Posts Tagged “transportation costs”
“Rates keep going higher and higher, adding difficulty to the already complex produce industry.”
Intergrow Greenhouses, a farming company located in Upstate NY, focusing on the production and sale of greenhouse grown tomatoes, is thankful to have their own private trucking fleet to help service their customers. Stating the primary goal of their own fleet is to give the best possible service to top tier retail customers. Understanding the importance of “On-time, In-Full” is fresh, perishable produce they have taken transportation into their own hands!
“When you contract a load through an outside broker or carrier you lose some of the visibility and control required to really deliver the best service possible. That’s why we’ve invested in our own fleet and in a freight market like this it has really paid off having the ability to run our own loads.” Explains Dirk Biemans, President of Intergrow Greenhouses.
“Although we are close to major markets, there is a lot of freight needing to be moved in this area of the US and there is, and has been more demand than supply in the market. That’s why we are so grateful to be running some of our own trucks.” Says Bill Cook, a 30yr transportation veteran and current Logistics Manger at Intergrow Greenhouses. “During the peak season we have as many as 50+ loads a week shipping out of our facilities, of course our own band of guys can’t handle of that high volume, so they remain on our retail accounts, providing consist and reliable transportation for the business. “ Currently expanding their business with another 10acre greenhouse, Intergrow says they are first and foremost a grower and farmer but saw the need to deliver consistent quality service to their customers in order to grow their business. “Here at Intergrow we’re not only striving for the highest quality product but also reliability. Our customers need to have confidence we can deliver of premium product, reliably and consistently throughout the year.” says Kris Gibson, VP of Sales and Marketing “This last part of the puzzle, transportation, has really helped us grow these past years.”
As rates increase Intergrow has also seen their own fleet benefiting them in other ways… cost control. “Our own transportation costs have increased as well, but in a controlled in regimented manor.” Says Biemans. “We are not at the mercy of the market for some of our most important loads. “Rates keep going higher and higher making it adding difficulty to the already complex produce industry. No matter the freight market you are expected to deliver product under your contracted price.”
Intergrow is currently looking to hire additional drivers to their fleet and asks anyone interested to email Bill Cook at logistics@intergrowgreenhouses.com.
The market dynamics that have led to higher transportation costs were a long time coming and won’t quickly be solved.
Industry leaders discussed some strategies to deal with the problems during a recent United Fresh Reimagine webinar on the future of transportation.
“We project this is a multiyear problem, probably 48 months or longer,” said Todd Bernitt, Vice President – Managed Services for Robinson Fresh.
“The driver pool problem may take a decade or longer to play out,” he said about the driver shortage.
He said a normal load-to-truck ration should be 2.5 or 3 loads per truck. Now it’s about 8-1.
“We’ve seen peaks I’ve never seen before,” Bernitt said, citing 30-1 ratios from Florida this spring and 40-1 from Texas during the winter storms earlier this year.
“All of this is market based,” said Brian Kocher, President and CEO of Castellini Company LLC. “All of this fits together. Regional growing will change the strategy, as with urban, greenhouses and vertical farms. We’re building as much flexibility as we can and advise our partners to do that.”
One simple solution to improving driver retention is to treat drivers and transportation companies better, said Jeff Moore, Vice President of Sales for Tom Lange Company Inc.
“Treat carriers like your best supplier or your best customer,” Bernitt said.
By Matt Sarko,Transportation Broker, ALC Cleveland
Since the beginning of last year, the increase in the cost of freight has not only impacted the transportation industry but the economy as a whole. Transportation costs are now at an all-time high as drivers and trucks are currently in short supply.
Food prices rose 3.9% in 2020 and the U.S. Department of Agriculture anticipates another 2% to 3% increase for costs in 2021. The increase in transportation prices is primarily due to the shortage in drivers causing trucking companies to increase wages to attract more employees.
Additionally, the market is experiencing a shortage in semi-conductors, which is keeping new trucks from coming on the market and has since exacerbated the issue. The increase in transportation costs only adds to the supply chain problems for growers, suppliers, and retailers as they are still experiencing the effects of congested ports as well as the winter storm, which both continue to have widespread impacts across the U.S.
Furthermore, the rise in the price of fuel is also a major contributor to the inflated freight costs. As a result of these supply chain complications, retailers have begun raising prices on a number of different goods in order to offset the shortages and transportation costs. “The rise in transportation prices affects everything from the farmer and the tractor, to the fertilizer and even the plastic hamper you put the product in.”
