How Produce Season Affects Rates & Capacity For All Shippers
Estimated reading time: 4 minutes
It’s that time again. Temperatures are rising, days are getting longer, and shippers are gearing up for a busy produce season. Even if you aren’t in the produce industry, spring through early summer marks a time of tightened capacity, increased rates, and scheduling constraints—especially for companies shipping refrigerated products.
What is Produce Season?
Produce season in the U.S. typically begins in February and continues through July. It can be defined as the time period in which the largest volume of fruits and vegetables are harvested and shipped to food manufacturers, grocery stores, and other vendors across the country. Growing and harvesting kicks off in Mexico, and we start to see an influx of produce imports into the U.S. in February. The produce wave moves to the southeastern states, southern Texas and the Rio Grande Valley, and southern California in late March and continues to move north as temperatures rise.
How Does Produce Season Impact Rates?
Because crop volumes increase from spring to early summer—and because of the time-sensitivity involved in shipping fresh fruits and vegetables—demand for transportation rises while available capacity shrinks. Refrigerated trucks are highly sought after, and shippers pay higher rates to secure them.
According to the DAT North American Freight Index, spot market freight volume typically rises about 30% in the spring and peaks in April. This shift sets the tone for other modes as well. In response to higher refrigerated capacity demand, dry van carriers, railroads, and LTL carriers also push for rate increases.
Because produce season can be a lucrative time for carriers, some companies will reposition their assets to southern, produce-heavy states where demand for them is high. As a result, even shippers in non-produce-heavy regions are impacted by capacity shortages and higher rates.
Controlling Costs When Your Headhauls Become Backhauls
As truckload demand shifts throughout the country, shippers experience headhaul rates (the higher rate in a pair of moves) that turn into backhaul rates.
For example, take a look at the Atlanta to Miami lane. Seasonal demand flips rates on this lane in the spring; outbound Miami is the backhaul for most of the year, but southbound becomes the backhaul during produce season. (DAT).
It’s easy to see how shippers end up paying exorbitant rates to get their loads covered. Here are some tips for controlling costs and securing reliable transportation during produce season:
- Analyze market rates. If a carrier offers you a rate that seems unusually high, examine market rates as well as the load-to-truck ratio for the return trip. There are software tools that can help you do this. (Contact us to find out about our real-time truckload rating technology). Remember, while it’s important to keep your finger on the pulse of market rates, don’t undervalue service. Poor service can lead to delays or missed appointments, which can end up costing even more than what you’d pay in the first place for a more reliable carrier.
- Set up time-specific contracts now. If you have regular runs on lanes affected by produce season, consider setting up time-specific contracts with dedicated carriers by the end of Q1. Shipping rates are expected to escalate in 2017 in general, and locking in quarterly or annual rates now will help you save in the long run.
- Study harvest schedules. Regularly check produce industry websites to determine which regions are heating up at which times. Doing your own research on seasonality will help you plan for fluctuations more effectively throughout the year.
- Be a “Shipper of Choice.” Think about how you can make your business more attractive to carriers. For example, offer ways to maximize driving time, allow for flexible shipping hours, or emphasize driver-friendly facilities. Positioning yourself as easy to do business with can make all the difference when carriers are selective about the freight they move.
- Forecast accurately. Carriers appreciate the ability to plan ahead as much as possible. Providing them with accurate volume forecasts makes it easier for them to execute on commitments.
- Opt for intermodal when possible. Shifting from over-the-road (OTR) to intermodal is another way to ensure coverage and keep costs down in a tight-capacity market. Sometimes it’s not about getting there sooner; it’s about getting there period, and switching modes can accomplish this. Partner with 3PLs that have experience shipping temperature-controlled intermodal and strong relationships with Class I railroads as a way to gain access to surplus capacity.
Regardless of your product type or lanes, Capstone can get your loads covered during volatile seasons without gouging you on price. We’ve built a scalable network of reliable temperature-controlled carriers and have regional capacity strengths in the Southeast, southern California, and Texas. Because of our strong carrier relationships, including a flexible network of owner operators, we can do whatever it takes to reposition assets to where you need them most.
From drop trailer programming to expedited freight to dedicated lane management, we create custom, time-sensitive, and reliable solutions that keep your freight moving seamlessly.