Source: The Packer
Truck rates and availability have been an issue for potato marketers in the 2017-18 season, and the drama is far from over.
A Northeast winter storm, holiday disruptions in driver availability and unrest and uncertainty about the electronic logging device (ELD) mandate were some of the reasons that caused truck rates from potato shipping regions to spike from November through most of January.
“I would have to say (that) through the Christmas season through the end of January was probably the most bizarre time in my entire career in the produce industry for trucks,” says Ralph Schwartz, vice president of sales with Potandon Produce in Idaho Falls, Idaho. “People were posting rates that were twice what an average lane would get or more.”
Schwartz says the rates had to be paid.
“We loaded a lot of trucks that we paid way more than we thought we should, but that was the only way you could get anything to your customers,” he says.
Doug Posthuma, potato buyer and national salesman for Friesland, Wis.-based Alsum Farms, says the truck shortage limited movement in Wisconsin, but perhaps not as severely as in other regions.
Trucks began to become tight around Labor Day, with demand for transportation for hurricane relief running high.
“It was a struggle for trucks from Labor Day all the way to shortly after the first of the year,” he says.
Most orders could be filled, but perhaps a day or two later than planned.
“We paid some high dollars,” says Posthuma. “There was definitely some gouging going on.”
He says by late February, transportation conditions had eased considerably.
Climbing the Ladder
The USDA reported truck rates from Idaho to Philadelphia on Jan. 6 ranged from $5,950 to $6,500. The rates increased to $5,950 to $7,800 the weeks of Jan. 13 and Jan. 20, according to the USDA, and then $6,375 to $7,800 on Jan. 27 and Feb. 3.
Rates finally started to ease by Feb. 10, when rates to Philadelphia ranged from $5,525 to $6,800. For the weeks of Feb. 17 and Feb. 24, rates had settled to $5,100 to $5,738 per load. On Feb. 21 a year ago, truck rates from Idaho to Philadelphia were $4,675 to $5,100.
In the Red River Valley of Minnesota and North Dakota, rates to New York on Jan. 23 were $4,675 to $6,000. By Feb. 20, the rates to New York had declined to $4,463 to $5,313. That is still well above a year ago, when rates to New York from the Red River Valley were $3,498 to $4,300.
The truck shortage also limited movement in some weeks, potato marketers say.
“The transportation shortage has effected the movement to date,” says Paul Dolan, general manager of Associated Potato Growers in Grand Forks, N.D.
While truck availability may have slowed movement in January, storage reports indicate the crop still appears to be on fairly normal footing.
Potato stocks on Feb. 1 were 202.5 million hundredweight, down 0.3 percent from a year-earlier level. Total production in the 2017-18 season had been estimated at 399.8 million hundredweight, off about 2 percent from 406.6 million hundredweight the same time a year ago.
Dolan says the truck shortage this season will continue to be an issue and may create some changes in how business is done.
“We may be forced to open some centralized distribution centers for transloading, and I believe the higher rates are here to stay,” he says.
Keith Goven, fresh sales manager for Black Gold Farms in Grand Forks, says the higher rates have made it more attractive for more truckers to meet the demand.
“From that perspective, we shouldn’t be terribly surprised that (high truck rates) work themselves out,” he says. “I wouldn’t say the problem is completely fixed. It is something we will continue to deal with over the course of the next year and likely longer than that.”
After truck rates and availability were “horrible” from mid-November to mid-January, the truck situation had improved by Feb. 20, says Ryan Wahlen, sales manager for Pleasant Valley Potato in Aberdeen, Idaho.
“Now we are to the point where we are able to get trucks when we need them, and that’s a change from before,” he says.
Looking Ahead
Potandon’s Schwartz says the next bottleneck in truck availability could be right around the corner.
“I’m really curious what the Easter holiday (April 1) is going to be like,” he says, noting strong demand for refrigerated hauling of Easter lilies and other perishable items.
Longer-term, a coalition of industry associations, including the National Potato Council, has asked the Federal Motor Carrier Safety Administration for a two-year exemption on the ELD mandate for trucks carrying agricultural commodities. An ELD mandate waiver that postponed the measure for trucks carrying produce and other ag products ends March 18.