All posts by Mike Hilburn

Florida orange crop is in trouble.

The primary agriculture commissioner in Florida announced last week that “Florida is synonymous with citrus, and without immediate and tangible support, as well as a long-term solution, Florida is facing the prospect of losing its signature crop and it’s more than $10 billion economic impact.”
The Florida orange crop of 69 million boxes is nearly 30 percent below last year’s crop of 96.7 million boxes and represents a decline of more than 71 percent since the peak of citrus production at 244 million boxes during the 1997-98 seasons. It appears a sneaky bacterium is the culprit which is a citrus greening disease, also known as “Yellow Dragon Disease” and abbreviated as HLB. It is a citrus disease caused by a vector-transmitted pathogen.
The Commissioner also announced a multifaceted plan to provide Florida growers with more immediate support until a permanent solution is developed. That plan includes, among other things, a cost-sharing program for the removal or destruction of abandoned citrus groves to eliminate material that harbors citrus greening and the vector that spread the bacterial disease. Researchers in several states are currently focusing on developing bactericides to reduce/suppress the transmission and eliminate infections in existing trees.
It looks like Texas and Arizona will be able to take advantage of Florida’s loss this year and the next few years to come.

Detention, still a top concern for truckers…

Whenever this subject is broached, there appears to be three areas of response from most truckers: Costs, regulation, and advice. Detention issues can be hotter than potatoes.

FCFS (First Come, First Serve) can cause a driver to be detained at a receiver, and the truth is, most of the time truckers are not well informed on the detention payment policies and rules. There really should be a rule of thumb regarding detention. The FMCSA, Federal Motor Carrier Safety Administration, mandates the driver’s work hours, but does nothing in regards to the shippers or receivers. There are no concerns or sentiments over the driver’s clock. Detention payment is almost unheard of in the United States; however, in Australia there is a fine for detaining trucks for more than 2 hours.

Often times shippers and receivers are the major contributing factors to speeding violations and accidents caused by truckers because of the undue pressure of lost time resulting from uncontrollable detentions. Truckers’ sentiments are that the FMCSA needs to pass a regulation that fines the shippers and receivers for delaying truckers longer than reasonable amount of time, i.e., 2 hours. Some are even suggesting that the shippers and receivers be forced to pay a hefty $150 fee, per hour, when the delay is beyond 2 hours.

It might be helpful if brokers could establish reasonable assessorial rates with shippers that would accommodate the truckers for detentions. With the looming ELD (Electronic Login Device) requirements, shippers and receivers are going to have to rethink the amount of time they hold a carrier at the dock. This is going to have a huge effect on OTD of freight. The “just in time” days will be over if the shipper/consignee cannot get it together and load in a more timely way. No matter how you look at it, nobody makes money when a truck is sitting. Today, it appears the biggest culprits are the grocers and produce shippers.

Prudent capitalists seem to have the best solution for this quagmire. It really leans toward deregulation, which means you get the government out of the picture completely and let the market find the right course. Just look at what UBER has done to the taxi industry.

Northeast and Midwest is in a Deep Freeze.

Over 65 million Americans experienced ferocious subzero temperatures with life threatening wind chills this weekend. The polar vortex sent brutally low temperatures across the Midwest and Northeast with millions of Americans being exposed to frostbite. The coldest air mass of the winter brought the thermometer down to minus-6 degrees overnight in Minneapolis, while New Yorkers were urged to take “extreme precautions” against wind chill. In New York, it was so cold that organizers canceled an Ice Festival scheduled for Saturday in Central Park. Central Park in New York City experienced its coldest February 14 since temperatures were being recorded. The temperature this morning in the park was one below zero.
New York was not the only area in the northeast that is suffering from some of the coldest temperatures in recorded history. Boston experienced the coldest day since 1957. The mercury in Boston dipped to a frigid nine below zero and the wind-chill in the city hit 28 below zero. The temperature is expected to peak at 10 degrees on Sunday.
Forecasters warned it would be Tuesday before temperatures return to normal, with Sunday morning likely to be the coldest for many. The arctic blast is a result of a piece of the polar vortex — the cold air system that sits over the North Pole year-round — coming further south and combining with a cold front.
The National Weather Service says the polar vortex whirlpool over Quebec, along with a reinforcing cold front, is expected to bring the coldest weather of this winter season from the Great Lakes to New England.

Would you believe biodiesel has become so cheap in the U.S. that some refiners are being paid to use it.

