Supply Chain

John Phipps: Is There Really a Shortage of Truck Drivers?

Mon, 14 Aug 2023 16:07:06 GMT

Cast your mind back to early 2022 and the headline-grabbing Trucker Shortage . My conclusion then was there wasn’t much hard data to substantiate that alarm. There has always been a need for truckers and perversely there seems to have always been ample qualified workers to fill it.

It didn’t take an economics degree to figure out the problem: truckers simply weren’t being compensated enough to entice and keep workers. Now a year and a half later the headline is the demise of one of America’s largest trucking companies – Yellow Trucking – and the end of 30,000 jobs they represent.

(Farm Journal)

Freight companies are struggling now with reduced demand, which threatens even more trucking jobs. At some point most of us begin to wonder about these alleged shortages. Adding to the muddled picture of jobs and pay is the historically low unemployment rate which emphatically illustrates how small the pool of potential employees is.

Related Story: Walmart Will Now Pay Starting Truck Drivers $110,000, Could It Backfire and Make the Nationwide Trucker Shortage Even Worse?

For trucking, which is often a career step up from entry wage employment, increases in the minimum wage by many states has helped low-wage employees keep up.

Since the pandemic, the surprising strength of low wage compensation compared to skilled or managerial wages removes some motivation for workers to consider a trucking job. Note the inversion after the pandemic of which income quintile is seeing greater wage increases.

Trucking companies have long dealt with astonishing turnover rates since the prospective employee pool was large and already qualified. New CDL licenses are issued to about half the current trucker numbers each year. Short-lived shortages are not limited to employees either.

Related Story: SHIP IT Act Could Save Truck Drivers Up to $10,000 and Cover CDL Costs

I started looking back at the numerous “shortages” and dire predictions of the last few years. At least some semiconductor chips, for example, are in now surplus, even a glut. We’ve discovered more new sources for lithium than anyone imagined. Ditto for copper, cobalt, and phosphates.

It appears markets can remedy shortages faster than we have imagined, and the few stubborn scarcities are sidestepped with alternative solutions. Not always, but certainly more than the hysterical headlines suggest.

There will always be warnings about trucker shortages, I suspect, but not from truckers.

Livestock Producers Report Being Just Days Away From Running Out of Feed Due to Shipping Rail Issues

Tue, 12 Jul 2022 20:46:53 GMT

Rail bottlenecks in the U.S. are not improving, and in some cases, growing more severe. Feed users in California and the Southwest are having issues sourcing grain, with some reporting they are paying $3 over the CBOT price to secure grain by truck. Not only are feed users on the brink of running out of grain, but there are also concerns the rail issues could grow worse during harvest this fall.

The National Grain and Feed Association (NGFA) says their members have been seeing issues since late winter and early spring, which then caused the Surface Transportation Board (STB) to hold a hearing in August. While the industry thought the issues would improve by summer, labor issues are not getting better.

“What I’m hearing from our members is fewer equipment issues and that the equipment and engines seem to be not breaking down, but the train times - the amount of time it’s taking to get the trains - and the reliability of receiving them is still quite a problem in in quite a few areas of the country,” says Mike Seyfert, President and CEO of NGFA.

Fears of Running Out of Feed

According to Trains.com , Foster Farms, the largest chicken producer in the western U.S., asked federal regulators to issue an emergency service order last week that would direct Union Pacific to prioritize corn shipments that thousands of dairy cattle and millions of chickens and turkeys depend upon.

”The point has been reached when millions of chickens will be killed and other livestock will suffer because of UP’s service failures,” Foster Farms wrote in its request to the Surface Transportation Board this week .

Seyfert says the emergency order shows the seriousness of the issue.

“At times in in the past several months, we have heard from more than one member that has had severe difficulty getting feed, sometimes being within several hours of being short,” says Seyfert.

While a combination of weather, supply chain issues and other factors are creating the severe scenario, the main issue seems to revolve around labor. According to NGFA, railroads were already down about 25% in staffing prior to the COVID-19 pandemic. Then, problems during the pandemic only exacerbated the labor issue.

Ken Erikson, senior vice president at S&P Global Fuels, Chemicals and Resource Solutions Group, says the training required to bring employees back on the railroad is something that takes time, similar to what airlines are experiencing with pilots and other staff.

