Why, with so many manufacturers of food and temperature-sensitive products, are there so few temperature-controlled carriers? And it’s not just food manufacturers that require refrigerated trucking services, other industries like pharmaceuticals face an equally challenging task to get their product to market and still sustain a reasonable profit margin.
In California, many trucking companies promote that they are refrigerated carriers, but are only brokers who hand off the cargo to an asset based refrigerated trucking company. So, not only are the choices limited in using a temp-controlled carrier, but costs could be high due to simple supply and demand.
For more information on strategies, like pool distribution, to control costs for temperature-controlled trucking, read our Insight paper: Jump in the Pool – Shippers of Temperature-Controlled Freight Collaborate to Save.
How do the prices get so high?
Well, along with the supply and demand issue there are other components that drive up the price of refrigerated trucking equipment. In the US, the annual cost of fuel to operate just the diesel reefer unit is nearly $4000.00. Add annual maintenance costs of over $1500.00 to that and you have a sizable overhead that general truckers do not have. Electric reefer units have less fuel and maintenance costs. But remember that that does not cover the cost of the reefer unit system or additional insurance coverage that the carriers must cover.
Am I overpaying for temp-controlled services?
Possibly. Larger manufacturers have the benefit of using FTL refrigerated services, which controls their cost per unit sold. Small to medium-sized manufacturers are forced to ship via LTL. Based on the weight and density of the cargo you will pay for the space used in the trailer. So the cost per unit is higher and can make it difficult to compete with bigger companies.
Also, when you are restricted to shipping LTL consignments for your refrigerated trucking needs, the transit time is usually longer. The carrier will collect various shipments over a set period to build a FTL to a particular destination. Longer transit times also mean a longer “days sales outstanding” for receivables, which does not help the cash flow.
How do I control my costs?
There are a few ways that you can keep those costs from cutting into your profit margin.
- Collaborate with other shippers of temperature-sensitive products and pool your freight volume. 3PLs who serve multiple food shippers can coordinate this collaboration.
- Contact a 3PL with warehousing and refrigerated trucking assets who specializes in storing and shipping refrigerated cargo.
- Look for refrigerated LTL partners. There aren’t many, particularly in California and the Western U.S. But providers like Weber Logistics can combine your temperature-controlled, final-mile shipments with other companies to reduce your distribution costs.
The limited refrigerated trucking services in California are not likely to grow in the future. But with some careful collaboration with similar shippers and a reputable temp-controlled carrier, you can control your costs and improve your bottom line.
Weber Logistics has one of the largest temperature-controlled delivery networks in the western US. We specialize in food-grade warehousing and refrigerated LTL shipments. With our fleet of late model equipment and the latest generation of reefers we will get your product to market in a timely and cost effective manner. Contact us at 855-GOWEBER (469-3237) to learn more about our 3PL services.
Download our Weber Insight on Pool Distribution for Temperature-Controlled Products: