Posts Tagged “truck supplies”
By Paul Nesbit, Account Manager, ALC Des Moines
Why are the rates so high? Where are all the trucks? When will it go back to normal?
All modes of transportation have been struggling to find these answers, the light at the end of the tunnel so to say. But the reality is we don’t have these answers. The last year has been challenging for obvious reasons, and as the containment of the COVID-19 outbreak continues to progress, so does the demand for transportation capacity.
How do we continue to service our customers, source capacity, and stay profitable all at the same time? Is that even possible? Yes, it is. And it boils down to a better understanding of the market, drivers, and communication.
The usual conversations between brokers and customers are focused on load details, commodities, quantities, temps, ready dates, and so forth. But, why not also discuss the market conditions related to bigger picture items? Information is a powerful tool for productive decision making and for educating our fellow supply chain members. We can work together to share insights and forecasts too!
As the gap between truck supply and freight demand continues to spread, most of us can attest it’s the tightest truck market in decades. Couple that with a driver pool which continues to age due to more drivers retiring while fewer drivers enter the workforce, and we all face an extremely fragile market.
Carriers are doing anything possible to help combat this issue and get drivers in the seat. We hear of this from our carrier partners every day. We also find that the small to midsize carriers are more successful in growing their fleets than the larger players as it’s easier to go from 5 trucks to 10 than it is from 50 to a 1,000.
At Allen Lund we are blessed that our core carriers fall into this category as it allows us to keep up with our customer demand in a way their asset pools cannot. All too often we find ourselves in a position of wanting to fulfill a buyer’s need for transportation and an obvious lack of supply that fits all of their freight parameters. Whether that be finding capacity within their vendor’s allowance, or finding a truck within the allotted freight spend that’s also able to deliver the load by the desired arrival time. This is a great time for honest communication and education about how to work together in this challenging market.
Maybe the buyer is willing to sacrifice price in order to keep a timeline or vice versa. Maybe there’s an ad and we need to make it happen, or maybe there is enough inventory on hand to tide them over until next week while we shop for better pricing. Unfortunately, with perishable shipments, time is of the essence. If we can’t find flexibility on load dates, maybe next time we can increase the lead time.
Anticipating continued driver shortages and elevated consumer demand as the world opens back up from the coronavirus will be key to staying ahead of the always hectic produce season. Buyers, brokers, and transportation managers will all benefit by being more comfortable talking about freight spend and capacity restraints. A wise man once said that there’s no hill for a climber.
We are all in this game together. Communication on market trends and drilling down to prioritize our freight will help us get through this as we establish the new norm in transportation.
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Paul Nesbit began working for the Allen Lund Company in February of 2020, when they acquired Des Moines Truck Brokers (DMTB) in Norwalk, IA. He has been working in transportation brokerage since graduating from Grand View University in 2012. He first started as an admin for TMC Transportation completing carrier setups and billing. Nesbit later obtained his CTB and was hired at DMTB. He has been an account manager in the Des Moines office for the last eight years.
“Name me a city or a state and I will tell you trucks have been tight,” states Bob Rose of the Allen Lund Company LLC.
Rose should know. He is the manager of the firm’s San Francisco office and has been with the transportation and logistics company 31 years. Based in LaCanada, CA, Allen Lund Company has 34 offices nationwide, working with 21,000 trucking companies, providing it with a keen pulse of truck availability.
The last three quarters of 2017 rates have been stronger, reflecting increased demand for equipment.
Allen Lund Company moves about 90,000 loads a year with a significant portion of this being perishables.
Rose doesn’t expect truck availability to improve any the rest of the year, and points out holidays such as Thanksgiving (November 23rd) always means increased demand for fresh fruits and vegetables and refrigerated trucks.
The ethnic population in the U.S. also is a factor with higher volume and demand for equipment to deliver product for their holiday observances.
“Not everyone can haul produce,” says Rose, in reference to the extra demands and knowledge required of drivers hauling perishables.
He also expresses concerns over the looming electronic logging device (ELD) requirement mandate, which the Commercial Vehicle Safety Alliance will begin phasing in December 18th unless it is delayed, as many hope. Plans to start using out-of-service criteria connected with the ELD mandate begins April 1st.
While the large carriers and their trucking associations tend to support ELDs, owner operators and small fleets often view it as limiting their ability to provide superior service, increases their costs of operation, and being another rule limiting their freedom of choice as professional drivers.
“Not a lot of the large carriers are hauling produce,” observes Rose. “Most of it is transported by owner operators and small trucking companies.”
He believes the tight truck supplies are resulting primarily due to the industry being at or near full capacity.
