Higham: Freight Rates Soaring, Capacity Tightening

Higham: Freight Rates Soaring, Capacity Tightening

A perfect storm of issues are affecting available truck capacity, causing freight rates to soar and growers to scramble for capacity. Interstate Transport’s Tim Higham explores the challenges many growers are facing.

For those growers reaching into the common carrier pool this year, in order to move material to customers they are finding trucks impossible to find–at any price in some regions. A perfect storm of issues are just beginning to show their effect on available truck capacity, causing freight rates to soar and growers to scramble for capacity.

This week, I have been inundated with calls from growers nationwide looking for help. One grower, who did not want to be named, stated: “I have loads sitting on the dock for days while we look for trucks. I am at the point where I will pay anything to service the customer or I will lose them. The problem is that whatever I offer to pay, it does not seem to be high enough. There is always someone more desperate willing to pay more.”

In an April 6 online seminar, an FTR Associates economist stated that truckload capacity shortages will gather further momentum this year and continue through 2013 as the economy recovers and as new regulatory restrictions will limit the driver pool. FTR senior consultant Noel Perry estimates that because of the economic upturn and the federal government’s push for improved safety, “a couple hundred thousand more drivers will be taken out of the marketplace between now and the end of next year.”

The problem in the horticultural market is magnified due to a host of factors that are changing the truck market in a permanent manner. In addition to the usual challenges such as the spike in spring shipping needs, the new CSA regulations are pushing carriers out of the market. It just happens that the carriers being pushed out are often small fleets with less than 10 trucks–the very carriers willing to take spot-rated, multi-stop plant loads.

In addition, fuel prices are causing small fleet operators to take huge losses unless they can find a way to be more efficient by reducing deadhead miles. Shippers often think the fuel surcharge they pay covers the additional cost of diesel, but the carrier is not compensated for the deadhead miles they drive between loads. They have to pay for that fuel out of their own pocket. I have spoken to well over a dozen small fleet owners that closed the door this year who stated that high diesel prices pushed them over the edge. Many of them were running older, non-aerodynamic equipment that’s getting less than 5 mpg, and the rising cost of diesel made continuing to run their trucks a poor decision.

But the problem isn’t just high costs and increased regulation. For the first time anyone can remember, banks will not loan money on equipment to truckers. Even those carriers that are holding their own are being given loan or lease terms that are unworkable. One Florida based trucker told me, “My trucks all came to the end of their five-year lease this year and I was told they would be happy to give me new equipment, but I had to pay six months of payments upfront. That came to almost $200,000 on eight temperature-controlled rigs. I was told they are being much more picky in their underwriting and credit department. Five years ago, I put nothing down but the first month in advance. The only choice I had was to turn in the keys.”            

Perry, the FTR Associates economist, says: “We expect the rest of the year to have relatively strong truck shortages and to include further price increases.” Perry predicts prices will continue to rise through next year and into 2013 even if trucking capacity catches up with demand. He adds that truck tonnage will average 5 percent growth this year through 2013.

With a declining carrier base to move the available freight, that will further exacerbate shortages. Preliminary FTR data shows March Class 8 truck net orders totaled 28,871, a 20 percent increase over February preliminary orders and a 155-percent increase over the same period in 2010. The data shows that the current strong new truck orders are primarily from large, financially stable carriers, and are replacing aging equipment, not adding to net capacity.

Leave a Reply

More From Finance/Operations...

April 1, 2015

Philadelphia Flower Show Draws More Than 250,000 Attendees With Disney Pixar Movie Theme

With more than 250,000 consumers attending the prestigious Philadelphia Flower Show in March each year, it's a great opportunity to get flowers and gardening products into the public eye. This year's show displays took on family favorites at the movies, with a focus on Disney and Pixar films. Check out some of the highlights in our slideshow.

Read More

April 1, 2015

Peace Tree Farms Grows Its Customer Base

Over the past five years, Peace Tree Farms in Kintnersville, Pa., has concentrated on growing its business by providing plant material for the displays at the illustrious Philadelphia Flower Show. We caught up with Peace Tree Farms’ Lloyd Traven to ask about how the Flower Show figures into his business plan.

Read More
protecting bees and pollinators video

March 31, 2015

New Video On Protecting Bees And Pollinators Educates Horticulture Industry Professionals

A new educational video that provides information on the horticultural industry’s essential role in bee and pollinator stewardship is one result of industry collaboration by the Horticultural Research Institute, AmericanHort, Society of American Florists and the American Floral Endowment. “Protecting Bees & Pollinators: What Horticulture Needs to Know,” narrates the current state of bee and pollinator health, provides information on factors that impact pollinators and the environment and underscores the beneficial role horticulture plays in providing healthy pollinator ecosystems.

Read More
Latest Stories
DNA-logo

March 31, 2015

DNA Green Group Will Acquire Rijnplant

DNA Green Group and Riknplant have finalized DNA Green Group's acquisition of Rijnplant, meaning that the breeding and propagation activities in pot and cut anthurium, bougainvillea and heliconia will transfer to DNA Green Group.

Read More
AFE scholarship_Ryan Dickson

March 25, 2015

AFE Educational Grant And Scholarship Application Deadl…

Apply now for American Floral Endowment (AFE) scholarships or educational grants. Applications can be found online. For educational grants for 2015-2016, applications must be submitted no later than June 1. Scholarship applications are due May 1. AFE will award $40,000 in scholarships for 2015.

Read More

March 23, 2015

UF/IFAS Appoints Joseph Albano As Director Of Mid-Flori…

The University of Florida's Institute of Food and Agricultural Sciences (UF/IFAS) has a new directors for its Mid-Florida Research and Education Center (REC) on Apopka, Fla. The role has been filled by Joseph Albano, a research horticulturist from the U.S. Department of Agriculture with more than 25 years of experience.

