Meat + Poultry - April 2005 - 42

Food ships truckloads of fresh and
frozen products.
Jeff
Golangco,
transportation
manager, says his freight rates have
jumped by 15 percent since last fall.
The increases have showed up as accessorial charges, which are fees in
addition to the base freight rate. The
most common accessorial charge is
the fuel surcharge, which the U.S.
Department of Energy classifies into
four regions: East, West, Midwest
and California. In Western states,
including California, the surcharge is
typically higher than in Eastern states.
"We were paying a 24-percent fuel
surcharge during a six-week period
from October to December last year,
up from between 10 percent and 12
percent. Even now it is 18 percent
from our California plants, which is
very high historically. By contrast,
the Kentucky surcharge is based on
the national average, which is 12 percent," Golangco says.
Beginning in the spring and summer, freight rates typically increase.
Fresh meat haulage competes with
vegetables and fruit, which have a
shorter shelf life. "Vegetable and
fruit shippers are willing to pay higher
rates, which forces the rates up for
meat shippers. We must bid out our
cyclical shipments, which can force
us to pay high rates," says Golangco.
Another common accessorial charge
is the reefer fuel charge for the air
conditioning unit, which runs on diesel fuel. A third charge is for pallet usage. "With the tighter trucking supply,
truckers can dictate the terms. The
cost of each pallet is $7. In the current pallet exchange system, truckers
are less willing to exchange pallets.
"Truckers must bring their own pallets when picking up a load. If some
get broken, there is a charge.
A fourth charge is the unloading
charge or "lumper" fee, which ranges
from $80 to $120, according to Golangco. "The trucker used to do the unloading and would exchange 22 pallets,
but now distribution centers use lumpers due to the liability involved." Most

companies will not even allow the
driver on the dock because of insurance
and security reasons, he adds. "After
Sept. 11, this increased," he says.
Labor and capacity shortages
Golangco says that although the
main factor in the freight increases
from Custom Food Products' California plants is the fuel surcharge, but at
its Kentucky plant the jumps are linked
to the shortage of labor. "We are concerned that there are not enough trucks
around. Regulations make it more
difficult for carriers to survive. Labor
is a significant issue, particularly for
interstate loads," he says.
Richmond Specialty Beef Importers Ltd., Brea, Calif., has also experienced freight rate increases beginning
in February 2004. This division of
processor Richmond New Zealand
sells truckload shipments of beef,
lamb, sheep, veal, goat and venison to
further processors as well as distributors and retailers.
"The real story is what the industry
is doing about holding onto drivers,"
says general manager Brian Anthony.
"There are not enough drivers, but the

shortage is more of a West Coast issue
than an East Coast one. There is a lack
of service to the Northwest from Los
Angeles, and we have seen a major
rate increases from Los Angeles to
San Francisco."
Pride Transport, Inc., Salt Lake
City, a medium-size carrier, handles
about 2,500 loads of meat and poultry
annually. "We implemented a base
rate increase of between 5 percent and
7 percent at the end of the third quarter last year," says Patrick Cook, vice
president of sales. "Its main purpose
was for a pay increase to the drivers. It
is important to secure high-end drivers for hauling temperature-sensitive
goods. With a lack of experience,
drivers would travel about 500 miles
per day compared to between 600
and 700. As a result, they were late
in making their stops. San Francisco
to Portland, which normally took one
day, was now taking two days. The industry needs to attract better drivers."
Simco Foods, Inc., Los Angeles,
a broker, distributor and wholesaler
whose products include about 30-percent meat and poultry, ships about 90
percent of it freight as multiple-stop

On-Highway Diesel Fuel Prices
$2.35

Cost per Gallon

$2.20
$2.25
$1.90
$1.75
$1.60
$1.45
$1.30

April

July

Oct.

Jan.

2003-04

April

2004-05

Source: Energy Information Administration/U.S. Dept. of Energy

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April 2005

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Meat + Poultry - April 2005

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