Spiking fuel prices, a declining and aging pool of drivers, container shortages in key shipping lanes and increasing government regulation combined to make 2011 a tough year in the transportation industry.
The woes of the industry trickled down to produce shippers large and small that struggled to get products from fields to consumers while trying to contain costs.
Some transportation companies, though, are surviving and adding staff and services. Several of them specialize in serving the fresh produce industry, and their growth promises to ease the transportation difficulties of fruit and vegetable shippers in 2012.
One example of a company expanding with value-added services is L&M Transportation Services, Raleigh, N.C. Doug Stoiber, L&M vice president of produce transportation operations, said the company plans to launch a transportation management system dubbed Genesis during the second quarter of 2012.
L&M hired Benjamin Stafford for a new information technology support position on March 1 to specifically work on Genesis. Stoiber said Genesis includes a customized, Web-based portal that provides real-time shipment status; exception notices; traceability; electronic carrier bidding, load tendering; and inbound and outbound management.
No matter how much value a transportation company adds to its services, the one variable that is practically impossible to beat is the cost of fuel.
A study by RWI Transportation LLC, Wilder Ky., found diesel hit the highest per-gallon rate since 2008 in November 2011 as it crept above the $4 mark. Year to year, diesel was almost 25 cents more per gallon in March 2011 than March 2010.
"Fuel prices will continue to be a challenge," said Richard Bauer, general manager for RWI, which operates 350 trucks in addition to providing logistics services.
The ocean-going freight industry also feels the fuel pinch, said John Hourihan, senior vice president and general manager for Latin America for Crowley Maritime Corp., Jacksonville, Fla. He said the multinational company sees no relief in sight.
Gail Toth, executive director of the New Jersey Motor Truck Association, said the increasing cost of diesel will likely continue to put smaller, local and regional trucking companies out of business in 2012.
Toth said increasing toll rates on bridges and roads across the country are also hitting the industry hard.
"The tolls to cross the bridge to Staten Island are increasing 163% in the next four years, and that’s after they already increased 100% four years ago," Toth said.
Maritime transportation companies face many of the same issues as the trucking industry: fuel costs, increasing regulations and container shortages.
During the peak of produce export season from Latin America, some oceangoing companies reported having trouble finding enough refrigerated containers.
Conversely, in February, international shipping giant Maersk Line reported removing 9% of its capacity in the Asia-Europe trade lane because of an oversupply of vessels there and fears that freight rates would drop.
Daniel Cooke, marketing manager for OHL International, Brentwood, Tenn., said the company recently had not been troubled by container shortages or excess vessels in trade lanes.
Rather, Cooke said the biggest concern for OHL’s customers was the time it takes to import fresh produce to the U.S. Part of that concern comes from changing and increasing rules related to importing he said.
OHL International is involved in a working group with the U.S. Customs and Border Protection and privately operated centralized examination stations to streamline the perishable import process, Cooke said. The aim is to make the import process more efficient, to speed up inspection release times and make better use of officer resources, he said.
To help its importing customers attain the shortest possible shipping times, OHL has added maanger Ed Fitzgerald to its perishables handling staff. OHL also has a new vice president for commercial development for perishables, Joe Galeone, who is based in OHL’s Philadelphia office.
Cooke said OHL also launched an Ag Inspection Notification program in January that provides its customers with real-time information on the inspection process so they can better manage their shipments.