If you’ve been experiencing sticker shock freight rates lately, then you’re not alone. It’s not a secret that capacity remains tight and freight rates stay high. This is affecting all markets but produce and other temperature-controlled products are being hit the hardest. This impact is likely to continue throughout the rest of produce season and even onward through the rest of 2021. Yet, produce shippers that take the time to think about the situation and what they can do to push through will have a better chance at finding capacity and keeping costs manageable. Keep reading on to learn how you can find ways around tight capacity during produce season.
Produce season is impactful because it puts pressure on freight shipping rates, which affects shippers both inside and outside the produce sector. To simplify it, it’s the rise in crop volumes and heightened demand for trucks to transport these crops that impact capacity during this season. These factors lead to an increase in rates, not only for the shippers who need trucks with temperature control but for a majority of shippers across other modes and regions as well.
There are a few more factors shippers should examine as they adjust their shipping strategies this produce season. For example, this year produce demand may be even higher because of states reopening and reducing restrictions at restaurants and other businesses. Since restaurant dining was limited during the past year because of Covid-19, it’s reasonable to expect a large amount of pent-up consumer demand for eating at restaurants.
Even before produce season began, freight rates were trending upward. According to DAT, there was a 34.1 percent increase year-over-year (YOY) in reefer spot rates in March 2021 compared to March 2020. Even more telling is the load-to-truck ratios. For every van truck posted on the board, there were 6.1 loads posted. For refrigerated loads, there were 13 posted for each reefer truck posted.
There’s also the price of fuel to consider. Data from the U.S. Energy Information Administration shows that fuel is running almost a dollar more per gallon from the lowest price point that fuel dropped to during the pandemic in May 2020.
With freight rates being so high and there being more loads than there are trucks, it means carriers can pick and choose top paying shipments. With building supplies and more being at an even higher demand due to shortages in product, some reefer trucks are deciding to use their truck as a van instead to haul more top dollar freight.
The challenges with finding capacity during produce season aren’t new. But the continued effects of disruption this past year and so on are making it harder than ever to find available trucks at decent rates. This year, produce season demand for trucking is up 70 percent YOY. That number alone is encouraging more produce shippers to start thinking strategically about finding capacity. Shippers are looking for ways to work around current market conditions to keep their logistics operations moving forward. Here are some things you should consider making it through this tough season.
When capacity is tight and rates are high, carriers get to pick and choose what load they want. Make yours more desirable by making it an easy job to complete. One way to do this is through freight consolidation. Regional consolidation makes freight easier for carriers to work with. Simply put, instead of using a long-haul truck to make many pick-ups or deliveries in a regional area, hire a regional short-haul expert to do that part. They make all the pick-ups and deliver to one spot so that your long-haul carrier can make one easy pick-up and drive onward. Vice versa is that the long-haul carrier would drop off at one regional facility, and then you use the regional carrier to make the many deliveries. We’ve found that consolidating the freight this way increases the percentage of on-time delivery which increases your product’s shelf life and customer satisfaction.
This goes hand in hand with making your freight easy to work with. Often, produce vendors will work with many packing house facilities. Make sure you confirm with the shipper where the truck needs to pick-up. It’s never a great start to a shipment when a driver has to search location after location for their pick-up. Not only does the driver get frustrated, but with it being a time-sensitive shipment, you want to make sure there are no hang-ups, so it’s picked up on time, delivered on time, and your product’s shelf life is as long as possible.
This may be your most important piece of advice. Make sure your selected carriers are properly vetted. What exactly do we mean by that? This means making sure they have reefer breakdown coverage. Or making sure they have the right amount of insurance coverage in case something goes wrong. For example, if you know a thing or two about cherries, you know they are hard to come by, and based on market conditions, their value can change. Does your carrier have that coverage should there be a problem? There’s also FSMA compliance to consider now. Does your carrier know how to work with produce? Do they have that experience? Do they carry pulp thermometers in their trucks and understand that process to make sure they are not loading produce that is too hot or too cold, making sure it will be in good shape when it’s delivered? All these factors are something to keep in mind regardless of market conditions. When selecting and vetting your carriers, remember that there is a big difference between the cheapest truck and the RIGHT truck.
Finding and building a relationship with providers that execute year-round temperature-controlled freight across the country can give you a competitive advantage. By having that relationship, you’ll know and better trust your provider because they have the proven experience and understanding of working with perishable freight. Additionally, having that reliable relationship can help you keep your costs down during peak produce season.
