A newly launched intermodal company aims to provide direct transport of produce from farms to major North American supermarkets by following the shifting growing season.
Tiger Cool Express, set to launch service in the spring, is the latest company entering the burgeoning temperature-controlled intermodal market. The new refrigerated service offerings come as shippers grapple to find capacity. Those challenges could become steeper in the coming years because thousands of refrigerated boxes are scheduled for retirement over the next few years.
“Every supermarket has to put fresh tomatoes in the aisles every days and they have to go through the process of changing their carrier group,” said Tom Finkbiner, CEO of Tiger Cool Express. “There is no reason you can’t move equipment and follow the seasonal pattern.”
Higher refrigerated trucking rates are helping fuel the demand for more intermodal capacity. Although dry van carriers have struggled to implement significant rate increases, reefer carriers have been the exception, with rates up 1 percent to 3 percent year-over-year, said John Larkin, a managing director and head of transportation capital research at Stifel Nicolaus, in an Oct. 23 research note.
The old model of sourcing produce from wholesalers is fading to follow the model pioneered by Wal-Mart, which is buying vegetables and fruit directly from farmers, said Finkbiner, a board member of the Intermodal Transportation Institute at the University of Denver. The consolidation of farms and the emergence of the “corporate farmer” is aiding the shift, he said.
Other supermarkets are following Wal-Mart in buying directly from farmers. Tiger Cool is looking to serve national players, including Aldi, Costco, Target and Whole Foods, along with regional players, such as Kroger, Loblaw and Sobeys.
Tiger Cool Express will also tap produce imports from the ports of Philadelphia; Manatee, Fla.; and Hueneme, Calif. The company will begin operations with 200 53-foot containers and will increase its fleet over the next three to five years as the market dictates. Shippers can save up to 15 percent by using the intermodal service instead of long-haul reefer trucking, Finkbiner said.
“That’s a lot of money to save, considering the (supermarket industry has) a low margin business,” he said.
The company — whose executive team includes intermodal veterans Ted Prince and Thomas Shurstad — will offer electronic tracking on the containers that shippers can monitor via a website and receive alerts from when their shipment strays more than 10 miles off of the route. The containers will have real-time internal temperature control, and shippers will be able to monitor the temperature of their produce via a website. Tiger Cool will also offer quick-pay incentives and 52-week contracts that bundle seasonal peaks and calls on capacity.
The company, which has agreements with all the Class I railroads, can also arrange first and last-mile truck transport. Tiger Infrastructure Partners, a middle-market private equity fund, is providing financial backing for the company, which has launched after roughly three years of planning.