Posts Tagged “produce freight rates”
Produce shipments should start returning to more normal movement now that we are past the holidays and receivers are starting to replenish their stocks. Here’s a look at produce shipping from several areas around the country.
Western Lettuce Shipments
Lettuce shipments, led by Iceberg and romaine are originating primarily out of the Yuma district of Arizona. Other leading items are celery, broccoli and cauliflower, although cold weather has cut into volume. Loadings are much lighter from the California desert, primarily from the Imperial Valley, Coachella Valley and Palo Verde.
Washington’s Yakima and Wenatchee valleys are averaging bout 2500 truckloads per week. New York state, led by the Hudson Valley, is shipping about 250 truckloads weekly. Michigan is third in volume about 175 trucks per week.
Washington apple shipments – grossing about $4500 to Dallas.
Texas Produce Shipments
Overall, it’s still relatively light for produce items here. This is light to moderate shipments of grapefruit and oranges from the Lower Rio Grande Valley. The is better volume of Mexican tropical fruits and vegetables crossing the border.
South Texas citrus and Mexican produce freight rates were up 15 to 20 percent during the holidays, depending on the destination; for example, grossing about $2900 to Atlanta. Rates could drop with the holidays past us.
East Coast Produce Shipments
Pretty slim pickin’s over all. If you’re coming out of Florida with a partial load, there’s very light volume of cabbage and greens being shipped from Southern Georgia…Eastern North Carolinas is loading sweet potatoes in moderate volume….Dry onion shipments are coming out of Orange County, NY. Partial loads of cabbage are coming out of central and western New York. Apples are available from the Hudson Valley, Champlain Valley, plus central and western areas….Aroostrock County, Maine has light volume with potatoes.
North Carolina sweet potato shipments – grossing about $3000 to Boston.
The initial estimate for Washington apple shipments was about 140 million boxes, however, some growers believe it could now hit 150 million boxes.
In fact, the Washington apple crop is so huge some growers are already mentioning sending some of the fruit originally intended for the fresh market, to the processed market, or being used for cow feed. We expect to hear this talk coming from Idaho potato farmers, who are notorious for over production, but not the apple folks!
There also are concerns by apple growers and shippers about the availability of transportation in the midst of large volumes.
One shipper recently stated, “We have needed almost 300-400 more trucks each week out of the state of Washington to deliver this product. And that’s been difficult especially this time of year as the Northwest begins shipping Christmas trees, so trucks are much more difficult to obtain.”
Under these circumstance one would expect produce freight rates for apple hauls to be stronger this year – something we will find out in the weeks and months ahead.
Washington state apples from the Yakima and Wenatchee Valleys – grossing about $6800 to Orlando.
It was in early June that truck broker Kenny Lund saw the spot market on produce freight rates hit $10,000 for loads between California and the East Coast. While part of the reason was seasonal volume increases for fresh fruits and vegetables, and truck availability, he saw other factors contributing to the rise in rates.
Lund was speaking at the 2014 convention and exhibition of the United Fresh Produce Association in Chicago June 11th.
The vice president, support operations, for the Allen Lund Co. Inc. of LaCanada, CA cited the recently completed 72-hour U.S. Department of Transportation check points held across the country. This was delaying truck schedules.
Another factor was the CARB (California Air Resources Board) regulations, which Lund said were resulting in more truckers refusing to come to California. It takes a minimum investment by truckers of $8,000 to comply with CARB regulations.
“It is impossible to be compliant and move significant amounts of refrigerated product into and out California,” Lund stated
He noted less than 30 percent of refrigerated carriers are compliant with CARB and truckers simply do not have the money to become compliant.
In an effort to assist produce haulers, he noted Allen Lund Co. provides $1.5 million a week in advances to drivers.
Lund, who has been with company founded by his father and namesake 25 years, said there were over 50,000 carriers in the United States, but the average trucking company has less than six trucks.
“90 percent of the trucking companies have six or less trucks,” he noted. At the same time the percentage is very low of trucks having team drivers.
Getting more specific, Lund said refrigerated carriers are dominated by owner operators and companies with less than five trucks.
As for CARB, Lund said he has “fought tooth and nail with them” (California bureaucrates). Since the CARB rules were implemented in 2004 fines have been extended to brokers, shippers, receivers and specifically to drivers.
“It (CARB rules) has driven a lot of drivers away from California,” Lund stated.
He also was critical of hours-of-service regulations, and particularly the 34-hour restart. While the restart requirement may be okay for local trucking, it is not good for long haul drivers.
During a question and answer session, Lund said the reason more large refrigerated carriers do not haul produce is because “it comes down the driver having a stake in that load. I see a lot of large carriers get in and out of hauling produce. It comes down to not having enough good drivers,” Lund concluded.
There seems to be very few examples of bumper, much less record setting produce crops around the country this spring and summer. That will probably translate into produce freight rates not being exceptional – at least for this time of year. Typically, the heaviest volume and highest rates hit sometime in May and continue through June and July.
