FreightWaves Market Expert Michael Crosby takes a closer look at winter produce and the countries we rely on to maintain fresh supplies year-round.
About the author: In addition to being a freight market analyst, Michael Crosby spent 10 years working for a wholesale company in Chattanooga, Tennessee – supplying restaurants and grocery stores with fresh fruits, vegetables, and dairy products within a 200-mile radius. From placing orders to managing customer service to unloading trucks, Michael has seen many aspects of the produce world – from the supply/demand struggles of the farmers to transportation challenges of inbound carriers to satisfaction of the end user.
With most things in life, you get what you pay for. In regard to produce, however, the opposite is actually true. Not only is in-season produce cheaper, it’s also higher in nutritional value and tends to look and taste better. Even still, the demand for fresh fruits and vegetables doesn’t stop – even when it’s not feasible to grow them on domestic soil.
In the freight industry, the year-round produce that we enjoy impacts the supply and demand for trucks, affects capacity, and freight rates as well. Strawberries and lettuce from California, tomatoes and oranges from Florida or grapefruit and pecans from Texas definitely influence the freight markets, but there’s more than inland transportation that goes into keeping every bin stocked at the local supermarket. Seasonality impacts what fruits and vegetables are imported and when, but unpredictable extremes in the weather such as drought, flooding and hurricanes also dictate responses to the ever-growing demand.
To supply year-round consumer demand, U.S. fruit and vegetable imports made up about 34 percent of total food imports in 2017.
According to data from the U.S. Department of Agriculture (USDA), about 40 percent of fruit imported into the U.S. comes from Mexico, primarily through commercial ports in Eagle Pass, El Paso and Laredo, Texas; Nogales, Arizona; and Calexico, California.
Mexico is the largest supplier of imported vegetables at 50 percent of the total; Canada is the next largest supplier, accounting for 22 percent of 2017 imports.
Almost 75 percent of U.S. banana imports come from Ecuador, Guatemala and Costa Rica. Not only does Mexico supply watermelons, it also supplies strawberries, avocados, asparagus, tomatoes, and lemons. Canada supplies the U.S. with carrots and even potatoes when American growers can’t meet the demand.
Even though it only provides 5 percent of U.S. fruit and vegetable imports, Peru has distinct growing advantages (12 hours of daily sunlight, desert-like temperatures and a dry coast). Using irrigation, Peru is able to generate grape crops 55 percent faster than other countries. The Peruvian sweet onion is also a favorite in the United States, and because of the country’s optimal climate, Peru is able to harvest up to three crops per year.
Although U.S. watermelon harvests produce 40 million pounds of the fruit annually, the country still imports approximately 30 percent of the domestic consumption to keep up with demand. Since watermelons require conditions between 70-90 degrees Fahrenheit for three consistent months, countries like Mexico, Guatemala and Honduras are able to meet that extra demand. Because honeydew melons and cantaloupe also require a frost-free season, these must be imported when the production in southern states like Arizona, California, Florida, Georgia and Texas can’t keep up.
After harvest, most of the fruit and vegetables imported into the U.S. are time- and temperature-sensitive because of their relatively limited shelf life. Often freight companies of all types (ships, airplanes, railroads and trucks) still struggle to find capacity as the influx of produce rapidly absorbs the refrigerated fleet capacity.
Not all produce needs to be temperature-controlled, but that doesn’t mean it can be transported with some varieties of temperature-sensitive produce. For example, the aroma from a pineapple or banana can easily permeate a porous vegetable like a bell pepper. When it comes to transporting produce, the old adage “one bad apple spoils the whole barrel” has never been more true. Compared to those with no imperfections, more ethylene gas escapes from a blemished apple. This can cause other apples being transported to become softer and ripen prematurely.
The majority of Mexican produce enters via the border commercial zones in Texas. Winter seasonality impacts long-haul refrigerated freight in Laredo (OTRI.LRD, LTRI.LRD). Last winter there were two spikes in demand – one in late January and the second in late April, illustrating just how volatile this market can be.
According to the USDA’s 2018 agricultural projections, fresh produce imports are anticipated to rise by more than 40 percent by the year 2027. This suggests that nearly 50 percent of the vegetables and 75 percent of the fruits will be imported in less than 10 years. Just like fish, flooring, and flash drives, produce may become the next consumable good in the United States comes from outside the country.