Trucking Costs Present Challenges for Potato Industry

Published online: Oct 20, 2021 Articles Tom Karst
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Source: The Packer

Higher trucking costs are one of the season’s biggest potholes for Idaho potato grower-shippers this season.

From early August to Oct. 9, the USDA reported the average rate for refrigerated trucks from Idaho to Atlanta rose from $4,675 to $6,500, a gain of 39 percent. This year’s October rate was up about 40 percent compared with a year ago, the USDA said.

The truck rate from Idaho to Boston rose from $7,000 in early August to $8,500 by Oct. 9, a gain of 21 percent. Compared with the same time a year ago, the October 2021 rate was 37 percent higher, the USDA said. Refrigerated truck rates from Idaho to Chicago were rated at $4,500 on Oct. 9, up 25 percent from early August and 32 percent above the same time a year ago.

Strategies 

Finding trucks during the holiday season may be challenging, said Ross Johnson, international marketing director for the Idaho Potato Commission.

“We’re really getting out there and trying to encourage retailers to try to look forward and really start to build their inventory on potatoes, because it’s going to be a challenge as we head into this winter timeframe.”

Speaking at the Idaho Grower Shippers Association 93rd annual convention in early September, Kevin Vandenberg, account manager for C.H. Robinson, said truck supply will continue tight for the foreseeable future and shippers need to do all they can to make themselves preferred customers.

Market forces that favor increased truck capacity, he said, include high pricing, driver signing bonuses and strong truck demand. Factors that decrease truckload capacity include slowed truck manufacturing because of part shortages and labor headwinds.

Increasing demand for truck capacity is seen with the economic stimulus, retail spending, inventory replenishment, consumer sentiment, and housing. 

However, the federal stimulus package enticed some drivers and warehouse workers to make money by “sitting on their couch” as opposed to joining the workforce, he said.

With 62 percent of truckers in the owner/operator category now, Vandenberg predicted more and more entries into the freight business by that route, since the barriers to entry are low

With truck capacity continuing tight, Vandenberg said that C.H. Robinson’s projections pointed to 5 to 6 percent growth rates in spot rates from early September to the end of the year. Less-than truck load rates remain elevated compared to the historical five-year average and the truck driver shortage is not easing, he said. 

Key drivers for 2022, he said, will be the strength of the economy, supply chain and labor restraints and inventory rebuild continuing for multiple industries.

In the face of the tight truck market, shippers should work to be a shipper of choice for carriers and drivers, Vandenberg said. He said that reducing wait time for drivers should be one aim, and investing in good facilities is another, and that having a more consistent experience at a shipper’s facility will make drivers want to come back.

“Right now, we’re trying to do that as well, trying to make life easy for our (transportation) providers,” he said. “We need the supply to meet the growing demand that’s out there.”

Having accurate forecasts of need when setting up transportation contracts with carriers is critical, he said.

“Having more articulate conversations with your providers, and having a plan when things go off plan is obviously important,” Vandenberg said. 

Investing in technology to remove manual touch points can increase efficiency at a time when it is tough to remove costs from the system, he said.