Making use of transportation management (TMS) technology can help during this season. A TMS can help you with routing decisions by matching freight with the best carriers, lanes, rates, and transit service. It will allow you to optimize the in-house processes of your transportation network – which can help in both times of disruption and easier times. By selecting the best carriers and optimizing your routes, you’ll not only increase your service levels but reduce your risk.
Having a best-in-class TMS also provides you with data-driven insight to better manage disruptions, reduce downtime, and effectively plan and budget your logistics spend. By using data analytics, you’ll be able to recognize which carriers are most likely to have capacity, allowing you to reduce your harvesting to minimal levels.
Having a TMS on hand gives you a full view of your network and transportation management. You’ll be able to see what’s happening across all markets, ensuring proper rates for shipments, finding freight consolidation, and tracking everything from start to finish. You’ll be better prepared for now and any future disruptions. Not to mention, you’ll also gain an extra layer of security to your supply chain, which is something top of mind for everyone in this industry.
There is never a time where you shouldn’t strive to be a shipper of choice. Carriers are in the position of choosing which shippers they want to work with. Shippers who provide better experiences for carriers can reap long-term benefits in the form of higher service levels, fewer claims, and better rates. To become a shipper that carriers want to work with, it’s important to run efficient and friendly dock operations, reduce driver wait times, provide comfortable breakroom and restroom accommodations, and pay carriers quickly. Let’s break these down further.
Make sure it is in line with industry standards. You can also leverage your relationships with other carriers, shippers, and 3pls to see how you compare.
In business, cash is king, especially for carriers. Favorable payment terms can make a world of a difference to a smaller carrier company or an owner-operator. Anything under 30 days is often ideal.
This may not always be possible, but the sooner you get a load tender to your selected carrier, the better they can plan their own workload. Providing as much lead time can help you get the best capacity available at the most cost-effective rates. It can also get you more committed freight and keep you out of the spot market. 48 hours or more is ideal.
Put yourself in your provider’s shoes. What is it like to get an appointment set? Is it a huge effort or is it quick and easy? The easier and more user-friendly the process is, the more carriers will want to work with you.
Whenever possible, schedule pick-ups and deliveries that set carriers up for success. If transit is too tight and a late driver will have to wait hours for the facility to work them in, then the load is less attractive. Whereas if the pick-up and delivery are too far apart and a driver will have to sit around to get unloaded, then the load is also less attractive. Make sure your transit times are reasonable and make sense to keep carriers moving along. They will appreciate it.
The industry standard is two hours or less. Anything over that and your facility is at risk of having a negative reputation among drivers. Depending on your freight and operations, this may not be possible, but it is something important to keep in mind.
Unfortunately, this commonsense advice is not always common. Access to bathrooms, vending machines, waiting rooms, Wi-Fi, and most importantly, a friendly smile at the dock will go a LONG way.
When truckload capacity is tight, using a variety of modes can help mitigate capacity challenges while reducing your cost. Exploring multimodal options can be a great way to diversify risk, add capacity, and protect your freight budget. It can also give you the opportunity to reduce your company’s carbon footprint.
Whether you awarded hundreds of lanes in an RFP event or are a small shipper relying on the spot market, it’s important to have your supply chain driven by data, and tracking carrier performance is a part of that. If you can’t track it, how else can you make improvements? Be sure to communicate your KPI’s to every carrier you work with so they can be crystal clear on your expectations. Regularly evaluate your carrier base. Give them report cards and make sure their performance is not a mystery to you or them. You should also have a process in place for taking action for poor performance when needed. Again, clearly communicate that process to your providers, and be sure to stick with it. Inflationary markets will often show you which providers are serious about being your business partner.
If you found some tips that could better help you, it’s not too late to act. Any improvements that you make now will help you ship better. The faster you act, the more likely you will beat your competition to the punch. Now all this might seem like an overwhelming amount to do, which is why we’d like to offer you our help.
Trinity has over 40 years of experience working through produce season and years of supply chain disruptions. We can help you with capacity through our carrier network of over 70,000 relationships available. We can help you in your journey of being a shipper of choice as we offer carriers Quick Pay options through TriumphPay, available within two days. We can help you navigate freight consolidation options with the help of our experts. We have best-in-class TMS technology available with customized solutions to fit your needs, not the other way around, and experts to support you in those applications. We work with several modes and can offer you guidance on when and what solution you should use. Most importantly, we offer you a People-Centric approach.
To get started in learning how we can help you through this and future produce seasons, request your first quote.
Author: Mat Rasmussen
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