Will the supply of independent truckers rise to meet the demand?
Originally printed in the March 2021 issue of Produce Business.
The pandemic exposed and exacerbated vulnerabilities in the nation’s produce distribution system, and it remains to be seen how long it will take the industry to fully recover.
National transport companies at the nerve center of moving produce from fields to distribution centers and terminal markets hundreds and thousands of miles away found that, since last March, it has been even more difficult to find enough independent truckers to add to their own drivers to form a reliable and efficient network.
“Some drivers have chosen to drive less during COVID, and government funding has helped them do that,” says Robert Goldstein, owner of Genpro, Rutherford, NJ. “It created some capacity constraints. There is a reduction in the workforce.”
Genpro is a full-service trucking company with a national footprint and an emphasis on produce, pairing independent haulers with the freight they most want to carry in a logistical framework that includes access to the most advanced information technology and reliable quick payment for services.
Goldstein has seen costs go up as firms like his, that coordinate independent truckers, find it difficult to line up enough help.
“We’re seeing a 60% increase in freight charges early in 2021 compared to a year ago,” he says. “Hats off to all the drivers who have continued to deliver produce during COVID.”
“Some drivers have chosen to drive less during COVID, and government funding has helped them do that.”
— Robert Goldstein, Genpro
The fear factor placed particularly strong pressure on areas known to have a high rate of COVID infection.
“At the beginning, we had challenges getting carriers and drivers to come to the New York Metropolitan area since we were the ‘hotspot’ then. If we could, we paid a premium for that service,” says Paul Kazan, president of Target Interstate Systems, Bronx, NY. “Now we are dealing with a shortage of carrier capacity due to the carriers and drivers that left the workforce in conjunction with unprecedented demand due to COVID.”
Target distinguished itself 40-years ago by becoming one of the only truck brokers based at the point of destination, the New York Metropolitan area, rather than at the point of origin.
Will the Economy Normalize?
Kazan believes part of the supply problem has been that a rise in consumer spending with dollars that used to go to restaurants has tied up trucks that might otherwise be available for produce.
“This unprecedented demand for trucks has created a capacity shortage of trucks available for produce loads,” says Kazan. “Produce is just another freight category that is in competition with all that other freight. This backlog has many reasons, but one is the strong American consumer buying patterns. Some economists suggest that, since the pandemic, people were not spending money on restaurants, movies, vacations, etc. But they were spending money buying consumer goods and DIY home improvements.”
While the availability of vaccinations should entice some truckers back to work, no one claims to know how long it will take for buying and shipping patterns to return to a pre-pandemic normal.
“The greatest transportation challenges during COVID-19 have been the variability of supply and demand, primarily due to production and manufacturing closing, slowing down and reopening in conjunction with seeing demand either spike or dissipate based on uncontrollable influences,” says Mike Petersen, vice president for transportation at C.H. Robinson, Eden Prairie, MN.
This uncertainty of production during the pandemic has clogged transportation for all products, including produce.
“The true impact of the vaccines on produce truck transport will be the buying patterns of non-produce items,” says Kazan. “For weeks now, there has been an unprecedented amount of container cargo freight from Asia sitting off the Southern California ports. There has been what is described as a two- to four-week delay in getting the ships empty. This container freight already so delayed is not going rail as it would traditionally. The rails are too slow. Most of that freight is being unloaded and transferred onto trucks.”
The pace with which economic activity beyond the world of produce normalizes will greatly impact the efficiency with which fruits and vegetables can be moved from the fields to distribution centers around the country.
“I would hope manufacturing and shipping would level off and create a stable ration between supply and demand for transportation,” says Tracey Lewin, vice president for sales and operations at Allen Lund Co., a La Canada, CA-based transportation broker bringing together shippers and carriers, serving as a logistical nerve center with no equipment of its own beyond 36 offices around the country and countless telephones.
“There has been a real problem with capacity since late March or early April,” says Lewin. “In some cases, we saw freight costs double or triple; and there were sustained 15% to 20% increases, 25% in some areas. It was feeling like we would recover in January until the storms hit.”
The cost of trucking produce should come down, and become more stable, once vaccinations help our buying patterns return to normal.
“As the country reopens, I anticipate that how Americans spend their money will change and will allow the supply chain to get back in sync,” says Kazan. “This will hopefully lead to a reduction in demand for trucks and allow produce rates to settle at a manageable level.”
One important piece of a return to pre-pandemic consumer patterns will be the recovery of the foodservice sector as people return to restaurants.
“The impact of COVID has been extremely frustrating,” Goldstein says. “The technology has enabled us to be available and connected but from a logistical and communications standpoint it’s been harder. Produce wholesalers have been up and down, retailers have been consistent and foodservice has a ways to go to come back.”
While a return to more normal buying and shipping patterns will help, the pandemic has highlighted that, at the heart of produce transportation, there is a chronic long-haul trucker shortage.
