, according to Brad Udall at Colorado State University.
Out of major concern, the water leaders in Arizona, Nevada and California signed an infamous drought agreement in 2019 that allows states to cut back on water usage. This cut back has been a huge strain on communities in California and Arizona, shrinking water supplies to tens of millions of people and farms that produce 90% of the country’s green leafed vegetables. Cruel evidence can be seen in Pinal County in Arizona, where acres of once planted land now lay unplanted, deserted by their previous farmers. Farmers fear that a decline in farm productivity, as a result of water shortages, will result in less profit for them.
A consequence of higher costs to maintain water supplies, will lead to higher produce prices for consumers across the country.
“This production increase in costs is affecting local governments as well as workers who transport food products.”, said Danny Merkley, director of water resources for the California Farm Bureau. Dwindling wells and dried up canals from less ground water to go around prompted President Joe Biden to sign the bipartisan infrastructure bill in November. The bill will help provide several billion dollars to Arizona and California farms.
With produce season around the corner, only time will tell which direction this year’s produce season should follow. The produce season in the Southwest will depend on the elasticity of supply and demand. What is certain, though, is this drought is harming our farmlands and as a result we need to better conserve our water usage. If we do not, we’ll find ourselves in an even tighter supply chain.
Jenilee Curley is a transportation broker in the ALC Phoenix office. She attended Arizona State University and received a degree in Supply Chain Management, before obtaining a Master’s in Secondary Education with an emphasis in Mathematics from Grand Canyon University.
By Lisa Towner, ALC Portland
Cherry season is right around the corner. The Pacific Northwest cherry season typically begins in early June and continues until late August.
A typical season will see 20-25 million boxes of cherries harvested in Oregon and Washington. Cherries are generally picked, chilled, and loaded onto a truck within 24-48 hours. Peak season usually coincides with the 4th of July. Many refrigerated carriers across the country plan their loads around cherry season every year.
April 2022 saw record low temperatures in Washington and Oregon. A cold spring brings many obstacles for local cherry growers. Several publications have predicted cherries to start later and the crop to be smaller than usual. Some predict the overall crop will be between 20% and 35% smaller than in the previous five years.
The Seattle Times warned that a cool April will also affect bees, as they struggle to pollinate the cherry blossoms. Less fruit available will also mean each box will have increased value due to basic supply and demand. This is a stark contrast to what growers were facing last year. In April 2021, the Pacific Northwest saw record high temperatures that reduced the cherry crop by 20%, according to Fruit Growers News.
Overall, many growers remain optimistic as the season approaches. Delayed cherry harvest in some growing regions may extend the season, which could be profitable for cherry producers in the Pacific Northwest. Most growers agree that the fruit will be high quality and ready for consumers to enjoy in the first few weeks of June.
Lisa Towner began her career with the Allen Lund Company as a transportation broker in 2002. She was promoted to assistant manager in the Portland office in 2015. In 2022, Towner was promoted to manager ALC Portland. Her transportation career began back in 2000 when she worked at the corporate headquarters for a national LTL company.
By Dave Comber, ALC Madison
Many of us like to enjoy a beer at a sporting event, while watching our favorite sports teams on TV, at picnics, or at any other gathering with family and friends. Most of us never think about the fact that beer is considered a perishable product. However, beer is a fragile product that needs care when being transported.
Beer is food. As with most foods, it deteriorates as a result of the action of bacteria, light, and air. To combat this, breweries, prior to bottling, make beer undergo some form of stabilization to extend its shelf life. The two primary forms of stabilization are sterile filtration, where the beer is passed through a microporous filter that will not let through any crunchy bits larger than 0.5 microns, and pasteurization, whereby the beer is heated briefly to kill any microbial wildlife.
The length of time it takes for a beer to become stale is determined by the alcohol strength and hopping level of the beer. Alcohol and hops help preserve beer – stronger beers with more hops keep longer. The freshness for a lager is about four months, five months for stronger craft brewed ales, and about six months to one year for high strength beers such as doppelbocks.
In most cases beer is at its best before it leaves the brewery. The further it travels from the brewery, the more difficult it becomes to maintain quality. Everyone involved in the production, distribution, and service of beer shares a responsibility for familiarizing themselves with, and maintaining product freshness. The sooner the beer can get from the brewery to the consumer, the better. Transportation providers play a large role in ensuring beer gets to the consumer expeditiously to ensure product quality.
When transporting beer, it is critical that carriers understand what it takes to cross state lines. Many states require permits to be able to legally haul beer in and out and through their state. All transportation providers need to ensure they have the proper permits to haul the product. Fines are possible, and delays getting the product to the store can occur if a truck is detained because they do not have the appropriate permits.