For example, California avocados, lettuce, many other vegetables and stone fruit are not expected to set any shipping records. You’ll also see the results of this lower volume translating into significantly higher retail prices at your local supermarket.
Other shipping areas around the country expect small volumes of produce to be shipped, due to weather factors, ranging from Texas to Michigan and the Southestern U.S.
There have been produce industry estimates ranging from a half-million to 1 million acres of agricultural land likely to be affected by the current California drought, with between 10 and 20 percent of the supply of certain crops possibly lost. California grows and ships around 50 percent of the nation’s fresh fruits and vegetables.
One study estimates the following possible price increases due to the drought: avocados, up 17 to 35 cents to as much as $1.60 each; berries, up 21 to 43 cents to as much as $3.46 per clamshell; broccoli, up 20 to 40 cents to a possible $2.18 per pound;. grapes, a rise of 26 to 50 cents to a possible $2.93 per pound; lettuce, could rise 31 to 62 cents to as much as $2.44 per head; packaged salad, up 17 to 34 cents to a possible $3.03 per bag; peppers, up 18 to 35 cents to a possible $2.48 per pound; and tomatoes, likely to rise 22 to 45 cents to a possible $2.84 per pound.
“We predict the increased prices will change consumer purchasing behavior,” Sherry Frey, vice president of Nielsen Perishables Group, said in a release. Frey said that certain consumers — young consumers of avocados, for example — will be more heavily affected by the price increases.
All of these factor don’t even take into consideration mounting rules and regulations by state and federal governments on the trucking industry. The hours-of-service rules implemented last year alone will undoubtedly reduce the number round trips. There is still a push for electronic on board devices, and the feds want higher insurance requirements for truckers — and the list goes on and on.
So will there be any $10,000 gross freight rates on coast-to-coast produce hauls this year? Probably not, or at the best very few. But no one really knows for sure.
California spring produce shipments are gradually building in volume as we look at Salinas vegetables and some San Joaquin Valley stone fruit. But overall, this spring and summer in California doesn’t appear to be shaping up as any barn burner when it comes to volume and loading opportunities. Between the continuing drought in the state and only moderate volume with many fruits and vegetables, I don’t see produce freight rates setting any records.
Salinas Valley vegetables have had some ups and down in volume recently due to weather, but head lettuce and other items should be significantly increasing as we get closer to May.
Broccoli and cauliflower shipments are expected to fluctuate over the next several weeks.
Meanwhile, Huron lettuce shipments from the Westside district of the San Joaquin Valley have been lighter than normal this season as the one-month spring shipping season comes to a conclusion.
California Cherry Shipments
The California cherry harvest is shaping up to be a light crop this year
California initial loadings should start around Easter in the Arvin district and peak cherry shipments should occur from mid-May into the first week of June, with product becoming available from the San Joaquin Valley further north in areas such Fresno and Reedley.
Salinas Valley vegetables – grossing about $7000 to New York City.
Hunts Point Wholesale Produce Market is the largest produce terminal in the world, moving 3 billion pounds of fruits and vegetables from 55 countries and 49 states through its stalls each year. The 113-acre complex has more than 1 million-square-feet of shop and storage space, houses 42 merchants, employs 10,000 people, and generates $2.4 billion in sales annually.
Hunts Point, located in the South Bronx, serves New York City and the tri-state area (New York, New Jersey, and Connecticut), bringing fresh produce to an ethnically diverse population of more than 23 million. The terminal facility sells to retailers, secondary wholesalers, restaurants, and other foodservice outfits.
For over 10 years Hunts Point has faced a challenge due to operating in a 1960s-era facility that’s both in need of repair and has been outgrown.
Storage is limited, and the layout was built for smaller trucks than today’s 53-foot trailers. Infrastructure (including electrical needs) is inadequate, and the cold chain is a challenge. Over the past several years, there’s been questions, if rebuilt, is there enough room on the existing campus to accommodate a new market that will last the next 50-plus years.
PRODUCE FREIGHT RATES
A combination of fewer trucks due to the economy reducing the number of owner-operators and carriers, plus fuel costs led to what wholesalers claim were record freight rates last summer.
“Freight has been very rough,” says Hunts Point wholesaler Jim Hunt. “Up until July Fourth, freight out of California to New York was astronomical, in the $8,500 to $9,000 range. Also, trucks were hard to come by, and this is something we will have to deal with going forward.”
“It gets broken down as a function of the delivered cost,” explains Hunt. Hypothetically, if freight is $8,000 or $9,000 for a 20-pallet truck, the f.o.b. price is $5 per box. And if the freight is another $5, this puts the merchant in at $10. “If you’re trying to make 15 percent, you have to gun for $12 and fall short at $11,” he said.
“If freight were to continue to go up the way it has, it would be unsustainable for the produce industry,” concedes wholesaler Matthew D’Arrigo. “But the beauty of our industry is that we don’t have government regulations setting freight rates; we have the laws of supply and demand.