Fresh haul

| December 12, 2008

Produce is the preferred cargo for many owner-operators, despite fluctuating rates, long waits and seasonal variation.

Rodger Munson has hauled produce for most of his 40 years of driving, 30 years as an owner-operator, but he’s never seen it this bad. The Gaylord, Mich., driver and owner of West Nor West Diversified says the only way he’s staying afloat is by owning his tractor and trailer and by digging into his savings. He’s also selling land in Maine that’s been in his family for 50 years.

“I run up and down the highway because there’s nothing better,” he says with pride in his 2005 Peterbilt, which he bought for $160,000, and his 53-foot Great Dane reefer, which was $80,000. “But now it’s digging into my livelihood so bad I wish I’d never fallen in love with the industry.”

DuWayne Marshall has a slightly different story to tell. The Watertown, Wis., owner-operator has confined produce almost exclusively to backhauls since 1990. Now, after delivering to California, he transports fruits and vegetables back to the Milwaukee area on a contract for Brennan’s Market, a group of four upscale grocery stores. “They are generous enough to pay a fuel surcharge,” Marshall says.

These days, the color of produce is anything but green for many owner-operators. Rates often fall short of keeping pace with fuel costs. Steady loads may disappear because of crop freezes in Florida or salmonella scares over tomatoes or chilies. The carrier is rarely compensated for wait times, which can stretch to many hours. Loads occasionally are rejected at the destination, often through no fault of the driver.

“Produce transportation is very volatile from a demand standpoint,” says Mark Petersen, general manager for C.H. Robinson Worldwide. “Rates reflect the demand for a given day in different markets, and carriers tend to reposition themselves to take advantage of that.”

Martin Gyuro, owner of produce broker Charter Marketing in Tucson, Ariz., says it’s often difficult to find enough trucks to carry loads from Arizona, California and Texas to Toronto and Detroit. In some cases, he says, rates have almost doubled from spring 2007.

If you want to haul produce independently, you’ll have to pull your own trailer, which can cost $70,000 or more new. You’ll also have to provide fuel for refrigeration when the trailer’s loaded.

You’ll be lucky to find a shipper who will work with you directly if you have only one or a few rigs, veteran produce haulers say. That means you’ll have to rely on brokers to find freight for you. Brokers sometimes negotiate fuel surcharges, but you can’t be sure you’re getting a cut of the extra fees. And the number and frequency of loads can fluctuate depending on the season and the shipping lane, so you may have to scramble to find freight when your regular lane goes out of season.

Operators using refrigerated equipment aren’t making a killing. Owner-operators with reefers are projected to make less than $50,000 this year, according to figures from Commercial Motor Vehicle Consulting. That’s down from an average of about $57,000 in 2006. Figures aren’t broken out for produce haulers among reefer operators.

Payment methods vary: flat rates, per mile, by weight. Bob Matson, an owner-operator in Friendship, Wis., who hauls cheese and chocolate to the West and produce on his backhauls, gets a flat rate. He estimates that rates have increased about $1,200 per haul in the past three years. A recent load from California to the Milwaukee area paid $6,000 for 2,200 miles, but fuel siphoned off about half of that. “I’m just breaking even,” he says. “There’s no profit.”

Rates typically shrink in the winter when Matson runs his 2005 Peterbilt and 2007 trailer out of Yuma, Ariz., and he collects $3,200 to $3,500 for 1,800-mile northbound loads.

The produce broker he works with tells Matson a fuel surcharge “is built into the rate,” but he’s not so sure. “If I could find someone in the produce industry paying a fuel surcharge, that would be great,” he says.

Denny Zonic, who with his brother owns Zonic Transport, a three-truck business in Wittman, Ariz., says he’s paid $2.60 per mile hauling produce from Arizona to Florida. The backhaul to Arizona isn’t as lucrative: $1.50 per mile carrying juice. Summer trips pay better than winter, he says; hauls this past winter paid about $1,000 less than what he got this summer.

While he also hauls grapes and melons, Zonic was a victim of the salmonella scare blamed on tomatoes. He normally hauls tomatoes from Florida to Arizona but temporarily lost that business.

Munson, who’s been leased to C.H. Robinson Worldwide since January 2007, says his per-mile rates aren’t keeping up with what he needs to pay his bills. He calculates he’s earning $1.93 per loaded mile and $1.74 per mile for all miles including deadhead. “I need $2.41 per mile for every mile to cover everything to make a menial $50,000 per year,” he says. “Sometimes I get $2, $2.20 or $2.40 for a load, but not enough of them. I let them know what I need, but they’re not able to pay it.”

Owner-operators say produce frequently pays better than other commodities, but not always. Munson says his produce loads almost always pay better than dry van freight.

