Are Transportation Rates Scaring Farmers?
When it comes to farming, there are many costs to consider. Seeds, herbicides, pesticides, water – and these days, even transportation. Most of today’s industrial farms grow crops that are shipped by truck to warehouses and markets across the country, and as the costs involved in moving those crops continues to rise, farmers are feeling the pinch.
The Increased Costs of Transportation
Crops move across the country in all manner of transportation, including trains, barges, and trucks, with the latter being the most common option. Recently, spokespeople for trucking companies have made it very clear that trucking costs will continue to climb. Early in January 2018, moving a truckload of refrigerated food across the country cost roughly $8,450 per truckload. Two weeks later, in mid-January, that same load cost $10,000, and these costs do not appear to be going down any time soon.
Why Costs Continue to Rise
Trucking companies say there are several reasons for the sudden increases in transportation costs. Things like fuel prices do have an impact on the costs of moving goods, but there are two other factors that play bigger roles – the low availability of trucks and the current shortage of people qualified and willing to drive them. What’s more, since the federal government now requires truckers to use electronic logs to help make highways safer and better monitor truckers, trucking companies have incurred substantial costs that they must offset by charging more to transport goods.
Aside from this, truck drivers across the country are looking for ways out of the industry, claiming that the installation of electronic logs will drastically reduce their pay. When the electronic logs are installed, information will be fed into databases for collection and analysis, and truckers who go against any of the tightening regulations will face fines or perhaps the suspension of their CDLs.
What’s more, the electronic logs will drastically reduce their hours and miles, taking a big chunk out of their earnings.
Where Does the Extra Funding for Transportation Come From?
Consumers actually take the brunt of the excess transportation costs. This is evident in the increased prices of everything from milk and eggs to fresh produce. Shipping companies note that most retailers – and especially the big-name grocers across the country like Walmart, Target, Kroger, Meijer, and others – are very reluctant to accept these increased costs. Places like these are known for their low prices, and when they must pass cost increases down to their consumers, they lose some of their competitive edges. Unfortunately, there will likely come a time when these retailers have little choice but to absorb some of the costs and pass the rests on to their shoppers.
Transportation rates are undoubtedly scaring farmers. As the rates continue to increase, everyone has to do their part to absorb the charges – including retailers and consumers alike. In time, if those consumers refuse to buy products due to increasing prices, thereby reducing the demand, per-bushel crop prices will go on the decline and affect farmers’ bottom lines.