In the Midwest, refiners are paying less than 65 cents a gallon for the fuel after they factor in a $1-a-gallon tax subsidy and other credits, and if you reduce the additional incentives offered by the State of California, it is being said that some customers are effectively getting biodiesel for free in the Golden State.
Sounds crazy, but with crude oil’s 71 percent slump since 2014, the price of everything from diesel to gasoline has been dragged down incredibly. What really makes it competitive is the U.S. ‘s renewed commitment to renewable fuels in the battle against climate change, with the Obama administration mandating their increased use. Noteworthy Agricultural Economists are saying “They get the tax credit and the higher mandate,” and “They’re coming out looking like roses.”
This past November, the government raised the amount of biodiesel refiners must use to a record high. Just one month later congress reinstated a $1-a gallon tax credit for using the fuel.
The EPA tracks compliance with the consumption mandate using certificates that are attached to each gallon of bio-fuel. The tax credit and the value of those certificates lower the final costs of the fuel, similar to a rebate. In addition to the California renewable fuel programs, such as the Low Carbon Fuel Standard combined with federal subsidies to bring costs down even more. It appears now refiners may be getting money back on every gallon.
While a physical gallon of biodiesel goes for free in some contracts, the compliance credits that refiners are mandated to purchase cost Tesoro Corp. $30 million last quarter, the company reported Monday. Oil companies must use 1.9 billion gallons of biodiesel this year. When refiners buy a gallon of biodiesel, they’re essentially getting the fuel as well as the credits and subsidies.
In some instances, biodiesel producers and blenders share the value of the tax credit. Some contracts are negotiated taking into account the incentives, while others may be agreed upon without factoring them in. These unusual transactions are being called “reversing the invoice”, when the customer has to charge the refiner for taking the fuel.

Millions hunker down on the East Coast from a Menacing Blizzard

2016 East Coast Blizzard hit up and down the East Coast. The storm’s effects stretched from Massachusetts to Georgia. As millions dig out from the deadly storm, here’s what we know about snowfall totals, travel conditions, and power outages.

More than 60 million people were under blizzard, winter storm, or freezing rain warnings as the storm’s effects stretched from Georgia to Massachusetts, as of Sunday morning. Washington, D.C. recorded 17.8 inches, Philadelphia recorded 22.4 inches, while New York City recorded 26.8 ​inches. Three major cities broke records:  Baltimore (29.2 inches), Allentown (31.9 inches) and Harrisburg, PA (34 inches). The storm marked the first time a single storm dumped more than 2 feet on Baltimore and New York City. The top snowfall total from the storm was 42 inches in Shepherdstown, W.VA, the weather service reported. Many locations across mountainous portions of West Virginia, Maryland, and Virginia topped 3 feet.

The travel ban that barred non-emergency vehicles from the roads of New York City was lifted at 7 a.m. Sunday by Gov. Andrew Cuomo. In Baltimore, a travel ban was lifted, but some restrictions remain in place. Subway-surface trolley routes have resumed in Philadelphia. Public transportation in Washington, D.C. continues to be shut down.  Flight cancellations continue to pile up in New York, Washington, Philadelphia, and other cities throughout the Mid-Atlantic, with 12,854 flights cancelled since Friday.  On Sunday alone, more than 3,928 flights had already been recorded as cancelled. Dulles and Reagan National said their runways would remain closed all day.

ELD – Electronic Logging Devices to be Required for the Commercial Truck Industry

The U.S. Department of Transportation’s Federal Motor Carrier Safety Administration (FMCSA) announced, this past December, the adoption of a Final Rule that will improve roadway safety by employing technology to strengthen commercial truck and bus drivers’ compliance with hours-of-service regulations that prevent fatigue. The final rule will eliminate the use of pencil and paper, which has been a considerable hassle for them to verify.  The new automated technology brings it into the modern age making it easier for the safety inspectors to unmask violations of federal law that might put lives at risk.

The government is estimating an annual benefit of over 1 billion dollars by reducing the amount of required industry paperwork. Most importantly it will improve the roadside law enforcement by providing quicker and more efficient reviews of driver records, minimizing commercial drivers from being harassed. The ELD Final Rule is estimating they will save 26 lives and prevent 562 injuries resulting from crashes involving commercial motor vehicles.  An ELD automatically records driving time.  It monitors engine hours, vehicle movement, miles driven, and location information. Federal safety regulations limit the number of hours commercial drivers can be on-duty and still drive, as well as the number of hours spent driving.  These limitations are designed to prevent truck and bus drivers from becoming fatigued while driving and require that drivers take a work break and have sufficient off-duty rest period before returning to on-duty status.

