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Summer Stock: Dealing with zooming costs

What may not dissipate with the end of the pandemic are soaring costs, suppliers say.

It starts with trucks.

Gerry Valois, president of Western Onion Sales, Inc. BB #:144232 in Camarillo, CA, chalks it up to a supply-demand situation.

“The freight rate markets will seek their own levels,” he explains. “The freight rate for reefer trucks is up considerably more than for, say, flatbeds. It’s probably up 50 to 100 percent, at least for reefers, for sure.”

Greg Zdroik, director of grower relations, sourcing, and logistics for grower-shipper RPE, LLC BB #:105471 in Bancroft, WI, says the biggest issue for the industry is “transportation costs and the lack of available trucks in all shipping regions. It’s unbelievable to see some freight costs higher than the value of the actual potatoes.”

Joseph Mercurio, managing member with Columbus, OH’s Joseph Mercurio Produce, LLC, BB #:102552 agrees, especially for FOB (free-on-board) loads. He remembers a conversation back in February, when a truck from Salinas to the Midwest, with two pickups and one drop off, was $9,000.

Mike Fields, operations manager with American Fruit & Vegetable Company, Inc. in Rochester, NY, BB #:159286 reveals his own his dealings in the winter months, waiting as long as 10 days just to secure a truck and get it loaded. He believes the scenario will likely persist.

“Trucks always become an availability issue in the summer months,” he says.

“A nightmare” is what Jeff Joseph, managing member and salesman at Visalia, CA-based grower-shipper and broker Mineral King Produce, LLC, BB #:162871 calls the trucking situation.

He says winter rates are usually low, but not this year due to so few drivers. Toss in Russia invading Ukraine and oil embargos, and prices soared even more.

He predicts prices will be in the $12,000 to $14,000 range from California to Ohio this summer, noting similar orders cost $6,000 to $8,000 a few years ago.

Lucas McComas, operations director with Lewis Center, OH-based truck broker Triple T Transport, Inc., BB #:150285 is on the same page, and doesn’t see much improvement in the near future.

“Honestly, I don’t think there’s going to be much change,” he says. “There’s not going to be a massive change in the driver shortage. We’re probably going to be in this situation the rest of the year.

“With what we do and most of the product we’re moving,” he continues, “I don’t see a huge impact even in the fourth quarter, with the holidays and seasonality.”

Truck rates are up, but they can rise only so much, explains McComas. “There will be some seasonality, but as far as standard rates, I think we’ve gone up as far as we can go—it’s just not sustainable.”

And then there’s labor and rising inflation.

“Labor is going to be short for everybody,” states Valois. “Most of what we do is machine-harvested, but we still look for labor and share in the same misery—just not to the same degree,” he observes. “There are others with hand crews that need 50 to 100 people.”

Tillman comments on inflation, a rate not seen in decades. “I started selling produce 45 years ago, and I’ve never run across such situations as we’re dealing with now.”

And higher costs for growers and suppliers mean higher costs for customers.

“We’ll try our best to keep our costs reasonable, where our customers can still make money, and us too,” says Jonnathan Cordon, business development manager for Nashville, TN-based wholesaler Mid-South Produce Distributors, LLC BB #:152766.

“We’re not trying to make just one sale; we’re trying to build relationships long term.”

This an excerpt from a spotlight feature in the May/June 2022 issue of Produce Blueprints Magazine. Click here to read the whole issue.