TEMPERATURE CONTROL FREIGHT IS HOT & GETTING HOTTER
While 2016 was fairly soft most of the year, capacity tightened dramatically in the 4th quarter. One segment of trucking fared far better than the rest, all year—temperature control. If you ship using temperature controlled equipment, it’s likely that the next 10 years will be exceptionally challenging for you.
Factors driving the higher demand for temperature-controlled freight include: (a) increased adoption of whole foods, organic foods, gluten-free and other products that spoil more quickly than others; (b) FDA’s Food Safety Modernization Act (FSMA) increased the burden on food shippers, carriers and even brokers, to control temperature and better protect food; (c) a rush by over-the-counter product manufacturers and homeopathic manufacturers to guarantee controlled room temperature (CRT) throughout the manufacturing stages, through transportation, right up to the delivery to the retailer. As manufacturers require products to be transported as temperature controlled shipments, clean, dry and odor free capacity could come at a much higher cost, if it’s even available.
Expect truck shortages and rate increases far worse than the dry van sector due to rapid industry consolidation and more private equity flowing into the temperature controlled arena. In fact, it’s already begun and is expected to continue for many years. Another thing to expect is deteriorating quality from some of the larger refrigerated transportation providers. As their options for pricing and maximizing their ROI can be solid far into the foreseeable future, customer service may take a back seat.
We’re watching this closely, and have been aligning ourselves with some of the best performing temp-control carriers in the business. We’ve been getting ready for years.