The high and rising price of fuel has added significantly to the cost of putting potatoes on the American consumer’s dinner table. But even more than rate increases, the industry is facing a growing shortage of rail cars and trucks to carry spuds to market at any price.
Dave Smith, president of the Idaho Growers Shippers Association, said truck availability has been short for some time. In part, independent owner-operators haven’t done well, thinning out the truck supply, but that may change as large fleet operators start to sell more used equipment into the market.
But, he added, A big issue is that not enough people want to qualify and drive.”
Kevin Stanger, the sales manager for Wada Farms in Idaho Falls, agreed. Independent small operators have gone out of business, the truck population has decreased, and it’s hard to get drivers. The pay is “just OK” for a lifestyle that is not a lot of fun, with drivers making long hauls sometimes having to stay on the road for several days.
In Idaho, growers depend on rail for moving 30 percent of their produce. In January, they were notified of a 10 percent increase in rail freight rates plus a fuel cost surcharge that varies month to month.
But rail rates aren’t the real problem, Smith said.
“The problem is service,” he said. “The service stinks and everybody knows it. The railroads need to increase the velocity in the system, returning refrigerated rail cars faster and using them more reliability. We can’t stand erratic schedules where one load takes 10 days, the next 15 and the next 20.”
The railroad industry has internal infrastructure problems with issues such as labor and staffing, Smith said. These problems seem to go in cycles, he said, and currently the railroads are having “a difficult time delivering on the promise of service.” Short of manpower, the lag time in car turnaround keeps getting longer.
In Washington state, similar problems with railcar supply led the state to establish the Washington Produce Railcar Pool, said Pat Boss at the Washington State Potato Commission. The idea, according to a paper describing the pool, is for the state’s Department of Transportation to lease or accept donated refrigerated rail cars and refurbish and restore them to service.
Congress approved an initial investment of $1 million, but the pool needs $250,000 from local sources to start up.
These scarce refrigerated railcars would be available to growers who are year-round suppliers to East Coast markets. They would have to pay the shipping costs, but there would be more cars available.
The shortage of rail cars is critical, according to the report provided by Boss. The Burlington Northern-Santa Fe (BNSF) railroad has only 1,800 refrigerated cars to service 27 states and two Canadian provinces and it plans to retire 700 of those. The ones it will retire are the large 160,000-pound capacity cars best suited for produce shipment. It plans to stop its car-building operations as well.
The shortage of cars leads to “crippling delays,” the report said. It takes one to three weeks to get a car after it has been ordered. Produce markets want providers who can ship when the order is placed.
The shortage of cars has pumped up the price shippers pay per car to Miami and Boston by 25 to 30 percent since 1999. Skyrocketing fuel prices forced BNSF to add a fuel surcharge of $700 to $800 per car.
The report also stated that the national truck fleet is shrinking, that large fleet operators have gone out of business, and that fuel and insurance costs discourage new people from going into the business.
“There simply aren’t enough drivers, even for the biggest truck fleets,” the report said. “The supply of trucks soon will be nearly as unreliable as it is for railcars now.”
Tim O’Connor, president and CEO of the U.S. Potato Board in Colorado, said that transportation is a serious problem even more so in the more remote and less populated areas.
“I don’t know whether, or how many, sales have been lost to truck unavailability, but truck procurement can be hard,” he said. “Trucking is a two-way business.”
Smith said that, in Idaho, “truckers may have to deadhead 200 miles for a load.”
Paul Vanderstoep, transportation issues consultant with the Washington Potato Commission, says Washington growers are sometimes forced to quit packing because of truck shortages or high freight costs that take them out of the market.
Freight costs from Washington to the East Coast run almost 10 cents a pound for truck and 7 cents a pound for rail. That’s not very profitable when potatoes are on sale at 10 pounds for 98 cents, he said.
In areas of high population, potato growers don’t have the same trucking issues but higher freight rates due to high fuel costs affect potato shippers wherever they are.