Distributors cope with rising freight costs
Rising freight rates and inconsistent availability of trucks is shaking up the transportation industry nationwide, and the Chicago area is no exception.
“(Freight) costs have gone up, which increases our costs, which we have got to pass along to our customers,” said TJ Fleming, vice president of Strube Celery and Vegetable Co., Chicago. “The lack of drivers is an issue,” he said.
The problem was obvious over Thanksgiving, he said, with freight prices up across the board, including the produce industry.
High costs also are affecting Coosemans Chicago Inc., said president Mark Pappas.
The company has to try to pass on the higher cost to the customer, he said, but that can have a negative effect.
He cited an example of a buyer who usually orders specialty lettuce with freight costs of $275 to $300. If the freight rate is bumped up to $475 to $550, the buyer might try to save money by eliminating the premium item and switching to regular romaine.
Strube “has had some issues” in its efforts to acquire trucks, Fleming said, but in the end, deliveries always have gotten covered.
There have been some instances where trucks were committed, but those agreements were canceled at the last minute when the carrier could make more money elsewhere, he said.
Fortunately, Strube has strong relationships with its carriers, he said, and the company never has been left without a truck.
Still, nothing can be done to control the market.
Costs up for competitors too, Fleming said.
“Costs have increased, but everyone is on a level playing field.”
Suppliers used to have options and could barter back and forth with their carriers, Pappas said.
“There’s really no debating right now,” he said. “We have to pay the price, whatever it is.”
More and more companies are starting to add a fuel surcharge, he said, taking rates to new heights.
“It’s higher than I’ve ever seen in my career,” he said.
He cited one instance in Northern California where fuel was priced at $7.99 a gallon.
“That’s going to hurt everybody,” he said.
At Sun Belle Inc., Schiller Park, Ill., president and founder Janice Honigberg said transportation has not been a major problem.
“It is expensive,” she said, “but we are year-round, and we have very close relationships with truckers, so we have not found trucking to be an issue.”
