Archive For The “News” Category
DAT’s 2024 Freight Rate Focus report notes pandemic-sparked disruptions of 2020 and 2021 stretched routing guides beyond their threshold and pushed truckload rates to record highs. The high rates attracted a record number of new carriers, with the number of for-hire interstate carriers nearly doubling.
While truck rates are expected to rise to some degree, the DAT report said it may not be until the middle of 2024.
“The truckload market cycle is bottoming out as carriers continue to exit the industry,” the report said. “However, without any significant change in truckload demand expected before the second quarter of 2024, the market may remain in its current state for quite some time – likely until at least midway through 2024.”
Other shocks to the global supply chain, including war, could change pricing quickly, the DAT report said.
DAT’s prediction is current market conditions will continue until late Q2 when the market should finally find equilibrium.
“The truckload market should revert with spot rates rising over contract rates sometime in the first half of the year, and demand will normalize as the supply chain disruptions that began during the pandemic work their way out of the system,” the report said.
Average U.S. refrigerated truck rates (per mile)
- Jan. 3 — $3.88.
- Feb. 7 — $3.72.
- March 7 — $3.48.
- April 4 — $3.43.
- May 2 — $3.37.
- June 6 — $3.58.
- July 4 — $3.59.
- Aug. 1 — $3.57.
- Sept. 5 — $3.69.
- Oct. 3 — $3.41.
- Nov. 7 — $3.33.
- Dec. 5 — $3.21.
(Source: USDA)
Freight costs for produce shippers declined during 2023, but the rate dip may be setting up a return to firmer pricing in 2024.
In January 2022 for a load of refrigerated produce out of California to the East Coast averaged $5.19 per mile, according to the USDA. By late July, the rate declined to $3.55.
Following drought restrictions imposed in May, which saw daily transits and vessel capacity reduced, the Panama Canal Authority (ACP) announced Dec. 15 that it will increase the number of daily transits to 24 starting in January.
This comes as rainfall and lake levels for November proved to be better than expected, coupled with the positive outcomes from the Canal’s water-saving measures.
Additionally, the Panama Canal will allow one booking slot per customer per date, with some exceptions for quotas offered to vessels competing through the reservation system.
These measures allow the majority of vessels that want to transit the Canal to have a better chance of obtaining a reservation.
Currently, 22 vessels transit daily, divided into 6 Neopanamax and 16 Panamax. This restriction is in response to the challenges posed by the current state of Gatun Lake, which is experiencing unusually low water levels for this time of the year due to the drought induced by the El Niño phenomenon.
The canal is supplied by two nearby lakes which received 50% less rain than usual between February and April.
With this, 2023 became the second driest year in recorded history of the Panama Canal watershed, which led to the implementation of an operational strategy focused on water conservation and transit reliability.
Approximately 3% of global maritime trade volumes traverse the Panama Canal. Over 50% of the tonnage navigating through the maritime passageway originates from the trade lane connecting the East Coast of the U.S. to Asia, followed by South and Central America’s routes. Agricultural products are among the key commodities transported through the canal.
The Hunts Point Produce Market located in New York City’s South Bronx is the world’s largest wholesale produce distribution center supplying fresh fruits and vegetables to 22 million people each year.
The 112-acre complex in the Bronx has approximately 30 merchants, moves over 2.5 billion pounds of produce sourced from 49 states and 55 countries each year.
S. Katzman Produce reports it sells various products the year around because it is produced in different places with different seasons.
Literally hundreds of trucks ranging from 18 wheelers to straight jobs are deliver produce to the market, or distributing it from the facility. Hunts Point also receives about 150 rail cars per month, providing volume that is miniscule to that of trucks.
The giant produce markets employees 2,000 people and has about 7,000 visitors daily.
Hunts Point opened in 1967 and is owned by New York City. It has received three rounds of funding totaling nearly $400 million, but business owners say more is needed to fully modernize.
A major upgrade at the produce center is building adequate refrigerated storage to replace the approximately 1,000 diesel-powered refrigerated trailer units that idle on-site.
