Truck rates may force shipping cost load to shift - The Packer

Truck rates may force shipping cost load to shift

06/11/2004 12:00:00 AM
Terry Scruton

“The product is more spread out,” he said. “I don’t think things will be as tight as they were in the month of May.”

In spite of this, some buyers, such as J&J Distributing Co., St. Paul, Minn., say that fuel costs have raised the price of some commodities, which in turn means that they have had to raise the cost to their customers.

John Jackson of JJ Marketing Inc., Salinas, Calif., said costs eventually have to be passed along to the consumer.

“Whatever added cost will be passed on to the consumer because that’s what (shippers) have to do,” he said.

MAY GET WORSE

Chuck Nelson, owner of Chuck’s Transport Inc., San Antonio, said shortages also could get worse for California shippers before too long.

“You’ve got carriers now that, if they aren’t getting a premium fuel surcharge to run that area, they won’t run there anymore,” he said.

Tony Forsythe, president of National Produce Consultants, Plano, Texas, said the biggest concern for the trucking industry is that smaller independent companies are going out of business.

“It’s reducing the number of options you have,” he said. “That business is going into bigger hands.”

Nelson agreed, adding that he doesn’t think the trucking industry will see rapid growth anytime soon.

“There’s no incentive for people to jump back into trucking,” he said. “Because, between fuel surcharges and everything else, there’s no profit margin left. In the last 46 months, roughly 25,000 carriers have closed their doors. The truck shortage is here, and, unless something major happens, it’s going to get worse before it gets better.”

OPTIONS

What that something major might be is up for debate. For example, few shippers who don’t use rail already are turning to it as a viable option. They say rail lacks the flexibility of trucking and isn’t equipped to move as many different commodities as trucks can.

Kodish suggested that regional load consolidation might be the answer, with trucks making fewer pickups and making more use of terminal markets.

Nelson said going back to terminal markets is a possibility, though it won’t happen any time soon. He said a more likely scenario is that those on the supply side who haven’t already bought trucks will do so.

“It’s going to force a lot of these produce guys back into the trucking deal,” he said. “A lot of them may have to look at buying a few of their own trucks. It’s forcing people to take another look at how they meet their own transportation needs.”



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