The ELD Final Rule permits the use of smart phones and other wireless devices as ELDs, so long as they satisfy technical specifications, are certified, and are listed on an FMCSA website. Canadian- and Mexican-domiciled drivers will also be required to use ELDs when operating on U.S. roadways. Motor carriers who have previously installed compliant Automatic On-Board Recording Devices may continue to use the devices for an additional two years beyond the compliance date.


Fairchild Freight 2016 New Year’s newsletter

Entering 2016 we reflect on the combined efforts and contributions of our Customers, and the industry challenges overcome together. We’re entering our 10th year of growth as a direct result of the opportunities and collaborative support you’ve provided. Our New Year resolution is to further develop the partnership with increased service capabilities.    We’re excited to kick off the year with these new developments:

Fairchild Intermodal is now operational, with a fleet of  CARB Compliant Reefers providing temp-controlled TOFC service. Equipped with Intelliset tracking and remote control technology, now both driver and dispatch monitor cold-chain security in real time. Our newest terminal will open in Stockton, CA late January; increasing our west coast presence, and serving as a hub for NorCal Port Services. This 37 door facility will support import/export drayage, consolidation/distribution, repacking, temporary cold storage, and cross-dock services.

Since our conception in 2005 we’ve experienced recession, oil crisis, inflated fuel costs, labor strikes, driver shortages, ever increasing CARB requirements, and ELD technology mandates. Despite these challenges we’ve continued to adapt, and maintain average growth rate of 35% annually. Our fleet & infrastructure have increased to 129 Tractors, over 200 Trailers, and now our 5th west-coast terminal opening January in Stockton, CA. We consider this a direct result of your trust and loyalty, and the persistent efforts of our Family of Employees to maintain it. We’re truly grateful to be a part of your team, and look forward to continued growth.   Happy New Year!


2015 ends with near 30-year record massive flooding in the Mid-West and January begins with a chilly cold snap.

The Mississippi River and many of its tributaries continued their retreat Sunday after reaching historic and deadly winter flooding, leaving amid the silt a massive cleanup and recovery effort likely to take weeks, if not months. This deadly flood, supplied by 10 plus inches of rain during a three-day period that began Christmas Day, is blamed for 25 deaths in Illinois and Missouri.

Flood waters forced closure of sewage treatment plants, Eleven Postal Service stations, and Interstate 55 and I-44 closures temporarily in St. Louis. At this time, the Mississippi River which crested to over 47 feet in Thebes, Illinois, is receding except in the far southern tip of both states. The Meramec River, the St. Louis-area tributary of the Mississippi that caused so much damage last week, already was below flood stage in the hard-hit Missouri towns of Pacific and Eureka and dropping elsewhere.  Amtrak service between St. Louis and Kansas City was back in business on Sunday, four days after high water had reached the tracks at some locations forcing the passenger service to be halted. Moderate Mississippi River flooding was expected in Memphis, Tennessee.

Colder and drier weather is expected to return during much of January, and freezing temperatures at night will slow the runoff. Storms that roll through will drop much less water on the region, in comparison to late December. Once the rivers crest, they should not rise significantly in the weeks ahead, according to NOAA, The National Oceanic and Atmospheric Administration.

The 2015 Winter produce market is ramping up.

There’s a big reason why a lot of trucking companies are at full capacity…

Jalapeno peppers, tomatillos and Mexican gray squash are coming across the border in record numbers. Organic vegetables, grown in Mexico and shipped through Nogales to US consumers, are also reaching record volumes. Mexico remains established as the major source of vegetables to the US in the cold months of late winter, with great expectation to early spring.

On the northern side of the border of Mexico, in Yuma County, with its rich soil, plentiful water access, and more than 350 days of sunshine a year, Yuma’s produce is feeding thousands of households nationwide. After the notorious summer heat, the temperature drops just enough to create the country’s longest growing season. Yuma County is the winter lettuce capital of the world, supplying a whopping 90% of the nation’s leafy vegetables between November and March. Agriculture is Yuma County’s number one industry and accounts for over a third of Arizona’s total agricultural revenue. Approximately 45,000 workers harvest the fields and work in the nine salad plants that produce bagged salad mixes. During peak production months, each of those plants processes more than two million pounds of lettuce each day!