Shipping prices are up significantly from a year ago as truck availability tightens, eroding food producers’ profits.
Cain Adams, who owns Trinity Logistics and Longboard Logistics freight brokerages in Meridian, Idaho, said Nov. 17 that shipping a 50-pound bag of onions or potatoes from Washington state to New York City costs $11.50 by refrigerated truck and $8.75 on intermodal, truck-to-train transportation. The truck price is up 43.75% from $8 a year ago, and the intermodal price is up 40% from $6.25.
A standard load is 840 bags.
“Both rose because of the capacity crunch,” he said.
Malheur County Onion Growers Association President Paul Skeen of Nyssa, Ore., said truck availability has been a hot topic among growers, shippers and university extension educators.
Availability dropped in recent years as truckers retire, and now it is especially tight due to COVID-19, he said. A bit of relief could come when Christmas-tree shipments end.
“Nobody turns anybody down,” Skeen said. “I see trucks loaded late at night. Whenever that truck comes, they are making sure they get the truck loaded and on the road again.”
Higher shipping costs are eroding profits. “Almost every truck that leaves this valley is costing more for the truck than the value of the onions that are on the truck,” he said.
Adams said truck rates have risen a bit faster than intermodal rates partly because the number of trucks on the road is down from 2018’s strong market. The fleet expanded in 2018, then shrank in 2019 as rates fell.
“So 17,000 trucks ended up being taken off the road” in 2019, he said. Some companies closed. “Now in 2020, we are seeing the opposite, with less capacity.”
Trucks move about 72.5% of the nation’s freight by weight, according to the American Trucking Associations. Some 97.4% of carriers operate fewer than 20 trucks.
Adams said shipping-price increases are “a capacity issue. Intermodal is maxed as well.”
COVID-19 boosted shipping demand for food products at stores and for USDA-funded food boxes directed to people in need. Strong business in population centers reduced truck availability in more remote areas where many commodities are produced.
Refrigerated trucks have been carrying more frozen foods as people stock in-home freezers, so it’s harder for some perishables to compete for space on trucks, Adams said.
“And frozen can pay more per truck on the spot market” because it is a value-added product for which demand remains high, he said.
Cold-storage space is at a premium, helping to keep truck and intermodal prices up even as fuel costs remain below year-ago levels, Adams said.
He said it will be at least February, about a month later than the previous year’s seasonal drop in demand, before truck supplies and prices ease. He expects the fleet of refrigerated trucks to start increasing in spring or summer.