Between January and September of 2023, the Peruvian avocados were exported to 36 different countries with a total market value of $953 million. Compared to the previous year, this was a 9% increase from the $874 million reached in 2022, according to The Peruvian Exporters Association (ADEX).
In terms of volume during this period, 594,778 tons were exported, 3.3% more year-on-year.
The industry struggled with challenging weather conditions during August, which reduced the month’s harvest volume year-on-year from 48,401 tons to 45,041 tons. However, regions like Pasco and Ica experienced more than an 85% increase in production volume.
The United States stands as the third main destination of Peruvian avocados this year, with a total import value of $135 million. Only The Netherlands and Spain have a bigger share of the market with $293 million and $185 million in total value, respectively.
Chile and the U.K. finish the top five list of Peruvian avocado importers with a shared import value of $97 million, according to ADEX.
Leading export companies were Avocado Packing Company S.A.C., Westfalia Fruit Perú S.A.C., Camposol S.A., Virú S.A., Sociedad Agrícola Drokasa S.A., Agrícola Cerro Prieto S.A., and Agrícola Pampa Baja S.A.C.
Wishing everyone one of you and those you love a Merry Christmas! Pray for peace in a turbulent world. May the love of Jesus Christ live within all of us.
Sun World International announced the addition of eight importers to its portfolio of North American licensees. These are Canadawide Fruits, Direct Source Marketing, Flavor Farms, Fresh Latina, International Produce Group (IPG), Pandol Bros, Sbrocco International and Sun Fresh International.
The new additions bring the company’s panel of licensed importers to 28 companies.
Each of these companies holds a license to distribute and market Sun World’s full line of proprietary grapes in the United States and Canada from licensed Chilean, Peruvian, Brazilian, European, and South African suppliers.
Additionally, licenses include the right to import fruit from new and existing varieties developed by Sun World, marketed under the company’s leading consumer brands, such as AUTUMNCRISP, MIDNIGHT BEAUTY, SABLE SEEDLESS, ADORA SEEDLESS, and SCARLOTTA SEEDLESS.
“We are pleased to be able to bolster and expand our global footprint through the appointment of these extraordinary importers,” says Petri van der Merwe, global licensing co-director for Sun World.
“As we continue our strategic growth and expand our marketing efforts for our consumer brands, like Autumncrisp, we are ensuring ease of access to our proprietary fruit. Our goal is to maximize the revenue for our licensed growers while increasing consumer exposure to our proprietary table grape varieties and consumer brands,” he adds.
By Jon Manning, ALC Cincinnati
Creighton Abrams once said, “When eating an elephant, take one bite at a time.” AI is that elephant in the logistics space that everyone seems to be talking about. Let’s not kid ourselves here, we humans love the opportunity to have something within our grasp, that ultimately will make our lives less laborious, and can provide boundless information whenever and wherever we need it. Within the past week, I would have loved to have had something tell me how to make a beef Wellington from scratch or provide me with college football picks. That time will come, I’m sure, but even before the time comes the conversation about policy and ethics of AI will certainly be debated in many forums.
Ultimately, the idea is that AI can and will eventually surpass a team of people in breadth and scope of work, in mere seconds, it will become the new standard. I opened ChatGPT recently and typed in, “How will AI help supply chains?” The answer was shocking. In a matter of seconds, it gave me a plethora of ways that AI could be beneficial, such as demand forecasting, inventory management, predictive maintenance, blockchain for transparency, and risk management. For those thought-provoking scholars, that means AI can carve vast efficiencies in any supply chain. In a recent article from Nasdaq, “AI is being used worldwide to improve production times and boost safety in manufacturing plants in what is referred to as the ‘Industry 4.0’ era.” Will the human element still be applicable? The short answer is yes. While AI is revolutionizing the supply chain by optimizing processes, predicting demand, and enhancing efficiency, it will never replace the invaluable human connection, compassion and sensible foresight that supports the industry.
