Executive Summary

Executive Summary

During 1996, $23 billion was spent on intercity transport to get America’s food supply to retail outlets.1 Transportation accounted for 4.2 percent of America’s food expenditures that year.

The California fresh fruit and vegetable industries are dependent on a reliable and cost effective transportation system. Without transportation these industries would have only local markets. There has been increasing concern about the future of produce trucking services and the impact that emerging problems will have on California’s fruit and vegetable industry. Concerns are that fewer people are becoming drivers; truck operating costs have been increasing; profit margins have diminished; equipment is getting older; and in peak months demand for trucking services exceeds supply.

The study outlined in this report was undertaken with support from the U.S. Department of Agriculture. Key objectives were to identify the important issues facing the produce trucking industry; to estimate the annual California loads shipped; to compile truck rates and returns for hauling produce; and to determine how shippers, truckers, and receivers perceive the trucking industry.

The survey results indicate that the more crucial issues facing produce trucking are driver availability, truck availability (increasing demand), rate levels, highway weight limits, and hours of service for drivers.

More than 485,000 truckloads of fresh fruit and vegetables leave California every year. Revenues and costs for shipping these loads were determined for shipments going to five cities: Atlanta, Chicago, Dallas, Denver and New York City.

Truck rates vary greatly throughout the year. Rates for refrigerated trucks hauling loads from central California to New York City ranged from $5,100 per load in July to $2,600 per load in December of 1996. Rates per load during July are frequently double the low rates of the late fall and winter months.

There are about four million medium and heavy trucks operating in the United States (Gross Vehicle Weight Rating over 10,000 pounds). These trucks are owned by about 423,000 trucking firms. While there are many large trucking firms, 69 percent of the trucking companies have fewer than six trucks. Not all of these trucks, however, have refrigerator trailers.

Since 1986, truckers’ fixed costs (interest, maintenance, licenses and insurance) have been increasing relative to drivers’ compensation and equipment depreciation. Drivers’ compensation and depreciation have been decreasing relative to the total costs incurred by truckers.

Based on U.S. Department of Agriculture trucking costs estimates, the profita-bility for truckers varies with the destination. Dallas and Denver shipments are the most profitable and Chicago and New York City loads are least profitable for produce shipments originating in California.

There were 71 shippers completing questionnaires about their perceptions of the produce trucking industry. These firms ship produce throughout the U.S., but 39 percent of their loads went to western U.S. locations (Denver and west of Denver). Most shippers sold "Free-On-Board" (F.O.B.) at the shipping point (85 percent of their sales). The buyers or produce brokers arranged transportation for 77 percent of the sales. Shippers indicated they encountered problems in finding trucks most often during June and July of each year.

While many shipping firms have experienced a problem with truckers showing up late or being a "no-show" to pick up a load, this happens less than 10 percent of the time. It was reported that seven percent of the time when a truck reports to the shipper to pick up a load, that loading is delayed because of a mechanical problem with the truck. These surveyed shippers reported that 51 percent of the transport problems occurred with shipments to eastern U.S. markets.

Generally, California produce shippers feel that the trucking service they have received was "good to excellent" (90 percent of time). Only 18 percent of these shippers reported that trucking services had deteriorated. Generally, shippers have an appreciation of trucking problems. They were concerned about the shortage of drivers and the availability of trucks. Of course, the cost of trucking is important to them.

There were 18 receivers (buyers) who completed questionnaires. They were located throughout the U.S. In 1997, more than half of these receivers had at least some problems getting trucks to haul their purchased produce. The receivers indicated it takes 6.4 hours to find a truck to haul a load during the peak season. Truck procurement problems are greatest during June, July and August.

Fresh produce receivers tend to be fairly well satisfied with the trucking services they receive. Eighty-two percent of the receivers indicated trucking services have improved or remained the same in recent years, and 81 percent of the receivers rated the trucking services they received as "good to excellent."

The receivers did express concern about a future shortage of drivers. They were, not surprisingly, concerned about the current and future cost of trucking. Forty-four trucking firms answered questionnaires: 30 were independent truckers, 12 classified themselves as fleet firms and two said they were "both." They operate fairly new equipment, with the average truck being 3.0 years old and the average trailer 4.7 years. The average load was shipped 1,315 miles, but the range in distance of shipment varied from 100 to 3100 miles. The average load was on the road 3.03 days.

Typically, a driver of an average load had to wait 1.98 hours before loading. It took 3.38 hours to get loaded, on average, and at the receiving end, the average load had to wait 2.45 hours prior to unloading. The unloading took an average of 3.25 hours.

The surveyed truckers said their drivers change jobs every 1.7 years. The truckers cited the attitude of the receivers, the attitudes of dock personnel, obtaining accurate directions to the shipper/receiver, and waiting time as their most important concerns.

These surveyed truckers were asked their opinions about the performances of the shippers and receivers using their services. The worst performance areas the truckers noted about shippers-receivers were truck waiting time, attitude of dock personnel, and availability of the company’s cafeteria to truckers.

On average, lumpers are used 64 percent of the time to unload trucks. The average fee for lumpers was $76 per load.

The study concludes that there is a general level of satisfaction among produce shippers and receivers with the quality and reliability of trucking services. There is emerging concern, however, about the future of the trucking industry in terms of personnel and cost of service.

{ CATI , also CAB , CFSNR , CIT , VERC }