Food suppliers venture into logistics to cope with soaring trucking rates
In recent years, the trucking market has seen price increases due to surging freight volumes, compounded by equipment shortages and delays, putting pressure on the food supply chain. Companies such as Roam Ranch, Simpli, and Marx Imports are attempting to alleviate logistics bottlenecks by building their own fleets, rerouting to less congested ports, and deepening partnerships.
Taylor Collins, co-founder of Roam Ranch, used to be able to ship products from his Texas ranch to retail customers across the country with just two weeks' notice. But in recent months, that timeline has stretched.
In the past few quarters, due to a surge in freight volumepushing up prices, shippers have faced a difficult trucking market. Manufacturing issues have further exacerbated the困境, with shortages of tractors, trailers, and replacement parts.
"Freight rates are rising. That's the reality we're in now," said Sarela Herrada, co-founder of Simpli, an ingredient company focused on vertical integration and ethical sourcing.
Spot refrigerated rates have exceeded $3 per mile, and contract rates have risen in tandem. Meanwhile, less-than-truckload (LTL) prices are above historical levels, and surging demand has ledsome carriers to turn away customers。
Rising truckload and LTL rates
It's not just prices and capacity that are putting pressure on the supply chain, but also reliability. Appointments at distribution centers are hard to come by, and labor shortages are slowing loading and unloading at some warehouses.
"We're seeing more delays in LTL freight," said Justin Marx, CEO of Marx Imports, which imports specialty and premium meats. "Trucks are always late."
Delays can risk spoilage and create a ripple effect—if a trailer isn't unloaded on time, the truck may be delayed for the next shipment. Worse, due to poor data quality and lack of visibility into shipment status, it's hard to know the extent of the delay.
Traceability issues are especially prominent in LTL shipping, as products may stop at multiple distribution centers and be transferred between trucks multiple times en route.
"We know it's on the road," Collins said, "but we can't say exactly where it is. Even the trucking company can't specify, only that it's at one of their warehouses waiting for pickup."
For many farmers and ranchers like Collins, there are almost no viable alternatives to road transport—meaning either pay high prices or don't ship. While food suppliers and distributors can't avoid the trucking market, businesses can still adopt strategies to mitigate the impact of market forces.
Shifting to less congested areas
Limoneira, an agricultural company focused on citrus, said it "may lean toward increasing distribution to East Coast markets and using trucks to move goods west to avoid congestion." CEO Harold Edwards said on this month'searnings call。
This is a shift for many companies that have historically relied on the largest ports in Southern California and New York. Simpli's Herrada said that traditionally, transit times from major ports were the shortest.
But now, it's faster to bring goods to places like Baltimore and then truck them to larger port areas like New York.
"You have to look at the big picture to get your hands on the product," Herrada said.
Developing in-house logistics
Wisconsin-based Johnsonville Sausage plans to expand its own fleet to cope with tight capacity.
While it's not uncommon for large food producers, dairies, and grocers to operate their own truck fleets, farmers and ranchers typically don't venture into that business.
"They're born to survive on existing resources and minimize unnecessary equipment," said Curt Covington, senior director of institutional credit at AgAmerica.
Customer service is the main reason for owning a fleet
Curt Reynolds, logistics director at Johnsonville, said the company will increase its truck count from about 30 to 50-60 this year. Last year, it also launched a new logistics business, opening up refrigerated backhaul capacity on its routes for other food and beverage manufacturers.
Owning trucks is an asset-intensive business, and supply chain issues in parts and manufacturing further compound the challenges of running a private fleet. But volatility in the freight market has prompted Collins to internalize some logistics at Roam Ranch.
Collins said the company is investing in refrigerated and frozen trucks and building its own delivery team, while also handling some distribution in central Texas.
"This is an area we never envisioned," Collins said, "but it's our hometown, and we want to have a very strong presence here. We can't rely on third parties to achieve that."
Communicating with suppliers and customers
As with any obstacle in the supply chain, shippers don't have to face challenges alone.
Johnsonville has worked with grocery customers to streamline processes and understand various pain points related to on-time, complete deliveries.
"What can we do as partners to solve problems? Rather than fining each other," Reynolds said.
"You have to look at the big picture to get your hands on the product."
Sarela Herrada
Co-founder of Simpli
Marx described his relationship with New Zealand's Silver Fern Farms, which supplies beef and venison. Over the years, a strong relationship has been built, and Marx considers delivering the farm's products to customers a priority.
The same applies on the customer side—when shipments are delayed and supply may be disrupted, winning the trust of restaurant buyers is crucial.
"This is one of the biggest solutions to supply chain chaos," Marx said. "You have to build relationships, not just transactions."