Read More

March 17, 2015

Pike Nurseries Implements Employee Stock Ownership Plan

Independent garden retailer Pike Nurseries has announced it will become an employee-owned company. Pike Nurseries management has combined with its sister corporation in California, Armstrong Garden Centers, to operate under an established Employee Stock Ownership Plan (ESOP).

Read More
GrowIt! App Wins Gold At Design100 2014 US Mobile & App Design Awards

March 10, 2015

GrowIt! Mobile App Now Available For Android

The mobile app GrowIt! Garden Socially can now be used by gardeners with Android-based smartphones. Now available on the Google Play Market, GrowIt! helps users find plants to fit their lifestyle and connect them with other local gardeners.

Read More

March 4, 2015

Second Annual GreenhouseConnect Will Bring Growers and …

Following a successful inaugural event in Tampa last fall, Greenhouse Grower has announced the dates of its second annual GreenhouseConnect: October 26-29, 2015. Representatives of an expected two dozen leading greenhouse operations from across the U.S. will join senior-level suppliers at Rancho Bernardo Inn in San Diego for several days of one-on-one strategic meetings, a growers-only roundtable, informational sessions and a variety of networking events.

Read More

March 4, 2015

Maryland Green Industry Associations Unite

The Maryland Nursery and Landscape Association recently announced that it is expanding its reach to include the greenhouse industry, meaning it has become The Maryland Nursery, Landscape and Greenhouse Association (MNLGA). The change comes as a result of the planned dissolution of the former Maryland Greenhouse Growers Association and the invitation for those members to join the existing and renamed association.

Read More
IPPS Sharing Plant Production Knowledge Globally Logo

February 25, 2015

International Plant Propagators Western Region Sets Ann…

The annual meet for the International Plant Propagators' Society (IPPS) Western Region has been set for this September. It will take place September 23 to 26 in Modesto, Calif., and will include learning sessions, tours to local nurseries, a research poster display and poster presentations, various networking opportunities and an awards banquet to close the event.

Read More
myers industries Lawn and Garden Logo

February 24, 2015

Myers Industries, Inc. Lawn And Garden Business Sold, N…

The management of Myers Lawn and Garden Group, along with Wingate Partners V, L.P. have recently acquired the Myers Industries, Inc. Lawn and Garden business. The new company is named The HC Companies, and will continue as a North American leading provider of horticulture containers supplying the greenhouse, nursery and retail markets.

Read More
american-hort-logo

February 17, 2015

AmericanHort Announces New Board Members

AmericanHort recently announced the election of new officers and members to the board of directors. Each will assume their positions on the board during Cultivate’15, July 11 to 14 in Columbus, Ohio.

Read More
All American Selections

February 17, 2015

All-America Selections Elects New Officers, Names New J…

While meeting during the Flower and Vegetable Seed Conference in Tampa, Fla., hosted by the American Seed Trade Association, All-America Selections elected new officers for a two-year term. Read on to learn about the new officers, as well as all of the new judges that were added in 2014.

Read More
Greenhouse Grower.com on your desktop, on your phone, on your tablet

February 11, 2015

GreenhouseGrower.com Relaunches With Responsive Design …

Greenhouse Grower magazine, the nation’s leader in profits, production and education for greenhouse growers, announces the launch of its completely redesigned website, GreenhouseGrower.com. The new design is the product of direct user feedback and GreenhouseGrower.com analytics, and includes responsive design for ease of mobile use.

Read More
Andy Higgins

February 3, 2015

MasterTag Names Andy Higgins As Its New President

Former CEO and president of Ecke Ranch, Andy Higgins, joins MasterTag as its new president. He brings more than two decades of industry experience to the position.

Read More
Syngenta Bioline Hires Ronald Valentin For Technical Lead Role

January 28, 2015

Syngenta Bioline Hires Ronald Valentin For Technical Le…

Ronald Valentin has been appointed technical lead for Syngenta Bioline, effective January 2015. He will be responsible for technical support of Bioline biological control agents and will be instrumental in helping growers develop integrated pest management (IPM) solutions.

Read More

January 27, 2015

Give Equal Time To The Number Crunchers

Before investing in a new business opportunity, check in with the financial gurus of your organization to make certain you have the cash flow to back up your efforts.

Read More
Plant Introductions, Inc. partners Mark Griffith, Dr. Michael Dirr and Jeff Beasley and Bailey Nurseries President Terri McEnaney.

January 20, 2015

Bailey Nurseries’ Purchase Of Plant Introductions Inc. …

When Bailey Nurseries purchased its long-time breeding partner, Plant Introductions, Inc. (PII), in early January 2015, it freed the PII team to concentrate on what they do best: develop new plants. Bailey Nurseries will take on the business management side of the partnership, but otherwise the relationship it has enjoyed with PII for years will be largely unchanged.

Read More
Plant Introductions, Inc. partners Mark Griffith, Dr. Michael Dirr and Jeff Beasley and Bailey Nurseries President Terri McEnaney.

January 13, 2015

Bailey Nurseries Acquires Plant Introductions

Bailey Nurseries has acquired Plant Introductions, Inc. (PII), effective January 1, 2015. PII has developed numerous innovative new varieties that have been marketed worldwide, many introduced by Bailey Nurseries.

Read More

January 7, 2015

How Inflation Affects Your Business And Why You Can’t I…

Awareness of the true increase in costs after inflation is a necessary part of good financial management for greenhouse operations.

Read More