DAT SPECIAL REPORT. Freight Solutions
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1 DAT SPECIAL REPORT Freight Solutions Fruit & Vegetables by the Truckload August 2011: Maine, New York, Michigan, North Dakota, Idaho and Oregon By Mark Montague, MBA, Industry Rate Analyst
2 DAT SPECIAL REPORT 2 Executive Summary TransCore s third monthly Produce Report combines spot market freight rates from our Truckload Rate Index with data from the U.S. Department of Agriculture, in an analyzing seasonal and regional trends in truckload shipments of fruits and vegetables. Highlights include: Reefer rates in southern Maine dipped in July and recovered in August Rates and freight volume slipped in western New York in June and rose in August Southern and western MI reefer freight availability and rates peaked in August North Dakota reefer rates rose steadily from mid-june through August Origins - For the third in this series of reports, we focused on the markets in the Northern U.S., where fruit and vegetable crops were harvested in July or August. Destinations - For each produce market, we consider lane rates to a selection of the ten major destination cities identified by the USDA. Rates in southwestern Idaho were relatively stable throughout the summer Fruit ripened late in eastern OR, but reefer rates stayed high through the summer Key Origin Areas Covered in This Report 1. Southern Maine, including Bangor 2. Western New York, including Syracuse, Rochester and Buffalo 3. Jackson, in southern Michigan, and Fremont to the west 4. Fargo, in eastern North Dakota 5. Boise and Twin Falls, in southwestern Idaho 6. Eastern Oregon, including Pendleton Top Ten Destination Cities According to the USDA Report 1. Atlanta, GA 2. Baltimore, MD 3. Boston, MA 4. Chicago, IL 5. Dallas, TX 6. Los Angeles, CA 7. Miami, FL 8. New York, NY 9. Philadelphia, PA 10. Seattle, WA
3 DAT SPECIAL REPORT 3 Southern Maine Bangor In Maine, most fruit and vegetable crops ship during late summer, including the state s famous blueberries. The state is also known for potatoes, which are harvested from June through mid-october. Apples are the largest fruit crop, putting pressure on freight rates from August through October. Rates in Maine appear to fluctuate with load volume, not capacity, as trucks seem to be readily available throughout the growing season. In fact, the load-to-truck ratio for reefers in Maine is highest in winter and early spring, when reefer vans are used to prevent freezing of temperature-sensitive cargo. Rates for refrigerated freight peaked in Bangor, ME during strawberry season in mid-june, then dipped after July 4th. Rates recovered in late summer for vegetable, apple and potato harvests. Rates shown above do not include fuel surcharges. The load-to-truck ratio for reefers was highest in Maine during winter months, when the insulated vans are used prevent freezing of temperature-sensitive cargo. This year s produce season did not generate high reefer volume until late summer.
4 DAT SPECIAL REPORT 4 Upstate New York Rochester, Buffalo & Syracuse In the USDA Truck Rate Report s notes at the end of August, only one type of produce is listed for Western and Central New York: cabbage. This is a big crop, and it moves in its fresh form or processed locally and shipped as sauerkraut. Weather-related delays in the cabbage crop led to a late harvest in August. The USDA assessed local truck availability as adequate, but high load volume exerted pressure on reefer rates throughout the month of August. Reefer rates and shipments increased in June, then bounced around for most of the summer in the western New York markets of Rochester, Buffalo and Syracuse. August saw an upward surge in reefer loads and rates, in response to late summer harvests at local farms. Cabbage was the number one commodity looking for outbound trucks. Reefer load availability increased in Upstate New York during February, then dropped as the weather warmed in spring and early summer. Loads increased again in July and August, but did not achieve the heights seen in winter. In New York and across the northern U.S., reefers are deployed in winter to protect temperaturesensitive cargo from freezing.
5 DAT SPECIAL REPORT 5 Michigan Jackson and Fremont Although Michigan s most famous products are largely automotive, the state s agricultural sector contributes $3 billion and counting to the state s GDP. This summer, the produce season built momentum in southern and western Michigan from late June through August and into September. Reefer freight availability and rates ramped up steadily throughout the summer, with harvests continuing into early fall for apples and other commodities. Average rates for major produce lanes from Jackson rose 8.0% in July, compared to June. Rates increased again by an average of 10% in August, climbing to $1.86 per mile for line haul in the week leading up to Labor Day. Load availability in Michigan peaked for reefers on the spot market in March, declined steadily through the Spring, and recovered in July and August. Truck capacity peaked in May, but remained adequate throughout the summer, according to the USDA.