So, where would I guess the logistics industry to be in 5 to 10 years from now? Perhaps we’ll see a litany of providers offering up to customers a comprehensive “AI” program to help manage their supply chain stem to stern, or, most likely, staying the course and navigating the nuances of logistics using the best and brightest talent in the industry, which is none other than human capital. This remains essential for fostering collaboration, resolving complex issues, and navigating the unpredictable challenges inherent in the dynamic world of supply chain management. AI may streamline operations, but the industry’s success will always count on the symbiotic relationship between technological innovation and the irreplaceable human element that is required to cultivate and grow businesses.
*****
Jon Manning is the general manager of the ALC Cincinnati office. He started in the logistics industry working in transportation sales role in 2002. Manning graduated from Bowling Green State University with a B.A.C. degree in Communications.
jon.manning@allenlund.com
In an article published in the Journal of Commerce (JOC), Mark Szakonyi goes in depth regarding the options that carriers are considering to face drought-driven restrictions imposed in the Panama Canal. Unless unexpected rainfall were to hit the country, transit restrictions are expected to be in place for the next few years.
“Restrictions, which effectively reduce the maximum stowage capacity of larger vessels and limit the overall number of transits, will likely force carriers to alter networks as they try to push higher costs onto shippers,” says Szakonyi.
Panama Canal authorities have announced that the soonest relief to restrictions- which were imposed in July- could come in 2028.
More concerning is the fact that the easing of restrictions would come when the government of Panama leaves aside years of underinvestment and supports $2 billion in investment to build a new reservoir and more pipelines.
“We greatly appreciate the current weather conditions are a factor,” Ocean Network Express (ONE) CEO, Jeremy Nixon wrote in a letter to Panamanian President Laurentino Cortizo Cohen on Oct. 30. “However, we also understand that no significant projects have gone ahead in Panama to increase the freshwater supply to the locks from other catchment areas.”
Draft limits are reducing the capacity of container ships transiting the canal by approximately 20% across all size classes, says Michael Kristiansen, president of Panama-based consultancy CK Americas.
Larger vessels lose approximately 350 TEUs of capacity for each foot of draft lost; with the draft now limited to 44 feet, down from the designed 50 feet, larger ships must give up about 2,100 TEUs of otherwise usable space.
Some carriers have been forced to offload cargo at terminals at either end of the canal, and then rail those boxes across the isthmus. Container lines have been generally spared from long transit delays, however, thanks to pre-scheduled transit appointments.
Carriers considering options
In Nixon’s letter to President Cortizo he explains that upon growing concerns and the lack of service reliability, ONE is considering other routings via the Suez Canal.
This month, Zim Integrated Shipping Services added a call at the Port of Lázaro Cardenas in Mexico to allow Asian imports to arrive in the Midwest.
ONE, similar to other container lines, invested heavily in larger vessels that were able to move through a larger set of locks, which was completed in 2016 at a cost of $5.25 billion.
Ports along the US East and Gulf coasts similarly invested billions of dollars to be able to handle the larger ships, which has helped fuel a two-decade shift of trans-Pacific imports away from the West Coast.
The lack of scheduled service is squeezing seasonal refrigerated (reefer) operators that charter vessels on an ad-hoc basis and must wait in line similar to the bulk carriers and tankers.
Nixon also raised concern about the reduction in daily transit slots for neo-Panamax vessels- those with capacities ranging from 10,000 to 15,000 TEUs that can transit the canal thanks to the new set of locks that opened in 2016- with the number falling to five starting Jan. 1 compared with the 10 available just three months ago.
Political solutions
Panamanian politicians seem more focused on copper than water, amid the largest protests in three decades over mining concessions. Rising political instability and social unrest frame the upcoming national election in May.
Ultimately, the government must either expand the canal authority’s geographic remit so it can push through water management projects or limit current restrictions that prevent it from building new reservoirs.
Canal officials hope construction contracts currently in the offing can be awarded by the end of 2024, with work completed in 2028.
Depending on the severity of this drought, and potentially others to come, carriers may do as ONE warned: shift service away from the canal.
Deploying smaller vessels is another option.
Carriers could also adjust services to send more cargo from South Asia through the Suez Canal, though it would add distance for some origins, Kristiansen said. The US East Coast is approximately 2,200 nautical miles farther from Shanghai via the Suez Canal than via a Panama Canal routing.
