RSS
Twitter
Linked In
News In
News
Linked In
RSS
https://twitter.com/Agrimoney
http://www.newsnow.co.uk/h/Industry+Sectors/Agriculture

You are viewing your 1 complimentary article.

Register now to receive full access.

Already registered?

Login | Join us now

Cautions mount over cost to US agriculture of trucking safety clampdown

Twitter Linkedin eCard

Worries over the impact fo US agriculture of tightened trucking regulations crystalised as they were referenced by officials in a downgrade to cotton export prospects, and meat giant Tyson Foods as adding $200m to its costs.

 

The US Department of Agriculture - explaining a surprise 300,000-bale downgrade on Thursday to its forecast for US cotton exports in 2017-18 – highlighted the imposition of rules limiting truck driver hours and demand better record checks, a measure designed to boost safety.

 

“Since the beginning of calendar year 2018, implementation of new US trucking regulations has reportedly caused delays in transporting cotton from US warehouses,” the USDA said.

 

This was” a situation which may not be entirely resolved and backlogs cleared before the end of the season”, which for cotton closes in July.

 

‘Logistics have become a nightmare’

 

The comment follows concerns among many cotton investors that the freight rules have exacerbated the impact of a squeeze on truck supplies, and are behind an unusual disparity between a strong pace of orders for US cotton, and a relatively slow pace of shipments.

 

For instance, at Georgia-based McCleskey Cotton, Ron Lee said two weeks ago that “the main problem I am almost positive of in this situation is the lack of trucks available to ship this cotton to the various ports in the US.

 

“It almost doesn’t matter what you are selling and trying to move these days, logistics have become a huge issue and a nightmare in some cases.

 

“There is simply a huge shortage of trucks in this country at the moment and the new regulations are not helping matters.”

 

‘Consumer is going to pay’

 

Separately, Tyson Foods, the biggest US meat processor by sales, on Thursday cautioned that the higher costs forced by the new regulations will feed through into raised meat costs for consumers.

 

“Across all segments, freight costs have escalated as trucking capacity has tightened nationwide,” said Tom Hayes, the Tyson chief executive.

 

“We expect these costs to continue to rise as carriers compete for drivers and new federal regulations come into play,” he told investors, adding that the group expected this dynamic to “add more than $200m to our costs this year”.

 

Referring to increased wages bills too, he added that “we’re assuming we’ll recover the majority through pricing”.

 

“Freight is a tough one. It’s affecting all of our businesses.

 

“We’re going to pass it through and ultimately the consumer is going to pay for it at some point.”

 

‘Serious challenges’

 

Also in the US meat industry, the National Pork Producers Council in September sought sector exemption from some of the regulations, citing the need for swift transport of live animals.

 

The regulation “presents some serious challenges for livestock haulers and the animals in their care,” the council said.

 

“We’re asking the [government] to exempt truckers transporting hogs, cattle and other livestock from this regulation because they have a moral obligation to care for the animals they’re hauling regardless of what some bureaucratic rule says.”

 

‘Grim reality’

 

However, Uber, the company best known for revolutionising the way people travels around major urban areas, has seen a potential business opportunity in the disruption, and by launching a trucking service, named Uber Freight.

 

The service, a free app that matches carriers with shippers, “aims to empower truck drivers and small trucking companies to run and grow their business”, the company says.

 

According to meat industry monitor Urner Barry, a sister publication to Agrimoney, “with the food industry grappling with high freight costs, a service like Uber Freight could certainly be in play to mitigate shipping issues.

 

“As demand has increased for transportation services, a shortage of trucks has been the grim reality for many heading into 2018.”

Twitter Linkedin eCard
Related Stories

Evening markets: Calendar and dollar revival provoke ag market reversal

For cotton futures, that means a higher close, but the likes of soybeans and corn struggle. Coffee futures maintain downward trajectory

Deere lifts sales hopes - even as it unveils biggest loss in 25 years

The maker of John Deere tractors flags "strengthening" market conditions, but swallows a huge writedown prompted by US tax retorms

Plant Impact agrees takeover by Croda, after failure of Bayer contract

The crop enhancement group, floored by the failure of a supply deal with Bayer, agrees a takeover by a maker of chemicals from anti-wrinkle creams to floor coatings

Morning markets: Year of the dog starts broadly positive for ags

That is, what movement there is is largely upward. But the lunar new year is not the only calendar factor to watch out for...
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© Agrimoney.com 2017

Agrimoney.com and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of AgriBriefing Ltd
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069