6 DAT SPECIAL REPORT 6 North Dakota Fargo We tracked spot market rates in eight lanes originating in Fargo, ND. Most had relatively low reefer traffic through the summer, with the exception of the lanes from Fargo to Chicago, Miami and Atlanta. The lane to Chicago carried the lion s share of outbound reefer freight, accompanied by the lowest rates. Low-volume lanes to New York, Boston and Philadelphia paid well above $2.00 per mile, to balance the low-priced return trip outbound rates from those cities. Rates for reefers originating in Fargo, ND were close to the national average of $1.71 per mile in June. As summer progressed, the national average dropped to $1.55, while rates in Fargo continued to climb. That s because national averages are driven by high-volume states, especially California, where the long growing season peaks in June. Demand peaks for reefers in the winter in North Dakota, when the insulated, temperaturecontrolled vans are used to prevent freezing of sensitive cargo. Nevertheless, the load-totruck ratio rose steadily through the summer, to exceed six available loads per truck in August.
7 DAT SPECIAL REPORT 7 Southwestern Idaho Boise and Twin Falls A wet spring caused a delay in the growing season for Idaho potatoes, the state s primary crop, but some farms nevertheless began to harvest smaller spuds by late August. Idaho potatoes are typically processed locally and shipped frozen, so the resulting demand for reefers is spread evenly across the entire year. Nevertheless, competition for reefer capacity drives rates up during the summer months. Although demand for reefers remained relatively stable throughout the spring and summer, increased competition from other states drove rates up in July and August. Loads designated for reefers in Idaho doubled in June but slipped 8.4% in July. Reefer loads then increased 24% in August, while spot market capacity declined 24% statewide for the same segment.
8 DAT SPECIAL REPORT 8 Northeastern Oregon Pendleton Oregon s biggest agricultural crop is grass seed, which does not directly affect refrigerated freight volume or rates. In the northeast Oregon market of Pendleton, we track nine outbound reefer lanes that carry fruit to key produce market destinations identified by the USDA. Of those, the lane to Los Angeles paid consistently low rates of well below a dollar per mile on the spot market through July and August. Vineyards in the lowland areas of northeast Oregon were damaged in cold, wet spring weather leading to reduced or delayed grape harvests. Berries and fruit trees were also affected, postponing harvests well into August. Rates began to trend up in mid-june, and stabilized at the higher level of $1.42 to $1.46 per mile through July and August. Spot market freight availability for reefers in Oregon doubled in July and then nearly tripled in August, month over month. The high lateseason demand drove the load-to-truck ratio to 29 in August statewide, even though reefer truckload capacity also increased through the summer.
9 DAT SPECIAL REPORT 9 How We Measured Since mid-march, we have been using Truckload Rate Index to collect and analyze over 30,000 rates for refrigerated ( reefer ) vans on the spot market. In July, we identified trends in the weekly and monthly average rates for key produce lanes identified by the U.S. Department of Agriculture, then compared our results with the weekly USDA Fruit and Vegetable Truck Rate Report. We have found patterns of reefer rate trends that support the USDA findings on available truck capacity in markets where fruit and vegetables are grown or imported. Rates displayed in this report do not include fuel surcharge or other fees. Mark Montague, Industry Rate Analyst As a mathematician and statistician, Mark Montague has spent decades developing and implementing consistent, market-driven rate structures for transportation companies. Mark was instrumental in developing the dynamic rates database and analysis tools in TransCore s Truckload Rate Index for the Spot Market. Prior to joining TransCore in 2009, Mark applied his expertise in logistics, rates and routing as a logistics manager and analyst for carriers, 3PLs and shippers. He holds an MBA in Transportation Management from Indiana University s Kelley School of Business. Mark Montague, MBA, Industry Rate Analyst, Transcore Freight Solutions Truckload Rate Index is like Having a Rate Analyst at Your Fingertips TransCore s Truckload Rate Index is a sophisticated rates database and analysis toolkit. Truckload Rate Index includes spot market rates, which are based on $5 billion in rate agreements between freight brokers and carriers. Spot market rates are updated daily for vans, reefers and flatbeds across the U.S. and Canada. Truckload Rate Index includes a separate database of 12 million freight bills recording shipper-to-carrier contract rates, which are updated monthly for the three equipment types. For more information about Truckload Rate Index, contact a professional sales representative today. Call or visit TransCoreFreightSolutions.com *The Load-to-Truck Ratio is a useful indicator of demand and capacity in a given market. While it is not a precise measuring tool, it typically provides a good overall indication of supply and demand. As a general rule of thumb, if you see a high load-to-truck ratio for your preferred equipment type in a market, you can expect spot market rates to be higher than normal TransCore. All rights reserved. All trademarks are the property of their respective owners Freight Solutions
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