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Reefer Market Trends and Transition.

The Refrigerated spot truckload rates out of McAllen, Texas, fell 5¢ to an average of $1.80 per mile. Up until a few weeks ago, McAllen, Texas, on the Mexican border in the Rio Grande Valley, was the top source of reefer load posts. Now it’s #5, after Atlanta, Los Angeles, Tucson, and Dallas.

The dynamic produce harvest activity is shifting north to areas like Central California, where Fresno was up 7¢ to an average of $1.86 per mile. The reefer load-to-truck ratio was 3.2 last week, a 5% improvement. As a national average, the spot reefer rate was unchanged at $1.58 per mile. National reefer rates are: West $1.86, Midwest $2.45, South $1.80, Southeast $1.37, Northeast $1.63

March is the month of transition. The total number of spot market loads posted in March was 42% higher compared to February—yet still 28% lower compared to March 2015.

Actual Load-to-Truck Ratio comparisons are as follows: 5.6 to 11.9 for Arizona, Idaho, Montana, North Dakota, Oregon, Arkansas & Maine; 2.3 to 5.5 for California, Washington, Nevada, Utah, New Mexico, Texas, Mississippi, Louisiana, Georgia, Alabama, Tennessee, North Carolina, South Dakota, Nebraska, Kansas, Oklahoma, Minnesota, Iowa, Missouri; and 0 to 2.2 for Colorado, Wyoming, Illinois, Pennsylvania, Virginia, Vermont, New Hampshire, Massachusetts, Connecticut and Rhode Island.

The FDA Food Safety Modernization Act (FSMA) took hold on April 1, 2016.

For the first time, FDA (Food & Drug Administration) has a legislative mandate, commonly called the “Produce Rule,” to require comprehensive, prevention-based controls across the food supply to oversee the standards for the growing, harvesting, packing, and holding of produce for human consumption. The rule applies to fruits and vegetables for human consumption, that are raw agricultural commodities, and sets standards to minimize the risk of serious adverse health consequences or death.

From the moment raw materials are received to the moment finished goods are shipped, parts or ingredients are tracked and traced to safeguard quality and compliance. This is done to ensure that finished goods match specifications and obtain line-of-sight to the origin of all ingredient or component materials. Knowing when defects are present and identifying what caused them and which lots or batches are affected by them is crucial to minimizing risk, protecting your customer relationships, and driving accountability with suppliers.

There will be a list of criteria that will have to be met and implemented to comply with the above ruling, including documents for traceability of the fresh produce with supplier identification, contact information, batch & lot numbers (of origin), shipment dates when received at distribution facilities and when shipped to specific customers, plus contact information of who and when received. The key here will be to trace all the way back to the grower(s) with harvest date, packing date, field identification, shipping date, and harvesting personnel.

Produce Transition is Almost Here!

They say the produce transition is following the sun. There is a major crop transition from Yuma, Arizona to the Salinas, California area going on right now and is expected to continue until the early part of April.

The Iceberg lettuce is following the broccoli and cauliflower crops that began a few weeks ago, along with the celery in Oxnard that began last week. Additionally, the Santa Maria mixed leaf shipments began about two weeks earlier than normal, and the Huron lettuce shipments went out of the San Joaquin Valley the last week of March and will continue for about three weeks.

There was some concern over quality, because of the warm weather in Yuma, which had some warm mornings, and the light rain experienced in San Joaquin Valley that lasted a few days before the harvest; however, it now appears the quality is still good because the weather is back to normal. They are expecting a sweet transition with no delays or hiccups in supply going into the Easter pull and over the next few weeks.

From ship to train to truck

This is where the action is, and Fairchild Freight has been experiencing a consistent increase of business in this service arena. Intermodal transportation is the movement of containers or trailers from point A to point B by combining two or more modes of transport, including truck, rail, and sometimes cargo ship for the delivery of goods. Increasingly, it’s the lifeblood of American commerce.

This method of transportation allows faster transportation of freight, reduces the cargo handling activity and damages involved, and therefore, improves security. Reduced costs and faster delivery time are the prime benefits of implementing intermodal freight transportation. As long as there is this increase in demand for on-time delivery of products and raw materials, Fairchild Freight will continue to implement efficient intermodal and on-demand OTR transportation solutions for its customers.

Truckers with Smart phones are proving to be more efficient.

About 64 percent of adults in America use smart phones as of 2015, according to a trusted national research center and that is about double what it was in 2011. And, that rate you can bet will increase in the next few years, and there is good reason for this. A smart phone is the next best thing to a desktop computer and a lot cheaper too.

Smart phones let you communicate with dispatchers and customers, not to mention, receive and print bills of laden. Believe or not, there are lot of other things you can use your smart phone for if you install the right app for it, such as finding trucking jobs according to your specific job search criteria and haul experience. Another benefit is planning your route with trip features that include: truck parking, hotels and accommodations, truck washes, truck stops, weigh stations, fuel stations, low clearance areas, and rest stops. You can even look up reviews of these areas and the price of fuel at the stations. It is all there at your fingertips. Other convenient apps include advance road condition warnings and projected weather.

Another essential for truckers with Smart Phones is budgeting, which helps ensure that they bring home more than they spend. There are a variety of apps available for this, which has different styles of debiting and crediting purchases to checking accounts. It is most likely to have more than one of these apps, depending on personal tastes and needs. Another item that is popular is the Fuel Perks program offered by truck stops and fuel stations, which rewards truckers for usage at their facilities. These bonuses can really add up!

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.