“I don’t know how long it will last; there’s got to be a significant turnaround in the economy as a whole,” says Goldstein. But, he adds, “There’s always been a shortage of workers who want to do long haul produce.”
Driver Supply & Demand
The reduced supply of drivers, independent truckers, has been the single greatest difficulty COVID has caused for produce transportation.
“Supply has been the greatest transport challenge during COVID,” says Fred Plotsky, president of Cool Runnings, Kenosha, WI. “Supply of labor, parts, product…all types of supplies are short in quantity. It slows progress.”
Cool Runnings started 35 years ago as a broker hauling potatoes out of Idaho and has grown to handle all sorts of freight and offer independent truckers a slot in an efficient logistical scheme.
The only expense that cannot go down as vaccinations reopen the economy is the drivers’ wages, according to Plotsky.
“Transportation can’t help but get more efficient,” Plotsky says. “With so many challenges, it’s fairly inefficient. I hope the vaccine will ease the burden of supply availability.”
While produce transportation figures to get more efficient as more and more people become vaccinated and COVID recedes, the driver shortage did not begin with the pandemic, and it will not be solved by vaccinations.
“Many small carriers closed their doors and took the federal PPP money,” Lewin says. “There was also a fear factor among drivers who didn’t want to get sick,” Lewin says. But she adds, “We have been living with driver shortages for over 10 years, and we are hopeful that we don’t see this trend continue and that new drivers will be coming into the market.”
Technology to the Rescue?
The work of transportation brokers is usually done in offices buzzing with telephones, fax machines, computers and teams of quick-witted and knowledgeable employees.
Those offices, like most in the country, have largely shut down during COVID, and only new technology made it possible to keep figuring out how to move produce from around the country to the nation’s dinner tables.
Produce transportation brokers showed, once again, that agility is one of their strengths as they moved to communicate remotely in short order.
Signs early in 2021 are that it will take some time to achieve a balance between supply and demand for produce transportation capacity.
“It has been difficult adapting to employees having to work at home,” Lewin says. “Our work is team-oriented and dynamic. We figured it out with a lot of zoom calls and group chats. We were forced to figure it out quickly; it took us about three weeks.”
Technology and the efficiency it affords helped the industry manage truck shortages during the pandemic.
“The pandemic impacted the driver workforce and made the carriers need to do more with less drivers,” says Kazan. “This required greater efficiencies in use of their assets. A lot of this was placed on the shippers and receivers to reduce the wait times to get loaded and unloaded. We also saw an increase in the use of technology to help make the whole supply chain more efficient in sourcing and procurement of carrier services.”
Even though there has been incredible progress in the technologies for remote communication in a short time, transport firms see the return to team office work as a core benefit of widespread vaccination.
“We’re hoping to get our people working at home back into our offices,” Lewin says.
Return to Normalcy
As the global pandemic becomes a memory one major benefit should be a return to stability, as production, trade and shipping requirements become more stable and predictable.
A first sign that we are returning to normalcy should be the recovery of produce shipments to restaurants.
“Now that vaccines are available, and the country has started to reopen, foodservice and institutional distributors will be most impacted with regards to the produce industry. Consumer buying patterns, both in store and online, will not see as great a change,” says Kazan. “This increase in foodservice business, which has been off by as much as 40%, will increase the demand for an already tight truck capacity environment.”
Shifts in the weather, the opening of the economy as more people become vaccinated and other factors combine in an equation that will take some time to sort itself out.
“When you ask questions about efficiency and cost, you need to look at the entirety of the transportation factors,” says Petersen. “The weather or the vaccine aren’t the only events right now that will cause tight capacity. Each event might be an individual event, and usually there is a lag in between each, but that may not occur this year. Tight capacity is acting as an accelerant for this. We should be in a seasonal low right now for transportation capacity, but we are not because of a number of factors.”
Signs early in 2021 are that it will take some time to achieve a balance between supply and demand for produce transportation capacity.
“Floral for Valentine’s Day was tough, and then we rolled right into produce season for the Southeastern United States in conjunction with the weather in Texas and a freeze in the Midwest,” says Petersen. “Capacity had no reprieve, and there are more events all the way through Memorial Day, from other agriculture areas coming into season to national holidays when more goods are traditionally moved. With all of these factors, demand has outpaced supply.”
The first big test of the new normal in produce transportation should come in the later spring and summer when the bounty from the nation’s fields, orchards and vineyards reaches its peak.
“February is always a slow period in produce, and the cold weather in Texas and other places has impacted a lot of the routes,” Goldstein says. “When we get back toward the peak around May, capacity is going to be tight.”
As transportation firms look for a return to normalcy, they will have to draw on their ability to adapt with agility.
“The one thing I have learned this past year is that no answer is right,” says Plotsky of Cool Runnings.
Even if no one knows when, we will return to a normalized system of trucking produce from field to fork.
“Trucks aren’t going anywhere,” Lewin says. “The million-dollar question is when we will return to normal.”