Since beer is a food product, the trailer needs to be inspected to ensure that it is clean and free of any odors. Some beer companies require that reefer trailers are used to haul their beer to slow down the oxidation process to keep it fresh longer. The temperature of beer hauled in reefers is generally around 40 to 45 degrees Fahrenheit. Keeping the beer at the proper temperature keeps beer fresh longer. Also, in the winter, if hauling beer in a dry van trailer, it is imperative that beer is not kept outside too long depending on the outside temperature. Beer will not freeze at 32 degrees Fahrenheit due to the alcohol and sugar in beer. However, if beer is being transported on a dry van in cold temperatures in winter months, it should be delivered straight through to the receiver, or early the next morning. If temps are extreme (15 degrees F. or less) beer loads should only be transported with a reefer trailer, with the reefer running between 40-45 degrees Fahrenheit.
The transportation industry plays a big role in ensuring that beer goes from the brewery to the consumer in a timely manner. When purchasing beer, remember to think about all that the transportation industry does to ensure the freshness of beer. Enjoy and respect beer, and always drink in moderation.
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 University in Appleton, WI and earned a B.A. in Liberal Arts with a Major in History.
By Harry Balam, ALC Los Angeles
One of the biggest problems the transportation industry is faced with is a truck driver shortage. I have been in this industry for 16 years and this is, by far, the worst I’ve seen it. However, one can argue that this isn’t a new problem. In fact, analysts and industry groups have warned of truck driver shortages for years.
Those of us in the industry have been aware of this problem for a while and have struggled to find drivers to cover loads. But the truck driver shortage has hit the average American much closer to home in the last few years. Empty store shelves caused by pandemic supply chain disruptions are just bringing this ever-growing problem to light and gaining the attention of the American people and lawmakers. No toilet paper = unhappy Americans.
According to the American Trucking Association, the truck driver shortage is currently at 80,000 and could climb to 160,000 by 2030.
It has been argued that the truck driver shortage isn’t exactly a shortage. “It’s a recruitment and retention problem,” said Michael Belzer, a trucking industry expert at Wayne State University.
In the U.S., “there are in fact, millions of truck drivers – people who have commercial driver’s licenses – who are not driving trucks and are not using those commercial driving licenses, more than we would even need,” Belzer said. He argues that it is because people have been initially recruited to the job and maybe even trained and then realize that the job is not for them.
So then, the problem lies in not just how to keep current drivers actively driving, but also, how to recruit new drivers.
One idea is to help pave the way for drivers under 21 years old to enter interstate trucking. I know…sounds scary, right? I’m currently trying to wrap my head around trying to teach my teenage son how to drive. The thought of teen drivers on the interstate pulling an 80,000 pound machine is more than a little alarming. But, the more I read about it, the more I feel like it could be an avenue worth pursuing.
President Biden signed a $1.2 trillion bipartisan infrastructure package into law last November. There is a lot included in that hefty price tag, one of which is the bipartisan DRIVE-Safe Act. The DRIVE-Safe Act focuses on one of the biggest obstacles to recruiting younger drivers, the requirement that they are at least 21 years old to drive in interstate commerce. One can obtain a commercial driver’s license at 18 but federal law has prevented them from crossing state lines.
“The DRIVE-Safe Act addresses our industry’s largest challenge by creating an apprenticeship program that will help train the next generation of safe, skilled drivers,” said Dan Van Alstine, who serves on the board of the ATA. The Act recognizes the fact that teen drivers have higher rates of auto accidents so it included added safety and training standards for newly qualified and current drivers. The new drivers must complete at least 400 hours of on-duty time and 240 hours of driving time in the cab with an experienced driver.
Also, every driver will be required to train on trucks equipped with new safety technology including active braking collision mitigation systems, video event capture, and a speed governor of 65 miles per hour or less and automated manual transmissions.
Also aimed at helping the retention and recruitment problem and is a new proposal to create a new refundable tax credit for truckers. On April 1, Reps. Mike Gallagher (R-WI) and Abigail Spanberger (D-VA) introduced a bipartisan bill that would create a tax credit just for truck drivers as a way to attract and retain more drivers in the industry. The Strengthening Supply Chains Through Truck Driver Incentives Act would create a new refundable tax credit of up to $7,500 for truck drivers holding a valid Class A CDL who drive at least 1,900 hours in the year. This tax credit would last for two years (2022 and 2023). It would also create a new refundable tax credit of up to $10,000 for new truck drivers or individuals enrolled in a registered trucking apprenticeship.
It is too early to know the future of this very newly proposed bill, but one thing is for certain – something needs to change. Just because things have been done a certain way for decades doesn’t mean we should keep doing it that way. Change brings opportunity. Like John F. Kennedy said, “Change is the law of life. And those who look only to the past or present are certain to miss the future.”
