Heavy shipments, delays at distribution centers push rates higher
Heavy produce shipments combined with unloading delays at retail distribution centers were factors in higher truck rates in mid-March.
Despite U.S. diesel fuel costs averaging 14% below year-ago levels, industry sources said there was upward pressure on truck rates in March.
The U.S. Department of Agriculture reported March 25 that refrigerated truck rates from Idaho to Boston had risen from about $5,738 per load on March 14 to $6,163 per load on March 24.
According to a weekly update of truck availability from the USDA, they were mostly adequate for fruit and vegetable growing regions, with shortages noted for shipments to the East Coast for shippers in Idaho and Washington state.
For Washington state apples and pears going to Boston, the rates climbed from $6,900 per load on March 14 to about $7,800 on March 24, according to the USDA.
COVID-19 effect
DAT, a transportation data company, said in a March 24 update that shifts in consumer purchases have had a significant effect on reefer demand and rates.
“Nationwide shutdowns of schools, restaurants, and other foodservice venues has focused shippers’ and carriers’ attention almost entirely on retail grocery outlets, including e-commerce,” according to a DAT webpage dedicated to COVID-19 analysis. “Further, reefers must be loaded ‘live’ with perishable goods, making delays and disruptions even more costly for the carrier.”
DAT predicted further disruptions when spring produce harvests increase, and said reefer rates can be expected to remain elevated through the end of June.
While foodservice orders have been canceled or cut because of widespread restrictions on restaurant operations, Seth Konkle, general manager of the Scot Lynn Group, Indianapolis, Ind., said that many of those orders were switched to retailers. That has led to congestion and unloading delays at retail distribution centers, Konkle said.
“The freight is still there, but it’s all getting shifted towards retail customers,” he said. “What is really kind of slowing up trucks is that a lot of these retail grocery distribution centers are tying trucks up for 6, 8, 12 or 24 hours because they are so backed up.”
Retailers are ordering 50% to 100% more volume of some commodities than they typically do because consumers are relying on supermarkets for all of their food needs.
Konkle said March 25 that truck rates the week of March 23 seemed to ease slightly compared with the previous week, but increasing volume from California in April could spur rates higher.
Non-contracted refrigerated truck rates were moving higher in mid-March, said Jeff Nelson, transportation manager and produce specialist for Twin Falls, Idaho-based trucking company Giltner Inc.
That upward pressure reflected big movement of commodities like potatoes and onions to U.S. retailers, but he said there was some evidence that retailers have been able to restock and would see fewer surges in consumer demand in the days and weeks ahead.
USDA reported shipments for select produce commodities from March 15-21, compared with year-ago levels:
- Apples: 183.7 million pounds, up 61%;
- Broccoli: 28.3 million pounds, up 21%;
- Carrots: 25.4 million pounds, up 10%;
- Celery: 42.1 million pounds, up 33%;
- Romaine lettuce: 40.7 million pounds, down 29%;
- Onions: 140.6 million pounds, up 34%; and
- Potatoes: 208.8 million pounds, up 28%.
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