The transportation end of the produce business continues to cause headaches among Northwest operators.
Transportation is the biggest obstacle that industry players have to pay attention to, said Ron Haas, owner of R&R Brokerage Inc., Tigard, Ore.
“Fuel is escalating again,” Haas said. “You have to pay attention, because you can’t do without it, and you have to factor that into your cost of doing business.”
But there is a silver lining behind the cloud as companies continue to find ways to improve their efficiency in load and delivery patterns.
Within the Portland, Ore., metropolitan area, Caruso Produce Inc. is combining routes when possible to close margin gaps, said Matt Weber, partner in the Tualatin, Ore.-based wholesale distributor.
A similar approach is applied when sourcing from various regions, Weber said.
“If we can combine backhaul out of eastern Washington or Oregon — whether it be apples, pears, onions, cherries — we try to make sure our delivery trucks aren’t coming back empty,” he said.
There has been a definite shift among wholesalers looking to maximize their distribution patterns, agreed Lon Hudson, organics sales specialist in the Selah, Wash., office of Raleigh, N.C.-based L&M Cos. Inc.
“The warehouses are doing everything they can to reduce their trips and fuel usage,” Hudson said.
Victor Whalen, manager of Freeway Transport Inc., Portland, deals with transportation brokerage into Portland on a daily — and sometimes hourly — basis.
“The competition is real tough,” Whalen said. “Fuel is starting to go up, but it’s still a lot cheaper than last year. The trucker is getting hammered pretty well.”
Still, there are truckers available. Because fuel is cheaper, they are willing to deadhead for a longer distance, he said.
“Normally in June, for instance, it’s tough getting trucks to go south because there is less truck traffic coming from the Northwest, which doesn’t start shipping out fresh produce until later in the year,” he said. “But with the low fuel prices, trucks will deadhead from here down to the San Joaquin Valley, no problem.”
While the trucking business has its ups and downs, Whalen said his company is doing fine.
“We’re busier than we were last year. A lot of stores still see the value in using a truck broker,” Whalen said.
Some analysts are predicting a return to $100-plus barrels of oil, a possibility that Whalen said he does not like to ponder.
“If oil goes back up, it will put the brakes on everything. Not just produce but all commerce,” he said.
While trucking rates are higher than historical levels, they have stabilized some, said Chuck Botsford, president of Botsford & Goodfellow Inc., Clackamas, Ore.
Botsford said he doesn’t think the stabilization will last.
“You stop drilling for oil, prices are going to go up. Now that we’re not talking about drilling anymore, prices are going to go up, up and up,” he said.
With the slack economy and less demand for transportation services, drivers are using a group approach toward self-preservation.
Where possible, truckers are taking a few less hours apiece so no one is laid off, said Dennis Baird, general manager, Coastal Brokers Inc., Portland.