Yet another option would be for carriers to change some Asia–North America services to so-called around-the-world strings, transiting the Suez on the backhaul from North America to Asia, Kristiansen says.
That would require an additional deployment of ships in the string to maintain weekly service frequency. Although less than ideal, it would slightly mitigate industry-wide overcapacity.
INDIANAPOLIS, IN – Greenberg Fruit Company, a produce distribution company headquartered in Omaha, Nebraska, joined FreshEdge, a family of best-in-class fresh food distribution companies backed by Wind Point Partners.
Since 1936, Greenberg Fruit Company has proudly been serving customers throughout Nebraska and Western Iowa, distributing superior-quality fruits and vegetables, including an array of fresh-cut offerings under its processing brand, Professor Fresh.
The acquisition of Greenberg Fruit Company strengthens FreshEdge’s pursuit of becoming the preeminent family of best-in-class fresh food companies by expanding its geographic reach, optimizing its supply chain network, and providing additional space and logistical support to better serve its customer base.
FreshEdge now operates more than 1.12 million square feet of warehouse space across 29 facilities with a fleet of 1,041 trucks.
“Greenberg Fruit Company will be an amazing addition to our growing family of customer-obsessed companies,” said Steve Grinstead, CEO of FreshEdge. “We share the same company values centered around quality, service, and making our customers the number one priority.”
“We look forward to working together with the great team at Greenberg Fruit Company to continue to provide unprecedented service to all FreshEdge customers,” said Greg Corsaro, President and COO of FreshEdge.
“We are thrilled to be joining FreshEdge and are looking forward to this new era of growth and success for Greenberg Fruit Company,” said Brent Bielski, COO of Greenberg Fruit Company. “We strongly believe in the power of synergy and are eager to begin working alongside this remarkable family of companies to create new opportunities for our customers.”
About FreshEdge
FreshEdge is headquartered in Indianapolis, IN, and was established in 2019 with the combination of Indianapolis Fruit and Piazza Produce in Indianapolis and Get Fresh Produce in Bartlett, IL. Since then, numerous other best-in-class distribution companies and their respective value-added operations have joined the FreshEdge family, growing it into a super-regional leader in the fresh food industry with a focus on fresh produce and specialty food items. FreshEdge’s footprint spans twenty-two states throughout the Midwest and southeastern United States. Greenberg Fruit Company represents FreshEdge’s fourth acquisition since Wind Point’s initial investment in 2022. Together, Wind Point and FreshEdge intend to continue growing FreshEdge by welcoming more fresh food distribution companies into the group—all focused on high quality produce and specialty food products, along with exceptional service—to create a unique group of complementary entities.
About Wind Point
Wind Point Partners is a Chicago-based private equity investment firm with approximately $6 billion in assets under management. Wind Point focuses on partnering with top-caliber management teams to acquire well-positioned middle market businesses where it can establish a clear path to value creation. The firm targets investments in the consumer products, industrial products, and business services sectors. Wind Point is currently investing out of Wind Point Partners X, a fund that was initiated in 2022.
By Ted Kreis, Northland Potato Growers Association
The fresh growers in the Red River Valley have long been known for their red potatoes. In fact, the valley has long been, and still is, the leader in red potato production in the nation, but the Red River Valley has quietly become one of the biggest yellow potato producers in the nation also.
Consumer preferences have created a gradual but steady increase in yellow potato demand for well over a decade in the United States. Growers have had to adjust what colors they plant to to meet these preferences. Unfortunately yellow demand has come at the expense of other colors including russets, reds and whites.
Fifteen years ago (2008) the Red River Valley only raised about 120,000 hundredweight (cwt) of yellow potatoes, or roughly 3 percent of the fresh crop. This year the valley topped 2 million cwt of yellow potatoes for the first time ever representing about 45 percent of the fresh crop!
Nobody seems to know how long this trend will continue or if it will ever level off or recede. Many have predicted it would slow in previous years, but so far those predictions have all been wrong.