Fruit and vegetable harvests began and ended later in Texas and Florida, and crops have been either delayed or accelerated in various growing areas in California, due to changing weather conditions.
The timing of fruit and vegetable harvests may vary from year to year. The maps above depict the relationship between spot market demand for refrigerated (“reefer”) trucks and available capacity, by state, in June of the past three years. To compare April and May as well as June, see additional maps, below or download the Q2 2013 DAT Produce Report.
Q2 Reefer Rates Affect Vans, and Add to Q3 Pressure
The ripple effect from each of those markets is profound, affecting not only reefer rates in those markets and regions, but also in major population centers that are the destinations for most produce shipments. Even van rates feel the impact, as more capacity shifts to temperature-controlled trailers throughout the late spring and early summer. The effect of rising reefer rates is already spilling over into July, as rates remain higher than normal for the season. The produce season is extending well into July, absorbing capacity that is usually devoted to back-to-school food, clothing and general merchandise, and adding to pressure on rates in Q3.
Capacity Constraints Advance Northward, from Region to Region
Beginning at the state level (below) we can see the progression of reefer demand (loads) vs. capacity (trucks) from month to month. The maps show the load-to-truck ratio for reefers in the months of April, May and June for the past three years. When there are more outbound loads than trucks available, that creates pressure in the market, and the rising load-to-truck ratio tips the color on the map from red to green.
When the load-to-truck ratio goes up, the rates for reefers tend to rise, as well. The increase is typically immediate for spot market rates, which are paid by the broker to the carrier. If the rate increases are sustained beyond two to three months, shippers will also begin to pay more for truckload moves. In this way, the spot market load-to-truck ratio is a leading indicator. Statistically, the load-to-truck ratio explains more than two-thirds of the rate increases for contract freight.
Produce Season Starts Late in CA and TX; Capacity Looser in FL in 2013 than in 2012
The high-demand season for reefers began later in 2013 (bottom row) than in the two previous years in both California and Texas, as indicated by the lower load-to-truck ratios in those states (gray or red instead of green) in April (left column) and May (center column.) Reefer season was less intense in Florida in April and May of 2013 than in the prior years, due to reduced citrus harvests and greater available capacity.
As shown above, demand for reefers is not only seasonal, but regional as well. In Q3 of a given year, the same states that are green on the above maps will likely be gray or red, as produce harvests wane in the South and intensify in the Northwest, Upper Midwest, and Northeastern regions. Numbers on the maps refer to the statewide average load-to-truck ratio for each month.
For additional trend information and specific details on reefer freight in four key produce markets, please download our Q2 2013 produce report: “Fruit & Vegetables by the Truckload” or visit the reefer rates pages on DAT Trendlines.
Are you hauling — or hiring carriers to haul — summer produce? What trends are you seeing in the marketplace this year?