“We talk a lot about truck shortages, but with ELDs, we will feel it. But no one yet knows how ELDs will be enforced,” Rose says.
As a result, he notes Allen Lund Company is looking for ways to reduce the costly delays too often found at loading and unloading docks. They also are seeking improved routes for trucking since customers are maintaining lower inventories and want faster deliveries.
“I want to figure out how to pay drivers more so they can truck less and still support their families,” Rose concludes.
Here’s a round up of opportunities for California produce shipments.
Complaints continue to be heard about the lousy westbound freight rates across the country. There also isn’t a lot of excitement over refrigerated loads for fresh fruits and vegetables. Even California seems subdued this summer, the West Coast is still your best bet.
Salinas Valley Produce Shipments
Adequate truck supplies seem to be the norm anymore in California. The reasons given are numerous, but we won’t dwell on that now.
Head lettuce is accounting for around 1,000 truck loads per week in the Salinas Valley, but volume with other types of lettuce (romaine, leaf) are substantially lower. There’s also the usual suspects in the fields ranging from celery to bell peppers, among many others. In the nearby Watsonville district, strawberries are finally in a consistent mode, with both volume and quality. Over 900 truckloads of strawberries are being shipped each week. The Santa Maria district just to the south of Salinas is shipping similar items, but in much less volume.
Salinas vegetables and Watsonville berries – grossing about $7000 to New York City.
San Joaquin Valley Produce Shipments
The heaviest volume out of the San Joaquin Valley now is probably grapes and cantaloupe. Table grapes are heaviest in the Southern part of the valley closer to the Bakersfield area, but are gaining in volume as the season spreads northward in the valley. Cantaloupe loadings are now good out of the Westside district of the San Joaquin Valley from places such as Firebaugh. Both grapes and cantaloupes are averaging around 1,250 truckloads per week.
Growers in Fresno County ship almost 250,000 tons of cantaloupes from 11,400 acres.
Tomato shipments are now originating out of the central valley. There’s also is moderate loadings with peaches. Both items are averaging around 500 truck loads each per week. Nectarines and plums also are being shipped, but in relatively light volume.
San Joaquin Valley produce – grossing about $4100 to Dallas.
Importers of Mexican produce at Nogales are frustrated over the lack of adequate truck supplies, high freight rates and are looking to the railroads to solve some of their problems, according to a recent news story in The Packer, a weekly newspaper for the fresh produce industry.
Struggling to acquire enough refrigerated trucks, complaints were common as the holiday season approached in late 2014. One importer described it as the worst holiday season they ever experienced getting enough trucks. However, some say the equipment shortages extend well beyond the holidays. As a result importers are taking a look at rail service.
Rail is conducive to a number of Mexican vegetables crossing the border at Nogales ranging from had shell squash, cucumbers and other hard grown Mexican items.
The Union Pacific Railroad is currently upgrading 20 miles of rail near the U.S.-Mexican border to make it easier for inspectors to check loads. There also is development of a rail switching yard in Tucson, which would help rail service.
If rail service is fast enough, items such as bell peppers also would be considered. One shipper complained of paying up to $6 per box in some cases to ship product from Nogales to the East Coast this past vegetable season.
Nogales is pretty dead this time of the year with the exception of the Mexican grape season which has just got underway.
Cold Train Express Intermodal Service suspended service this summer due to rail congestion, while two new refrigerated rail services were just getting started.
McKay TransCold based in Minneapolis began last June offering a refrigerated, dedicated boxcar unit train known as Transcold Express, which runs each week between Selma, CA and Wilmington, IL. Meanwhile, Tiger Cool Express LLC, Overland Park, KS launched intermodal services from multiple locations in southern California to destinations in the Midwest and East Coast in February. In a press release Cold Train reported that on-time deliveries for shipments on BNSF’s Northern Corridor fell from more than 90% in November to less than 5% in April due to surging more oil and coal shipments.
Meanwhile, the problems on BNSF’s northern lines reportedly has had little effect on the southern BNSF and Union Pacific rail routes.
Tiger Cool Express, reported rail shipments of oil from North Dakota on BNSF’s Northern Corridor have increased from 20,000 tank cars three years ago to more than 400,000 this year. And unlike major southern rail routes in the U.S., that northern route doesn’t have two different tracks.
Produce is viewed by some in the rail industry as the last long-haul, $100 billion market that intermodal has yet to penetrate. Still, over 95 percent of fresh produce is delivered by truck in the U.S.. Rail officials are counting on trucks supplies tightening, with the driver shortage continue to worsen.