As the U.S. trades tariffs with Mexico, Canada and China, American farmers have been feeling some heartburn, wondering if their export markets for grains might be drying up. Following several robust growing seasons, grain inventories have been building, but finally this year they have started to decline. A trade war could threaten that trend, though. Even without a trade war, U.S. grain exports are expected to total about 79.5 million metric tons in the 2017-2018 growing season, down from 93.9 million metric tons in the 2016-2017 season, according to U.S. Dept. of Agriculture data.
Just as the farmers have been feeling plenty of uncertainty, another group of individuals is also feeling pressure, and not just from the potential tariffs. Agricultural truckers are worried about a decline in shipments, hours-of-service, and the continuing fight for relief from the electronic logging device (ELD) regulation. With all that, though, the biggest disruptor for ag hauling capacity continues to be the strength of the overall freight market, particularly as dry van and refrigerated rates remain near historic highs.
“It seems like for us that we’ve been in this battle for the past year between the tariffs and the [truck] industry in general,” Jared Flinn, CEO of Bulkloads.com, tells FreightWaves. “The past couple of years have seen good crops but the export market has shrunk.”
With less product to move, some ag haulers have turned to van and reefer freight for more profitable runs. With average van rates nationally at $2.19 a mile and reefer loads at $2.55 a mile for the week of June 2, according to DAT, many ag haulers are finding more opportunity in those markets and that has led to less available capacity in the ag markets.
Flinn notes that ag haulers traditionally return to their “home,” eventually. “The guys who haul grain and ag products love that more than anything else,” he says, noting that hauling and loading/unloading bulk trailers is not as physically demanding and feature shorter length of hauls of 250 mi. or less usually. Longer grain movements are often handled by rail.
If the farming community makes it through the tough trade talk, and Flinn believes that even if tariffs cut down on trade with China, other markets will emerge to keep levels sufficient, there could be opportunity for ag haulers again.
“The market keeps improving and rates are getting better,” he says. In addition, the summer wheat harvest is just around the corner and will “create a lot of demand for ag haulers. There’s going to be a big deficit on trucks” that will drive up rates further and potentially pull back some ag truckers.
Currently, Flinn says that larger shipping companies are having trouble finding trucks and that is starting to impact rates.
One area that doesn’t seem to be affecting the market right now is the ELD rule. “There was a lot of buzz around it, but with the guys we talk to on a regular basis, it hasn’t come up much,” Flinn notes.
Work in Washington is continuing on creating a permanent exemption for agricultural haulers from the ELD requirements, but recent clarification on the 150 air-mile rule also helps. The new clarification states that the 150 air-mile exemption is from the source, meaning it could be from a silo, a farm, or some other facility. With shorter length of hauls – many of which may not require the use of an ELD, this is providing more flexibility for ag haulers even without a permanent exemption.
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