Attachment to Cold Connection, September 28, 2005
Carrier Crisis Looming?
In response to reports that FEMA may be paying up to $4-$6 per mile and taking
equipment out of the available carrier base, IARW conducted a quick survey of
members to see just how serious and widespread the problem might be.
One member, who contacted all his major carriers to inquire about the FEMA
issue, found that over half of them were called by FEMA and asked to commit
resources. As of five days ago, none of that equipment had been diverted to the
FEMA program. He reported, however, that brokers with whom he regularly works
are having difficulty, as their carrier base, the owner-operators, were
accepting FEMA offers.
An East Coast member reported hearing the pay is $4/mile, plus hefty layover
pay. They have been finding it difficult to hire owner-operators on a regular
basis, especially in the past few weeks, and especially in Florida and the
mid-Atlantic. He thinks carriers may have been pulling ice to the hurricane areas
and in some cases paid to layover until the ice could be distributed.
After Katrina and just prior to Rita, another member reported that carriers
were already at a premium in both the Southeast and Midwest. This member said
that over 100 trucks had been sitting at an Air Force base outside of
Montgomery, AL waiting for directions. It was said that they were being paid
$600 a day to sit and wait.
Another member who is feeling the hurricane impact agrees that FEMA and others
are paying considerably more in freight rates to secure trucks, particularly in
the South. This member heard that FEMA may be paying up to $1,500 per load,
when a normal rate would be $600. He is seeing truck shortages throughout the
industry and is unsure when the carrier base will return to normal.
A Midwest state trucking association that has not heard of costs going as
high as $4-$6 per mile did confirm rates of $3-$4 per mile, compared with
traditional rates for refrigerated loads in the range of $2-$2.50 per mile. A
PRW operator in the area forecasts greater demand for an already depleted
carrier base, and believes that it's going to get ugly for shippers through the
rest of this year, for sure, and perhaps for several years to come.
Many PRW customers are taking the initiative to deal with carrier shortages.
We heard that at least one large PRW customer met with several major carriers
in an effort to secure service to some areas, while another big PRW customer is
meeting one-on-one with carriers, negotiating rate increases for the carriers,
increasing fuel surcharge reimbursements, and adding to its own fleet.
Although a few PRW operators have not run into a carrier problem, they are
the exceptions. One PRW veteran observes that the hurricanes are making life
very difficult for his transportation managers and making his customers very
anxious about their deliveries. Another member believes that the supply of
trucks will continue to be tight and the costs will continue to rise. Another believes that carrier capacity will
be a big issue heading into this fall, and perhaps going forward. We will
continue to monitor the situation with the assistance of members of our new
partner association, the International Refrigerated Transportation Association,
and the new IARW/IRTA Transportation Committee.
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