This year’s produce shipping peak was more like a speed bump – DAT Freight & Analytics

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By Dean Croke and David Wardlaw

In a typical 12 months, america West Coast accounts for nearly 60% of produce hauled by truckload carriers. California, at 34% of annual quantity, leads the way in which, adopted by the Pacific Northwest area at 24%. In most years, summer season produce volumes in these areas, particularly California, are usually so excessive that they drive up nationwide truckload charges for reefer and dry van carriers peaking round July 4. That didn’t occur this 12 months, with June nationwide truckload volumes down by round 15% in comparison with the earlier 12 months.

In contrast to in different years, the place we see seasonal spot fee and delivery quantity spikes leading to market imbalance all through the nation, this 12 months’s peak was extra like a velocity bump. In a traditional 12 months, DAT would anticipate to see reefer spot charges climb by $0.12/mile in June alone; this 12 months, they dropped by the identical quantity.

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On the finish of June, truckload volumes of produce in California had been round 38% decrease than the earlier 12 months, and while there’s nonetheless crop quantity to be reported by growers, the season’s whole up to now seems to be weak in comparison with prior years (see determine beneath). Of higher concern for truckload carriers is the longer-term development the California produce season factors to, and that’s the multi-year drought the state is experiencing.

How severe is the drought on produce farmers in California?

DAT Freight & Analytics took a deep dive into the Golden State’s water drawback and located some alarming statistics that time to doubtlessly decrease ongoing truckload volumes. After all, there’s all the time the likelihood the heavens will open and dump sufficient rain to finish the drought and fill the state’s reservoirs. Within the interim, there’s discuss of stricter water restrictions, desalination vegetation and drought-resistant crops, however none of that may remedy the rapid drawback of decrease produce volumes this 12 months.

On high of long-term local weather modifications leading to a warmer state the place 11 of the 20 warmest years in California have occurred since 2000, this 12 months, uncommon climate patterns and hotter temperatures, particularly at night time (lowering the power of vegetation to get well from daytime warmth), haven’t helped both. At present, California’s common temperature is 3.5℉ above the Twentieth-century common leading to an 8% improve in crop water demand. Abnormally sizzling temps in April, upwards of 80℉, adopted by a harsh chilly snap, killing a lot of the brand new progress in Spring, has additionally added to a a lot slower begin to the 2022 produce season.

Some crops have been impacted greater than others in 2022.

Based mostly on information from america Division of Agriculture (USDA):

  • This 12 months’s rice crop would be the state’s smallest in at the very least 50 years at 250,000 acres, down from half one million acres.
  • Tomato manufacturing estimate continues to lower from 12.2 million tons in January to 11.7 million tons in June.
  • The grape crop is about 30% of typical volumes.
  • The full orange field forecast has dropped by 2.3 million to 49 million packing containers.
  • Grapefruit manufacturing has dropped from 4.1 million to 4 million packing containers.
  • Tangerine/ Tangelo manufacturing has dropped by 1 million to twenty million packing containers.
  • The lemon forecast has remained unchanged at 23 million packing containers.
  • The candy cherry crop is down 63% year-to-date.
  • Almond manufacturing decreased to 1,179,000 metric tons from 1,322,00 in 2021 and 1,413,000 in 2020.

How are this impacting West Coast Reefer haulers?

While the nationwide common all-in reefer spot fee sits round $3.00/mile, reefer carriers in California are fairing higher than the nationwide common at $3.24/mile for outbound long-haul masses. Produce-specific carriers within the main CA rising areas are doing even higher, averaging greater than $1.00/mile at $4.45/mile final week. That’s round $0.34/mile increased than the earlier 12 months.

Throughout the averages, although, are a variety of spot charges relying on truck availability, lead time, size of haul, and quantity. Take the ultra-long-haul lane between Fresno within the coronary heart of California’s produce-growing area and Hunts Level, NY, dwelling to the most important produce market on the East Coast. All-in spot charges on that lane are averaging $2.81/mile this week, which is 26% decrease than the earlier 12 months. On the high-volume lane to Chicago, spot charges are 23% decrease y/y at $2.73/mile, whereas masses north to Seattle are simply 6% decrease y/y. 

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