With the supply chain in disorder, we will continue to see a rise in the price of consumer goods. Moreover, the cost of transportation will ultimately affect the prices of publicly traded companies such as Bed Bath & Beyond and General Mills, considering they have alerted investors about these problems on their earnings call.
For transportation brokers like ourselves, taking advantage of the spot market whenever possible might be the best way to combat the losses taken on contractual year round rates as freight prices continue to rise, and to also keep important products, produce, and perishables moving across the country.
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Matt began working fulltime for the Allen Lund Company in August of 2020 as a transportation broker for the Cleveland office. He originally started working his summer breaks during college as a broker’s assistant for the office. Matt joined the company with a degree in Finance from John Carroll University.
By Eco Pack Systems
Eco Pack Systems, a groundbreaking maker of transport packaging, is rolling out its new low-weight container solution to the US market. The new container, which made its debut recently at the PMA Fresh Summit in New Orleans, enables fully customizable point of purchase branding, dramatically reduces transportation costs and is made from food grade material. It maximizes food safety, reduces product spoilage and damage with maximum airflow control and is the most sustainable packaging solution available today.
The patented Eco Pack system consists of an easy-to-assemble plastic frame and two lightweight plastic sleeves that together create an economical, multipurpose, recyclable box. The frame has the same dimensions as standard paperboard cartons and plastic crates, and is suitable for palletizing. The bags are customized for specific commodity and product application, and designed for optimal ventilation, hygiene, food safety and waste reduction. There are currently multiple sizes with three base dimensions at several heights, plus a unique tray for bananas. Additional sizes can be produced upon request. “The Eco Pack box is efficient, clean, has multiple uses and is recyclable. It’s perfect for fresh produce retailers, grower/shippers, exporters and other distributors and suppliers. We believe it provides a financially preferable alternative to the paperboard boxes and plastic crates now prevalent in the industry,” said Danny Bartal, CEO of Eco Pack Systems.
Benefits of the Eco Pack solution include:
- Recyclable – 100% reusable packaging that can be recycled indefinitely
- Weight – 50% less than similar cardboard or plastic packaging
- Economical – 30%-70% lower cost than competing packaging systems, as the frame is reusable and only the recyclable sleeves need to be replaced
- Hygienic – New, clean box every time, with an optional fully organic biodegradable sleeve
- Green – Lower energy requirements for production and in transportation than any other solution
- Versatile – Suitable for a wide variety of products, including fruit, vegetables, seafood, baked goods, dairy and fresh meat and poultry.
- Customizable – Fully adaptable sleeves for a wide variety of merchandising applications.
About Eco Pack Systems
Founded in 2008, Eco Pack Systems is a privately held company that markets a unique, patented container solution to the extended retail supply chain. The solution offers users cleaner, greener and healthier transportation of fresh and processed foods at a reduced cost.
The California drought, which has prompted emergency conservation efforts in its fourth year, has forced California farmers to abandon thousands of acres or pay more to water them, according to a recent article in the Pittsburg Tribune-Review. Anxious grocers and restaurants are watching closely for impact on the supply and price of berries, walnuts, avocados, tomatoes and other pantry staples.
Over a fifth of all American farms growing fruit, tree nuts and vegetables are in California, according to the USDA. The Golden State grows more than 200 crops and is the nation’s dominant supplier of nuts and produce including grapes, olives, peaches, raspberries, strawberries and lemons.
Issues on the farms have not reached the produce aisle. Typically, increases in farm prices for fresh fruit and vegetables show up at the retail level a month later. But a confluence of factors have counterbalanced the price pressures from water scarcity, the Tribune-Review article states.
A complicated array of transportation and labor costs, the contracts that restaurants and supermarkets have with suppliers, market competition and macro economic trends are among the factors that determine the price of food. Only 19 cents of every dollar spent on food is tied to farm costs, said Annemarie Kuhns, a USDA economist.
Price inflation has been tamped down so far because the strength of the dollar against foreign currencies made foreign produce cheaper, Kuhns said. Low fuel prices has eased transportation costs.
That could change as fuel prices rebound and the drought extends further into the growing season. Water-intensive crops such as berries and nuts, where California holds an overwhelming share of the market, stand to be the most affected, said Timothy Richards, a business professor at Arizona State University.
“If we don’t have that supply from California during the season, then prices will run up,” he said.
California accounts for 86 percent of avocado production in the United States, and if unable to replace that supply with avocados from Mexico, it would have to raise menu prices.
Salinas Valley mixed vegetables – grossing about $4200 to Dallas, $7100 to New York City.