By Mark Montague, DAT Solutions
It’s rare that we see spot truckload rates hit the skids during the last week of a month. Shippers are working double-time to push freight out the door, and in fact shippers and brokers posted 8.5 percent more loads on the spot market during the last week of February.
Despite the jump in demand for truckload services, national average rates for van and reefer freight are down. The van rate fell 4 cents to $1.54 per-mile to end the month while the reefer rate slipped 5 cents to $1.79 per mile. This is supposed to be a time when rates firm up. What’s going on?
For refrigerated food haulers, there’s a shift happening — and it’s being felt at the ports. Two main factors are involved.
More contract freight
Spending at restaurants has risen 6.1 percent over the past 12 months. When consumers spend proportionally less of their food budget in grocery stores, it has a big impact on the supply chain. Restaurants typically order from large food service suppliers with private fleets or contract carriers, which eats away at the refrigerated freight volume available to carriers and brokers on the spot market.
Truckload volume of imported produce (red bars) surpassed domestic (black) in two of three weeks in February, according to the USDA. The agency reported truckload volume of imported produce (red bars) surpassed domestic (black) in two of three weeks in February.
Truckload volume of imported produce (red bars) surpassed domestic (black) in two of three weeks in February, according to the USDA. Click to view larger.
Check out the latest trade data from the U.S. Dept. of Agriculture, above. We’re importing more produce and consuming less of the home-grown stuff (poor growing conditions in California and Florida are partly responsible).
As domestic production declines, refrigerated freight
Click to view larger.
activity is increasing at ports in the Southeast, and at border crossings between the U.S. and Mexico. Imported foodstuffs include bananas, avocados, citrus fruit, peppers, tomatoes, and mixed vegetables.
If you specialize in refrigerated freight on the spot market, you can expect to find more of your loads originating at the borders and ports.
Increased food imports mean there’s greater demand for reefers at ports like Miami and Savannah, with an ever-larger portion of the reefer freight in those markets originating from Chile and neighboring countries.
Other ports that are bearing foreign fruit include East Coast docks at Philadelphia/Wilmington and NY/Newark, as well as Los Angeles/Long Beach.
The shift toward the ports also will have an effect on seasonal rate spikes. The spring rush in Florida projects not to be as great, and the typical June boom in reefer rates may be muted, as well.
If you have van freight or trucks, you may be affected, too.
Every tractor and driver that pulls a reefer is one more unit that’s not competing with you. When fewer trucks compete for your loads during peak reefer seasons, everyone’s rates get a nice bump.
This year, the bump might be flatter, and trucks will be tight in Savannah and McAllen instead of Lakeland or Stockton.
Mark Montague is industry rate analyst for DAT Solutions, which operates the DAT® network of load boards and RateView rate-analysis tool. He has applied his expertise to logistics, rates, and routing for more than 30 years. Mark is based in Portland, Ore. For information, visit www.dat.com.