A colder than normal spring across northwestern Mexico meant the Mexican table grape export campaign suffered a delay of several weeks, spiking demand in June for reefer trucks out of Arizona and south Texas.
Coupled with a record-breaking Hermosillo, Mexico-based table grape crop, this year’s export campaign has been a perfect storm of a late start, big yields and an overlap between two Mexican grape growing harvest regions, said industry insiders.
“First of all, the [Mexican] table grape harvest was forecast to be a record crop in terms of size – initial estimates were for 22 million boxes of table grapes,” said Scott Vandervoet, a Nogales, Arizona-based produce importer. “We missed a major promotional window because of the delay – the Memorial Day holiday – then we had these two districts (Hermosillo and Caborca) overlap each other, so now you have a lot of boxes of grapes to sell.”
Vandervoet, a partner in Vandervoet and Associates, said the challenge for produce suppliers is “that you have to sell more boxes of grapes in less time.”
Demand for reefer trucks out of Tucson also recently rose sharply compared to last month’s average. According to DAT rateview, reefer rates are averaging $2.89 per mile in the last seven days from the Tucson market (includes Nogales) to Dallas (not including fuel). This is up from May’s average of $2.12, a 36 percent increase. Tucson to Atlanta is going for $2.31, up from $1.99 in May, a 16 percent increase.
Nogales to Brooklyn, New York, gained 54 cents to $2.96 per mile. Rejection rates are surging out of the Tucson market as well, according to FreightWaves’ Outbound Tender Reject Index (Tucson, AZ).
Southwest ports of entry were stacked with reefer freight last week, according to DAT Solutions. Nogales had more than 1,500 load posts versus just 73 truck posts on the DAT network. There were 22 loads for every available truck in Nogales.
In the McAllen-Pharr, Texas region – another key border entry point for table grape imports from Mexico, there was a 16 percent increase in load volume and a 7-cent jump in the average outbound rate to $2.34 per mile, compared to the previous week.
One San Antonio-based produce broker who wished to remain anonymous described the reefer truck situation in Nogales and Pharr as a “bloodbath.”
“Everyone is shipping like crazy, everyone needs refrigerated trucks,” he said. “Nogales is where most of the Mexican grapes come in, because it is closer to Sonora, where they are grown.”
The Mexican state of Sonora – particularly the region around the city of Hermosillo – accounts for 90 percent of Mexico’s table grape production. The city of Caborca in Sonora state, near the Pacific coast, is also another area of major grape production. Both Hermosillo and Caborca are less than 175 miles from Nogales.
This year’s crop of 22 million table grape boxes is a significant increase over the 16.37 million boxes harvested last season. Fresh grape imports into the U.S. in 2018 were valued at $1.56 billion, according to statistics from the U.S. Department of Agriculture. Mexico accounted for 23 percent of the total import grape value. Chile was the U.S.’s largest grape supplier, accounting for 50 percent of total U.S. grape import value last year.
“Nogales gets grapes from both Hermosillo and Caborca,” said Vandervoet, who is a chairman of the board for the Nogales-based Fresh Produce Association of the Americas. “This week and next week – it is going to be heavy in terms of volume, then heading into early July, we’ll see a downtick – by the beginning of July, we will have passed the peak.”