One of the biggest headaches for produce pullers is waiting for loads, even when they have scheduled pickup times. The problem, owner-operators contend, is that produce salesmen oversell their inventory and over-promise when their commodities will be available. “This happens all of the time in the peak of the season,” Matson says. “We’re caught in the middle. Our appointments are already set.” Loading late, he says, “puts us 10 to 12 hours behind in our deliveries to get home.”

Under normal circumstances, he says, he should be in and out in an hour at each stop. But it has taken him a day or two just to load. “I’ve sat around the clock waiting for four pallets.”

If you complain about the waits, you’ll lose the business, Matson says: The brokers will find other carriers willing to haul for less.

Occasionally a produce wholesaler or grocery chain sees the product and rejects the load. Sometimes the buyer claims the product is undersize or discolored and has it returned to the trailer. “If it’s a temperature thing, and it’s spoiled, obviously it’s our problem,” Marshall says. “There are rules that support the trucker’s side. But if you raise a stink about it, the broker will take it and then tell you, ‘You’ll never drive for me again.'”

The federal Perishable Agricultural Commodities Act regulates produce buyers and sellers because their products – fresh fruits and vegetables – perish quickly. PACA officially protects truckers during a dispute between a buyer and seller, but Marshall says he gets caught in the middle if a disputed load has to be transported to another location. He says he usually can negotiate an additional fee, but it falls far short of covering his time and mileage.

Sometimes a produce manager will reject a load in the middle of peak season and make up an excuse why the load isn’t up to snuff. Matson says he once had 21 pallets of strawberries turned back because the buyer said they were undersize. They were returned to his trailer, and he had to deliver them to another produce warehouse. “We had reason to believe those berries ended up back at the store’s warehouse the next day,” he says. “I’m sure it was a matter of price. I was paid by my produce broker, but it cost me a day away from home.”

If a load is rejected, the hauler will try to find another taker such as a warehouse club or a small store that isn’t as picky on quality. When all else fails, the hauler ends up transporting the load to a food bank. If that happens, the operator can file a claim through his cargo insurance if the value exceeds the deductible.

Seasonal growing patterns can undermine a hauling business depending on its lanes. The summer is typically busier for owner-operators who pick up in California, where melons and stone fruits such as cherries, plums, apricots, nectarines and peaches are plentiful.

Marshall averages 26 pallets per load in the summer, only 20 pallets in the winter. In busy weeks when he has more pallets than he can transport, he brokers extra pallets to other drivers looking to fill their trailers. But in the winter, he often has to search around for other freight to fill his trailer, he says.

The seasonal differential is compounded by brokers switching between higher summer rates and lower winter rates. Matson says brokers push to convert to winter rates right after Labor Day, but carriers have to fight to switch back to summer rates by Memorial Day. “There are times I feel it’s all a losing battle,” Matson says.

Overall, Marshall is satisfied pulling produce. He says it’s taken many years to find his customers and build his business. “Going independent is the best move I ever made,” he says. “I make more money now than I ever have.”

Munson, however, hopes he doesn’t end up being another trucker losing the economic battle. “If this industry doesn’t change in the next year or so, I could be another guy who falls by the wayside,” he says. “I’m 58 years old. I can’t afford to start over again.”


Necessary cabbage
You need a reefer to haul produce, but what does it cost to run your refrigerated equipment? DuWayne Marshall shares a few numbers from his own experience.

The $72,500 reefer drinks just more than a half gallon of fuel per hour when running continuously, somewhat less than the rate during stop-and-start running, he says.

This year it has cost $19.50 per day to run the reefer, compared with $12.02 in 2007. “That is a daily average, whether I’m running or not,” he says. Through mid-July, the expense is $1,480 higher this year than during the same period in 2007.

His non-fuel costs – trailer loan interest, insurance and maintenance – run 10 cents per mile.

“That’s a lot of cabbage,” Marshall says.


Tracking truck rates
For truckers looking for information about hauling produce, the website of the U.S. Department of Agriculture’s Agricultural Marketing Service provides useful data on rates, route traffic and commodities available to transport.

The service publishes an Agricultural Refrigerated Truck Quarterly Report that tracks reefer movements and rates across the U.S. In the first quarter of 2008, the report said, average truck rates were $1.85 per mile, 28 cents per mile higher than in 2007.

Average rates per mile varied from the low of $1.74 to $1.80 per mile for shipments from the Pacific Northwest to $2.99 to $3.07 per mile for shipments from the Great Lakes region.

The site also carries a report that covers the weekly range of truckload rates to 10 U.S. cities from prime growing regions. For example, the July 16 report noted a shortage of trucks to haul sweet potatoes from eastern North Carolina and potatoes from Twin Falls, Idaho, and Washington’s Columbia Basin.

For more information visit www.ams.usda.gov/fv/mncs/truck.pdf and www.ams.usda.gov/mnreports/wa_fv190.txt.

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