With produce season in full swing, the surges in volume, for many truckload shippers, have put strains on the available capacity in the marketplace to cover their shipments. States in produce-heavy regions have experienced drastic market shifts from Q1-Q2 as a result of not only the COVID-19 pandemic but the seasonal produce spike as well. As a result, many questions have been brought to the forefront from shippers as to how best to react to the various influences to ensure their freight operations remain intact.
To help answer these questions, we sat down with MoLo’s Vice President of Sales, Stephan Mathis, to get his insights on the historical impacts of the season and strategies shippers can implement to best work with their transportation partners.
A: Beginning in April and ramping up in May, Florida and southern Texas serve as key regions for tracking produce demand in the truckload market. Starting in Florida, port cities like Miami drive much of the volume coming out of the state. With domestic produce and imports making their way from these areas, shipments gradually move up through the southeast to be delivered throughout the country.
Along with Florida, southern Texas plays a pivotal role in produce shipping. Border cities like Laredo, and McAllen in particular, are primary areas of focus due to the produce volume from Mexico. As a result of the surges in freight, it is not uncommon to see capacity shift towards the U.S.-Mexico border during this time to capture premium demand posing challenges in nearby locations. Like Miami, produce and non-produce shippers in the Laredo, and McAllen regions compete over capacity to ensure their shipments are covered, thus, driving rates up. In turn, carriers will send drivers south to these areas during the seasonal freight spike to reap the benefits.
It is also worth mentioning Arizona and California as states that lead the demand for the western regions of the country. Produce from Mexico makes its way through major border cities trickling up the western coast to the pacific northwest as well as reaching mountain west states. Outbound lanes to higher volume areas will become desirable for carriers as they look to reload fleets back to produce heavy cities.
A: Both the 2018 and 2019 produce seasons were moderately tame compared to previous markets. As a result of poor farming conditions, as well as tropical storms, hitting much of the produce shipping states, the seasons were manageable for most of the shippers in the focal regions. You must examine the supply and demand of the industry as well. With 2019 serving as a year of capacity surplus, shippers could confidently procure providers at favored rates to move their shipments. Overall, many companies did not struggle to find available trucks both for their primary and spot allocations.
A: It’s difficult to say how the season will unfold with the volatility not only in the marketplace but in the larger economy. Prior to the COVID-19 pandemic, the favorable farming conditions forecasted for a successful season this year. However, since the outbreak, it’s difficult to determine how things will shape out at this time. With farmers facing potential challenges to source new markets due to the closing of restaurants and schools, the outlook of shipping operations remains unclear. Consumers will continue to buy fresh produce but the revenue streams may look different in 2020 for small to mid-sized farmers.
The modern transportation industry demands efficiency and scalability in a shipper’s supply chain network.
A: The modern transportation industry demands efficiency and scalability in a shipper’s supply chain network. To successfully navigate the ever-changing landscape, businesses must turn their supply chain operations into competitive advantages to grow market share. To do so, shippers must adopt and implement shipper of choice strategies and principles that will best serve their business in the long-term. While these strategies take time and resources, the investments made will attract high-service carriers to their network, elevating operations in the process.
While there are many practices to name, here are a few core principles:
Lead and forecast timelines play a critical role in shipping operations. Communicating accurate updates for product readiness and delivery options to transportation partners will help limit idle times and reduce accessorials at facilities. While some shippers are constrained in their ability to forecast shipments due to production schedules, ongoing updates can help carriers plan accordingly. Ideally, 24-48 hours of lead time, allows carriers to plan ahead and reposition drivers as necessary.
To help efforts, identify must-go shipments, and communicate the importance of service to carrier partners. Freight that has more flexibility can be scheduled accordingly to ensure high priority product gets shipped in a timely fashion.
Set carrier performance metrics and hold them accountable to those benchmarks. Implement carrier scorecards and reviews to help address underperformers and acknowledge those carriers who continually provide reliable coverage. Conduct reviews with carriers to ensure both parties are up to date on levels of service. Effectively communicate where they are performing well and discuss areas that need improvement. Being open and honest with carriers will help to hold them accountable for consistent service, and the strength of the network will elevate over time.
Procuring capacity early and often is a shipper’s biggest ally in limiting their freight to spot market exposure. By securing trucks early, shippers can allocate time to handling ad hoc freight that could pose an issue for their network. Understand how providers add value to the network. Inquiring about similar shippers they service is one method to align business needs to fleet capabilities. Take the time to learn how existing and prospective carriers can protect against market risks. With reliable, consistent coverage, shippers can focus on other areas of their business for future growth and monitor carrier performance.
Lastly, shippers should have a healthy blend of asset and non-asset providers in their network. When it comes to market fluctuations, being solely dependent on one provider poses risks to the entire operation. With multiple carrier options, tapping into excess capacity when issues arise is possible and allows shippers to analyze how carriers react during difficult scenarios.
Treat top-performing carrier partners well by offering them more opportunities to grow with the business. Build rapport with carriers and they will service freight well during the tough times and demonstrate flexibility when the market is more favorable for shippers. Premier shippers understand the strength of a network relies upon the relationships built with carriers. Take the time to align business needs. By understanding their priorities, shippers can establish strong relationships and trust with their core carrier base that will serve them well in the long-term.
With so much volatility in the marketplace, these best practices can help shippers safeguard their network against the risks associated with seasonal disruptions and gain a competitive advantage over their competition.
Need a strategic logistics partner for your produce operations? MoLo’s carrier network has the flexibility to help limit exposure to spot market uncertainties and help maintain reliable solutions for your supply chain.
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