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Steady truck rates expected through 2017

For the past couple of years, truck rates in the produce sector have been fairly steady with very few periods when demand outpaced the supply of trucks and prices spiked. Of course, there are always a few situations exacerbated by holidays or weather when shortage have materialized, but those instances have been the exception rather than the rule.

Discussing the current situation, Robert Silva, who runs the Salinas, CA, office of Advance Transportation Services, said, “We have trucks available in all growing areas nationwide. Now that the holidays are behind us, the truck capacity will now begin to get into normal traffic patterns.”

Paul Kazan, president of Target Interstate Systems in the Bronx, NY, agreed. While he expects the U.S. economy to continue to grow in 2017, creating jobs and increasing the shipment of goods, he does not expect that to occur at such a rate that carrier capacity will be stretched beyond its limits. There hasn’t been an undersupply of equipment for the last couple of years and he doesn’t expect a major change this year. “I’m not expecting a spike in rates,” he said in early January.

Silva noted that weather can always alter the situation for both supplies and equipment. He made these comments in early January after experiencing quite a bit of rain and flooding in California over the previous few days. “I don’t know what the impact will be but we’ve had a significant amount of rain over the last few days. Just coming to work you can see fields saturated.”

He said planting for spring and summer production is just getting started so there has yet to be an impact. “Fortunately, we have got quite a bit of rain and snow that the state has needed for some time and this is good for all California growing regions.”

Not of immediate concern but definitely on the transportation industry horizon are some regulations slated to take effect in January of 2018 requiring electronic log books. As a practical matter, the electronic log book is a device that mounts in the cab of a semi-tractor trailer and keeps track of the hours of service of the driver. Federal laws have regulations regarding the amount of hours a truck driver can log in any given time period. It is an accepted fact that those legal limits are stretched as it is virtually impossible to make cross-country trips legally in the time that has become industry norm: four days.

Silva said this topic is top of mind. He said turnaround times are going to slow down for solo drivers with team drivers being in heavy demand. “ATS has been preparing for these new regulations for quite some time and are making the necessary changes to continue to provide the best service to our customers.”

Kazan said the electronic log book regulation will have an impact. “Trucking companies will not be able to make as many turns. Trips that take four days now, will take five days. Five-day trips will become six-day trips.”

Kazan said hours of service regulations are important and they do have a benefit for the public in that they create more alert drivers and a safer situation. However, they also result in higher costs and he does believe that they are bit too restrictive. He believes a professional driver can safely drive beyond what the regulations allow.