Posts Tagged “Kenny Lund”
Here’s more proof that some basic, fundamental changes are taking place in California regarding produce trucking. The two most cited reasons are excessive regulations – and the drought. This deals with the drought.
Many folks recalled not too many years ago when it was a rite of spring that truck rates would go crazy in California. In particular, the rates would be lowest the first part of the week, but might increase 30 to 50 percent by the end of the week as truck supplies were depleted. While some of the reasoning can be placed on long term negotiated rates (for a year, or at least a shipping season), it is suspected that less production or volume is coming out of California while Mexico and Canada are increasing. (Also, see the interview with Kenny Lund of the Allen Lund Company, from June 4th).
More California crop acreage is being removed from production in 2015, according to the California Department of Agriculture.
At 564,000 acres, fallowing will be up 33% over last year as growers cope with the state’s fourth year of drought, according to the preliminary estimate by University of California, Davis researchers.
They compared this year’s drought effects to years of average water supply. Surface water is even scarcer in 2015 than last year.
Growers are forecast to pump 6.2 million acre-feet of groundwater to partially make up for an 8.7 million shortage. The added pumping is projected to cost $595 million. When pumping costs, job losses, livestock, dairy and other factors are added in, the state’s agricultural industry anticipates drought losses of $2.7 billion.
The estimate pegs direct job losses at 8,560 full- and part-time jobs. But when spillover effects and increased pumping costs are factored in, total losses are closer to 18,600. The loss in irrigated crop revenues statewide for vegetables is estimated at $107.7 million, and for orchard and vines at $82.8 million.
If the California drought continues, the consequences for produce trucking, consumers and agriculture will become even more severe.
Salinas Valley vegetables – grossing about $5100 to Chicago.
San Joaquin Valley fruit and vegetables – grossing about $7800 to New York City.
Kenny Lund doesn’t argue with the American Trucking Associations annual study, American Trucking Trends, which shows independent truckers and leased owner operators making $56,167 on average in 2014, which was 7 percent more income than the previous year. However, the vice president of operations for the Allen Lund Company, a third party logistics provider, says freight rates still aren’t increasing enough and operating costs are high.
For example, gasoline in California is $4 per gallon, while Number 2 diesel is about $3.50 per gallon. Take on excessive government regulations, plus an economy that leaves a lot to be desired, and Lund doesn’t see the freight rates keeping up with other costs.
“Truckers are making more money, but the rates aren’t up as much as expected, and the economy was expected to be much stronger,” Lund says.
He points out produce trucking is still dominated by companies with five trucks or less.
“God bless the owner operators out there. They don’t realize collectively what they do for this country and how important they are,” Lund surmises. “We try to convey that as a company and treat these owner operators with the respect they deserve. They are a critical component in the economic system of the U.S.”
He recently heard someone point out if all access to Los Angeles was cut off, there is only a four-day supply of food available. Lund calls that thought “sobering” and notes people just do not realize what a great transportation system has been built in this country due to all of the small companies working together.
“With the efficient distribution system throughout the U.S., you can pretty much get strawberries anywhere in the U.S. the year around, and this is true with most major commodities,” he says.
As for Allen Lund Company, he is particularly excited about a division of the firm, ALC Logistics. He developed the company’s Transportation Management System, building it from the ground up. It is the first one created and provides software solutions ranging from claims management to freight audits, and carrier contracts, among other features.
“It is pretty exciting. We are running about $1.4 billion through the system, working with the companies we have now, and we are just getting started,” Lund says.
As for the trucking industry itself, Lund is very interested in the development of driverless trucks. For example the technology is now available where you can follow someone on I-40 from New Mexico to Arkansas and never touch the steering wheel. He sees this addressing problems associated with hours of service regulations.
“I think we’re only five years or less away from it (driverless trucks),” he notes.
“If you can sell this to the driver by saying you are almost out of hours, then you put it on auto pilot. The driver can then go to sleep while the truck is moving down the road, and have your hours still available when you arrive at destination,” Lund observes. “It makes the single drivers like teams.”
(This is part II of a two-part series. The Allen Lund Company was formed in 1976 by its namesake. I have known Mr. Allen Lund nearly since the founding of the company. His son Kenny Lund joined the company 26 years ago this month. At that time the operation had 32 employees. Today Allen Lund Company has 500 employees, arranges about 250,000 loads a year, of which about 40 percent is with fresh produce. The company has 30 offices nationwide and will soon break the $500 million mark in annual sales. — Bill Martin)
Many folks involved in fresh produce transportation are wondering what is going on in California. Despite the state growing and shipping about one-half of the nation’s fruit and vegetables, rates have remained relatively flat during the heaviest volume period of the year.
In search of answers, we turned to Kenny Lund, vice president of operations for the Allen Lund Company of La Canada, CA, a transportation brokerage and logistics company that has been in business nearly 40 years.
“I think we’re in a historic…incredible shift in produce,” Lund states, “where product is being grown where it hasn’t been grown before. It’s hard to get the numbers, but it’s looking like there’s a 20 percent increase in produce from Mexico.”
He also cites production and shipping increases from Canada, as well as boat arrivals with imported produce from around the globe.
“But there is not an increase from the most fertile land in the world (California); there’s a decrease,” Lund contends. “I think the decrease is more significant than people will say.”
While acknowledging the drought has a lot to do with it, Lund sees an attack by environmentalists on the California agricultural industry as being a factor. He points to cuts in water allocations to agriculture and water going elsewhere due to environmental reasons.
He says there has been somewhere between 400,000 and 800,000 acres of California farm land being placed out of production.
“It is political more than anything,” Lund states. “They build pipelines for everything, but for some reason we can’t do it for water. You keep seeing a reduction of water in California and an increase in people (living here). The drought is more political than the actual drought. There is a lack of water going to the farms. The Columbia River going into the ocean is enough in itself to handle California farming needs. But the environmentalists will not let that happen.”
Similar to a statement Lund has made many times about the over regulation of trucking, he says the excessive regulation of farms is “amazing.” For example he recently talked to someone in charge of compliance with a California farming operation and was told she had to answer to 42 different government agencies.
Lund believes this a contributing factor to Allen Lund Company having more produce loads than ever crossing the border from Mexico into California, Arizona and Texas.
“It’s a contradiction. 50 percent of the nation’s produce is grown in California. That is under attack by a lack of water due to over regulation of farming, as well as trucking,” Lund says. “Government is over regulating diesel engines, farming equipment, pumps; all these things are under severe attack.”
Each of these factors are contributing to what he calls a “historic” shift in produce shipments from California. Lund talks of the Autopista Durango-Mazatlan, a 143-mile highway spanning from the growing regions of west Mexico to Texas ports of entry that opened last year. As a result business in McAllen, Tx is booming.
While California produce trucking rates are remaining rather flat, Lund says rates are up significantly in Texas, New Mexico and Arizona. At the same time, Florida is “mixed” because it has a very similar growing and shipping season to Mexico with which it competes. Still, he notes Florida does not have nearly as many regulations, plus that state has plenty of water.
(This is Part I of a two-part series. The Allen Lund Company was formed in 1976 by its namesake. I have known Mr. Lund almost since the founding of the company. His son Kenny Lund joined the company 26 years ago this month. At that time the operation had 32 employees. Today Allen Lund Company has 500 employees, arranges about 250,000 loads a year, of which about 40 percent is with fresh produce. The company has 30 offices nationwide and will soon break the $500 million mark in annual sales. — Bill Martin)