FOCUS ON LOGISTICS
By Cain Adams, Trinity Logistics, Inc / Longboard Logistics, LLC
My attention is often drawn to the notes left by receivers, particularly when it comes to loading onions onto various types of trucks. We typically use flatbeds, vented vans, and reefers for transportation. During times of high bag prices, we must be even more vigilant, hoping that flats are not rejected due to quality issues. If this happens, our carriers may incur losses, which is always a challenging situation. Your help in loading quality helps us and carriers get the job done right.
Reefers provide more security if the temperatures match the Bill of Lading or the customer’s specifications. However, the question of whether flats are essential arises. The answer is a resounding yes.
This year, we’ve noticed that flatbed prices are slightly higher compared to reefers. Previously, the price difference per bag used to be $1.00 to $2.00, but now it ranges from $0.25 to $1.50. We attribute this change to flatbeds being used more frequently for hauling construction supplies this year compared to previous years.
Truck availability has been relatively easy this year and is expected to remain so for some time, especially out of California, Texas, and Georgia. While prices may increase slightly, May typically marks the beginning of a ramp-up in both activity and prices. Weather conditions and the harvest of multiple produce items will drive rates up in California. Conversely, those shipping out of Oregon and Washington may experience a decline in backhaul prices. Shipping out of these states is currently considered a backhaul from California, with rates nearly halved from three months ago on the Washington to California lane. This shift benefits potato customers loading out of Washington. However, the industry is still grappling with an overcapacity issue, making it challenging for carriers to sustain their businesses.
The overcapacity situation has led to increased competition for loads, with carriers accepting lower rates to escape backhaul areas. It’s not uncommon for us to receive 20-40 calls for a load that may not cover the cost of fuel. Carriers are eager to return to more profitable lanes to recoup their costs.
We’ve observed significant variability in onion prices across different regions, as well as fluctuating availability of different colors. This variability has forced us to adapt quickly. Customers may request pricing from three regions but ultimately choose the most cost-advantageous location to load from. This trend suggests a shift towards less branding and a more consumer-centric approach.
Additionally, we’re noticing pricing becoming tighter as customers aim for razor-thin margins to remain competitive. This increased competition has led to a higher volume of calls, with brokers and carriers vying for business daily.
Looking ahead, 2024 appears to be a year of uncertainty. While economic graphs indicate a decline and a potential business recession, the political landscape suggests a softer landing. We know money is harder to get at a decent interest rate. If a recession presents itself in the latter half of 2024, we think interest rates will need to come down. We think the Fed is trying to get housing prices down and inflation under control before the Fed lets off on higher interest rates. Time will tell.
It’s crucial to prioritize quality to ensure receivers are satisfied with the products bearing your name. Don’t discount refrigerated trucks in favor of flatbeds without consideration. Refrigerated trucks can be just as accessible on certain lanes and sometimes even easier to secure. Verify the temperatures in your regions and match them with your Bill of Lading. We’ve encountered situations where summer onions are placed in refrigerated trucks with BOL temperatures indicating 32-45 degrees Fahrenheit, despite the onions coming out of fields with temperatures in the 90s. This discrepancy can lead to significant issues with the load. Therefore, it’s essential to conduct thorough checks and communicate with your loading locations to ensure that the temperatures are appropriate for the produce being shipped.
Isn’t this business a hoot? It’s a wild ride with a serious side. Paying attention to the nitty-gritty, knowing what can go sideways, and keeping it all on track really separates the pros from the rookies. Choose your partners wisely—it’s a win-win for everyone! Cheers to smooth sailing! Cain Adams, Trinity Logistics, Inc / Longboard Logistics, LLC
