As produce season approaches, the trucking industry braces for a significant impact not only on reefer volume but also on truckload capacity and pricing.
Brokers nationwide are pondering: When will produce season hit, and where? How will this affect capacity? And what will be the price hike resulting from diminished capacity?
Timing is key. Weather conditions heavily influence crop viability and regional output. For instance, the onset of tomato and strawberry season in southern Florida is imminent, but volumes are currently down by over 30%. The question arises: When can we expect these volumes to surge and start their journey northward along the traditional route? Stay tuned to our market updates for insights.
Typically, produce season follows a south-to-north trajectory annually. Markets in the Southeast, like Miami and Lakeland, witness increased demand for truckload capacity in late April and early May, driving up rates and attracting trucks from other regions. As retailers gear up for Memorial Day, restocking shelves fuels summer shipments of food and beverages. Border cities such as McAllen, Laredo, and Miami experience heightened demand for produce from Mexico and Latin America, impacting outbound spot rates in Texas and the Southeast.
By late June, harvests migrate northward, leading to heightened demand for refrigerated shipments. Carriers allocate more capacity to markets like Atlanta, Savannah, and Jacksonville, where prices soar.
Produce movement out of southern Florida typically results in tightened capacity for both reefers and dry vans. Reefers may transition to hauling non-refrigerated goods, acting as additional capacity, thus tightening van capacity as well.
The Market Conditions Index (MCI) for southern Florida, as depicted below, indicates market tightness or looseness, with higher scores representing extremely tight markets. Tightness during produce season often translates to increased linehaul costs due to the scarcity of capacity.
Finally, the burning question: How much does produce season affect freight costs on a given lane? The answer: potentially, a significant amount. Historical data from DAT iQ illustrates the upward trend in reefer spot freight rates from Lakeland, FL, to Atlanta, with rates soaring from $800 to $1,200 on average in 2023—a 50% increase. A similar spike is anticipated this year, with a projected peak average of $1,038. For businesses, this $162 difference between 2023 and 2024 projections can spell the difference between profitability and loss.
Source: Transport Topics
