Mother's Day adds to truck demand in early May
Packer Interview - Noah Hoffman Apr 29
Already elevated truck rates will likely be pushed higher with the convergence of floral imports into south Florida for Mother’s Day demand, accelerating volume of Southeast U.S. produce shipments and an early Department of Transportation Road Check Week.
That is the view of Noah Hoffman, vice president of North American surface transportation of C.H. Robinson, Eden Prairie, Minn.
“We expect this floral season to be one for the record books,” Hoffman said April 29.
Hoffman and other transportation experts at C.H. Robinson point to several factors that are stressing the transportation.
The Mother’s Day floral season is hitting earlier and harder than normal, according to the company, which is diverting trucks to Florida and occupying air space as flowers arrive from South America into Miami.
American consumers are expected to spend a record $2.6 billion on flowers, making it the largest year on record, Hoffman said.
“The overall floral expenditure (for Mother’s Day) was down two thirds last year, while the rebound this year is expected to be record breaking,” he said.
Miami International Airport received 89% of all U.S. flower imports by air in 2019. That totaled 240,162 tons valued at $1.1 billion, and that type of volume requires tremendous refrigerated truck capacity to distribute the flowers all over the U.S.
The delayed produce season in the Southeastern U.S. is accelerating, which also diverts trucks from the rest of the country down to Florida.
Beyond those factors in Florida, the U.S. Department of Transportation is holding its annual DOT Road Check Week (May 4-6).
This time period, Hoffman said, brings about a drop in truckload capacity as some drivers remain off the road to avoid checks or are forced off the road due to violations discovered during checks.
Beyond May, demand for refrigerated trucking will increase in the summer season, owing to higher domestic output during the summer and a gradually strengthening economy. Retail sales are expected to grow an estimated 6.5% to 8.2% in 2021, according to the National Retail Federation.
Hoffman said that the load to truck ratio in south Florida, or the number of loads available versus the supply available was running 19 to 1 April 29.
The shortage in Florida was causing transportation providers to “deadhead” trucks to the region, or moving empty truck capacity from Carolinas, Georgia, Alabama, Tennessee and other states to meet the demand, he said.
“On top of that, you’ve got all sorts of (Florida) commodities for produce popping, which is almost a month delayed due to the cold snap,” he said.
In general, refrigerated truck rates are perhaps 25% to 40% higher than the same time last year, depending on region, he said. But comparisons with year-ago levels are complicated by the big swings in freight demand during the early weeks of the pandemic in 2020.
Hoffman said the structural constraints of adding more truck capacity could translate into upward pressure on transportation rates for the next year or so, he said.
The supply of truck drivers has not kept up with demand, especially considering competing industries have taken some drivers off the road, he said.
Hoffman said the volatility of truck rates is causing some shippers and receivers to look at shorter duration contracts for transportation or incorporating some variable pricing strategy into contracts.