Harry Balam attended Los Angeles Mission College and began working as a transportation broker in the dry division for ALC in 2006. After two years he moved to the refrigerated division. He currently works as an operations supervisor in the ALC Los Angeles office.
By Brandon Demack, ALC McAllen
On the Saturday before Super Bowl Sunday, avocado imports from Mexico into America were put to a complete halt after threatening messages were sent to a United States plant safety inspector’s official phone.
The avocado industry is another victim of the turf battle between the cartels in the western parts of Michoacán and will put a strain on avocado imports into the United States for the foreseeable future. The U.S. health inspector was carrying out inspections in Michoacán when the threat was received, but luckily for consumers, it was the day before the Super Bowl so all shipments of avocados for Super Bowl parties and restaurants were already shipped and weren’t affected.
Avocados are considered “green gold” in Mexico, as it is a multibillion-dollar business and the industry even broke records in 2020 to become the world’s largest producer of “green gold.” Unfortunately, however, as the growth continues to rise, so does the threats from the nine identified cartels operating in the area.
In response to the issues going on with cartels, farmers have been starting to arm themselves and establish self-defense groups to combat this to the reluctance of Mexican President Andrés Manuel López Obrador. This violence and issues in Michoacán will hopefully subside sooner than later.
The U.S. responded to the threatening messages by putting more security measures in place for inspectors. On February 18, 2022, it was announced that the inspection of avocados in Michoacán would resume. The rapid response to the threat shows the importance of a working supply chain between Mexico and the U.S.
It would have been hard to fill the large gap left by the lack of avocados coming from Mexico. Mexico provides around 80% of avocados consumed in the U.S. and a longer ban would have drastically impacted the supply of avocados in the U.S. With the resumption of imports, consumers do not have to worry about a shortage or price hikes and can continue to enjoy avocados.
Brandon Demack has been with the Allen Lund Company since July 2011. He first started in the Dallas office and in March of 2019 he transferred to the McAllen office becoming the operations manager of produce. Demack attended the University of North Texas with a Bachelor of Science in Logistics and Supply Chain Management.
By Gerald Ebert, ALC Richmond
Is the severity of the “supply chain crisis” a direct result of the COVID pandemic? Probably.
Are 15 months of consecutive Year-Over-Year freight cost increases a direct result of COVID and the “supply chain crisis”? That question is not as easily answered.
Most of us in the freight business work in a right here and right now world. We win and lose looking into a crystal ball that has been very cloudy the last few years. We work hard to find commonalities with past trends to help give us even the slightest advantage.
Even with years of experience and more real-time data than ever before at our fingertips, every tight truck market is the “tightest we have ever seen”, while a loose truck market seems to add hours to every day.
As everything these days is a “crisis”, it is not uncommon to hear that the national reopening that followed the COVID shut down was the beginning of the current capacity “crisis.”
It’s true, that average truckload prices did increase approximately 80% from the end of the COVID shutdown through the close of 2020. This trend continued through 2021. Only as 2021 closed, did we see the Year-Over-Year gap shrink to reasonable comparisons.
With all that has happened since we found ourselves adjusting to a new and often unwelcome reality, it’s easy to forget that before The COVID Shutdown, The Great Reopening, The Workforce Shortage, The Supply Chain Crises, and Surging Inflation, there was January, February, and March of 2020.
I recall having numerous, maybe daily, conversations with colleagues in those three months in which we opined, “This the tightest market we have ever seen.” It wasn’t. In fact, it didn’t really come close in comparison to the capacity challenges we faced in June and July of 2018.
The industry, and those of us that work in it every day, were simply conditioned by an unusually long 24 to 26 month cycle of demand and rate decline. It is likely that the COVID pandemic was just an unpredictable pause of the inevitable rebound we are still dealing with today.
2022 is not showing any signs of a downward correction. Most are predicting mild 3-5% increases when compared to 2021. The reality is that we won’t know until the year concludes. That’s the way transportation works. Hindsight is crystal clear. The only thing crystal clear about the future in transportation is that it will be different than it was the previous year.
The market doesn’t recognize any calendar or bid cycle. It doesn’t show mercy for the unpredictable. When the market destroys your budget, it shouldn’t destroy solid relationships that have been built over years.
2021 proved, yet again, that any commodities market is measured by a simple supply and demand equation. From 2018 through 2019, that equation favored the shipper. For most of 2020 through today, and for the foreseeable right here and right now future, it has forced shippers to battle for capacity. Trusted resources and strong relationships have never been more important. That crystal clear hindsight view will verify those relationships.
Gerald Ebert began his career with Allen Lund Company as a transportation broker in the San Antonio office. In 1999, Ebert transferred to ALC Richmond and was promoted to the manager of the Richmond office in 2000.