As prices continue to climb across numerous sectors in the economy, transportation of goods to market continues to be a concern for the agricultural community. NEAFA reached out to industry experts to give our members an insight into what transportation topics are of importance in the Trucking, Ocean Freight, and Rail industries. We would like to thank TANY, NEAFA Board member and president of Global Agri-Trade Barry Baetz, and Joe Painting from VT Rail for taking the time to update our members on what is going on in their industries.
Trucking Update with TANY from Rick Zimmerman, NEAFA
Kendra Hems, President of the Trucking Association of New York (TANY) talked about the Association’s priorities for addressing the driver shortage challenge faced throughout the manufacturing and service sectors, including the agribusiness community. Driver licensing and training are at the forefront of the TANY focus, beginning with the new opportunity to train and license young adults, 18 years of age and older. New York is the last state in the Union to lower the minimum age from 21 to 18, and TANY is gearing up to inform prospective new drivers about the lucrative opportunities as a professional truck driver. TANY is also promoting the notion of expanding the “learners permit” timeframe from 6 to 12 months in length. State legislation to address this issue is anticipated this year.
One important new opportunity, likely to be a game changer in the certification/ licensing world, is the establishment of a third-party skills testing program. In addition to the long-standing state run CDL testing program, a pilot initiative for a private sector party, certified to implement a CDL testing program, is currently under regulatory consideration. This initiative could significantly alleviate the backlog of license testing applications at the State DMV office. Stay tuned for details of an informal public hearing to receive input on this pilot program.
In addition to addressing the minimum age of commercial drivers and licensing of new drivers, TANY is also focused on providing more training opportunities for new drivers. The new federal entry level driver training program has authorized private sector companies to provide basic training to new drivers. In addition, apprenticeship programs are being promoted by TANY as another avenue to attract new young drivers into the industry. The economic and quality of life opportunities currently offered today as a commercial truck driver is good news to be broadcasted to all prospective drivers, particularly those who are at a point in their life when career decisions are likely to be made.
The Northeast Agribusiness and Feed Alliance looks forward to collaborating with Hems and TANY to address our industry sector’s truck driver needs.
Ocean Freight Update from Barry Baetz, NEAFA Board of Directors
As many of us are painfully aware, the new normal for sea freight is overall elevated container freight pricing, whether inbound or outbound from the US. Global container availability has improved over the past 6 months however, as sea freight carriers have been able to move empty containers around the globe.
Annual sea freight contracts have just been renewed, with significant increases in year over year base container movement contracts. The number of vessels in use is also increasing, as carriers simply can’t keep up with overall volume and pressure.
Unfortunately, US port congestion has not improved, and continues to be a major supply chain issue. Truck driver shortages are severely impacting the drayage of containers in and out of ports around the US.
Ports on the East Coast are doing their best to keep vessels moving, with much shorter anchorage days versus the West Coast. LA/LB Ports have seen vessels simply pushed further out to sea to anchor while waiting for their port slot due to California emissions rules that have been implemented. Congestion on the West Coast could worsen, as LA/LB Longshoreman are posed to strike in July for wage contract renewal and will cause projected significant work stoppages if history repeats itself.
Rail Update from Joe Painting, VT Rail System
Labor Shortage
The shortage of labor in the transportation industry is still the case. The issues plaguing us have not abated at all. Since not much has changed on that front I will offer this link to the recent article covering that issue alone. I will say, again, that this factor is pervasive and affects other items on this list, specifically the Class One service issues.
Fuel Costs
Just to use an example, last May the VTR per mile fuel surcharge was .29 per mile. This May it will be .78 per mile. Just as a frame of reference, that means a flatcar of lumber from St Johnsbury, VT to Oregon last year had about a $1000 fuel surcharge. Next month that same trip will have about a $2800 fuel surcharge. No rail road is immune, this scourge is industry wide. While all roads use a different formula for figuring their fuel charges, this is not really a revenue generating endeavor. We are just passing this cost through to the end user.
Fuel costs affect us all. Higher fuel costs impact everything; groceries, dry goods, all services, all facets of the Cost of Living. Everything gets moved somehow before the end user takes delivery. The recent fuel cost spike has seen demand for regional rail enjoying an uptick. Hauls between 300-500 miles used to be all truck traffic all the time because the economics worked. As trucks have become less available and substantially more costly, shippers are looking at rail options. What never worked in a rail car before is suddenly a competitive alternative. Capacity equivalents are usually about 4 trucks to one rail car. That per ton freight cost for rail v truck is looking good for (relatively) short rail moves, even moves involving 3, 4 and even 5 different carriers to go just 350 miles are in publication and working now. It is a substantial amount of work to put these moves and rates in play, but the class one, two, and three roads in the Northeast are working together to make these more cost effective moves work for their customers.
Reciprocal Switching
On our last call we spoke of this being a positive for short lines, as it encourages competition and would thus keep the prices low. This is still a valid way to look at this, however, there are those who feel the infrastructure needed to make this work would be very costly, and this additional cost would ultimately be passed on to the end user. This is a valid argument as well. These issues would best be examined on a case by case basis to ascertain the specific and pertinent individual pros and cons. I would hesitate to offer a blanket statement that would cover every potential incident. There is a 5 mile limit on this, and this is threatening to some short lines who have large ‘bread and butter’ customers whose facilities may fall in that zone.
CSX takeover of PAS
This will change the landscape substantially, and will have an impact on the Northeast without doubt. For the moment, the status quo will be maintained, and all roads will be working to keep traffic moving smoothly while things slowly change. At the Vermont Rail System, we worked with the STB and Vermont Agency of Transportation during this process to protect our lanes and our interests. We want to be able to effectively serve our customers and preserve strategic assets we had in place.
Car Availability
Car supply is very tight right now. Imagine having product to move, customers waiting for it, but no cars to move it in. This is a reality for some. This has driven the costs of rail car lease rates up. Per month lease rates that were near $300 a month are now over $700 and the terms they are looking for are not 2 or 3 year deals, but 5, or even 10 year terms. New build costs are very high right now as well. Is this just regular old inflation as it applies to rail cars too? There may be some truth to that. There is more to it than that, but the car market can be volatile, and dramatic and sudden spikes and drops in rates and term lengths are to be expected. We are feeling the pinch now with high costs and car limited availability.
Class One service issues
I will point to congested yards and excessive dwell times for examples of Class One service issues. This problem is not unique to just one carrier, they are all wrestling with this and other issues. This can be directly traced back to a labor shortage. We continue to work with the Class Ones to keep the pipelines running smoothly. We work at this with them on an operational level every day, at managerial levels every day, and have escalated these issues where we can. They know the problem exists, and are addressing it, but there is no quick fix.
For more information you may wish to check out the following:
The Surface Transportation Board yesterday unveiled details for next week's two-day hearing on “urgent issues” related to freight-rail service.
To be held April 26-27 in-person and streamed live on the STB's YouTube channel, the hearing will address recent rail service problems and recovery efforts involving BNSF Railway Co., CSX, Norfolk Southern Railway and Union Pacific Railroad.