Our logistics expert, Cain Adams at Trinity Logistics/Longboard Logistics in Meridian, ID, provided us with a comprehensive look at transportation and onions and told us this week, “Chaos in the market has sent freight prices sky-high then down then back up between Memorial Day and the 4th of July.”
Cain said, “This ‘W’ shape freight wave will continue while we have COVID in the air. We have not seen pricing like this since 2018.” And, he continued, “We expect a bit of a decline during the months of July and August. After talking to five of our customers, we know medium yellow and jumbo reds are getting harder to find – which has kept us on our toes with pricing lanes to see which area is best to come out of.
During June, we finished up parts of Texas and Arizona along with Brawley and started as far north as Stockton, CA. New Mexico, Central California and Mexico crossings in the El Paso area have been busy.”
He added, “We are not sure how much impact the loss of Railex has had on the California market, but pricing is about 50 cents to $1 higher this year than last. More loads are definitely coming from California for us this year.”
Then there’s this factor: “June was tough with riots happening and trucks not wanting to enter cities. We only heard of one truck in New York having issues with protestors who took a few bags off the back of a flatbed. Other than that, it was pretty smooth.
“We had a few loads cancelled, delivering into the Los Angeles area, due to COVID and the closing of restaurant lobbies. Receivers were cancelling their orders.”
However, Cain said, “We expect wave two to be a little different. Restaurants are going to continue to work on their to-go service formula and persevere. This should allow more product to flow and help them recover.”
Public sentiment and compliance are also factors, he said, “We think people are just over it and may not conform with mask wearing unless forced. By not conforming, this may drag out longer and end up keeping the economy down a bit.”
Internationally, the United States-Mexico-Canada Agreement (USMCA) went into effect July 1. Cain said, “This will affect manufacturers who build items in the three countries and may pull manufacturing from China and other Asian countries back to the Western Hemisphere. Auto makers will most likely benefit from this move more than anyone.”
The upshot of July, Cain said, Overall, we are optimistic in the freight industry, and we see it thriving. There is so much pent-up demand in the minds of customers. People want to get out and buy stuff. Spending is up, and Americans do not want to be in a recession. As soon as this COVID gets fixed, look out for a huge surge in the economy and rates. It’s going to feel like a Wild West show. We can’t wait! Cheers!”