Cool Freight a Hot Market

Transporting refrigerated cargo is becoming an oasis for motor carriers that are finding it hard to make money hauling other kinds of freight.

Trucking freight that must be cooled to a controlled temperature is a sector of the industry that also happens to be more complicated to execute: Drivers must be trained to handle complicated equipment, and profitable backhauls can be difficult to find. And the additional fuel required to power the refrigerated units means transportation managers, who are already having difficulty sleeping at night because of diesel fuel price changes, are getting no sleep at all.

But in a recession, staples such as bread, milk and produce continue to sell, and carriers in the market — and those looking to take advantage of it — are keeping more full trucks on the road.

“People are doing more reefer work,” said Larry Ravinett, senior vice president of logistics and supply chain for National Retail Systems.
Last year, NRS, which owns 12,000 trailers under several divisions, nailed a contract with a large pharmaceutical company that required temperature-controlled refrigerated trailers. The company bought a fleet at $100,000 per unit, and quickly moved to secure a backhaul to help defray the cost.

“We started talking about an opportunity to move produce, something we never thought about,” Ravinett said. “We found that moving a load of fruit could get us $3,000 to $4,000 from the West Coast to East Coast. That’s as good as the front-haul price for a pharmaceutical move.”
NRS discovered what traditional reefer carriers have always known: Cool cargoes can help carry motor carriers through a weak economy. While trade in dry van freight such as auto parts and electronics may dry up, reefer freight stays strong.

Mondovi, Wis.-based reefer hauler Marten Transport reported a 52.5 percent jump in first-quarter profit to $4.1 million, despite a 14.9 percent decline in revenue tied to declining fuel surcharges.

Intermodal trucking and logistics company Roadlink partnered with Preferred Freezer Services, a cold storage warehouse operator, as its exclusive short-haul trucker at eight port locations throughout the country. Roadlink plans to link with 12 more during the next 18 months.

While Dallas-based Frozen Food Express had to lay off 110 workers at the end of the first quarter, no drivers lost their jobs. FFE said it’s looking to protect market share as other carriers enter the market, driving down rates.

As with other sectors of the trucking market, reefer rates have declined since last year because of excess capacity, said Kathy Schroeder, vice president of operations for Midway Distribution, a broker that deals in less-than-truckload reefer transportation between manufacturers and distribution centers.

“Rates are definitely down from a year ago,” Schroeder said, “but doing what we do, with 99 percent of our business in fresh and frozen food and produce, people are still eating.”

As a non-asset-based company, Midway Distribution has an added hedge against the recession: lower fixed costs than its asset- heavy counterparts.

“There’s nothing we’re doing that shippers couldn’t do themselves if they had the resources, so they’re paying us a premium,” Schroeder said. “We don’t tell everybody we can do everything, so we’re continuing to get new clients” looking for a specialized broker, she said.

“We’re getting calls from more carriers wanting to prove what they can do for us, and who want to get bids in front of us,” said Todd Larson, regional manager of northeast operations for Henningsen Cold Storage, a warehousing and non-asset logistics company.

On the logistics side, which includes transportation management, “business is down a little,” Larson said, and there’s unused capacity, particularly in the Northeast because of the weak economy.

“But those (customers) selling the more economical products that you see in the grocery stores are seeing an increase in business, while the higher-end foods are doing slower turns.”

Contact John Gallagher at jgallagher@joc.com.