“The railroads had on a mandated requirement, instituted position railroad systems out there for precision scheduled railroads, part of the requirements to meet for the federal government,” says Erkison. “So, they thought they didn’t need as much crews if they can automate some things or be able to have greater visibility and trains. Well, the reality is they got so far behind they had furloughed a lot of crew members. And you just can’t bring crews back overnight without adequate training and to bring equipment back that’s offline to get a condition again. These things take long lead times.”

Congress Urges STB to Take Action

This week, 51 members of the U.S. House of Representatives signed a letter and sent to the STB regarding issues with the rail system in the U.S.. The letter asked STB to continue to work through the current rail issues with all stakeholders in order to address short-term challenges and find a resolution.

“On behalf of our constituents and farmers around the country, we write regarding poor rail service, which has limited fertilizer shipments, among other essential agricultural inputs and commodities, including grain and feed,” the letter stated.

“At a time when global fertilizer supplies and global crop production are highly disrupted, imposing shipping curtailments on fertilizer inputs and grain, as recently proposed by Union Pacific, will cause major supply chain disruptions, hurt American farmers, and exacerbate the food crisis considerably. We must ensure critical commodities reach essential industries and workers, such as America’s farmers, who are essential to feeding our nation and the world. Food is a national security issue, and we must treat it as such,” the 51 members wrote in the letter.

The Senate sent a similar letter to the STB in May.

More Issues Due to Labor Discussions/Disputes?

Another issue with labor are union and other labor discussions and disputes. Erikson points out the International Longshore and Warehouse Contract with Pacific Maritime Association expires Friday, July 1. Erikson says the two parties have been negotiating and committed to stay working, there could be other ripple effects.

“They’ve committed to stay working, but what we’ve seen as the diversion of cargo moving to the West Coast or to the U.S. Center Gulf, areas that move a lot of cargo, but also you have requirements and equipment demand to other regions that hasn’t been there. So now you move the problem elsewhere,” says Erikson.

Ahead of Friday’s expiration, the L.A. port chief sees no disruptions on eve of contract lapsing. Farm Journal Washington correspondent Jim Wiesemeyer reports the head of the US’ busiest port said he doesn’t foresee strikes at about 30 West Coast maritime hubs even as the labor contract for 22,000 dockworkers is about to lapse without a new deal. “Anything’s possible, but it will not happen,” Port of Los Angeles Executive Director Gene Seroka said Wednesday.

The labor issues could be far from over, as the four major rail lines are in the middle of a labor dispute with the unions. With the timeline on the table today, there are concerns those issue could grow more severe and possibly cause even more rail issues during the fall months, which is a busy time with harvest.

“They’re currently in a 30 day cooling off period, where they’re no longer working on arbitration,” Seyfert explains. “There’s some actions the President can take in mid-July to appoint a board, which can then make some recommendations that can be acted on. There’s 30 days there. Then, there’s 30 days for the railroads and in the labor to work together to determine to accept or not accept that.

Once we get into mid-September, there’s also a risk of some labor issues, even labor stoppage on some of the rail lines. And so getting these things addressed now and all of us working together before we get particularly into that fall harvest, where we’ve really never been in a situation where a reliable and resilient rail service is more important than it is.”

Seyfert says there have been recommendations made to the Surface Transportation Board (STB) regarding more transparent reporting by the railroad, as well as a request for railroads to submit service plans. There are also additional steps Congress could take to help resolve a portion of the rail bottlenecks.

Diesel Prices Just Hit a New Record High, Here's Why a Diesel Shortage May Be Next

Tue, 10 May 2022 21:18:45 GMT

Farmers are already faced with a shortage of equipment parts, tires and some crop inputs. Now, due to increased demand and a drop in production, a diesel shortage may be next as the largest diesel distribution hub in the U.S. is sitting on supplies at a 30-year low.

Record gap between gasoline and diesel, but the gap will start to shrink very soon- not by leaps and bounds, but slowly. https://t.co/oFGj8piR3h
— Patrick De Haan ⛽️📊 (@GasBuddyGuy) May 9, 2022

Diesel prices hit a record again this week. The national average price of diesel is now $5.54 per gallon, which is an increase of 22 cents from last week, which was when the most recent record was set. Data shows there’s no state that’s currently seeing diesel prices below $5.12 per gallon.

So, what’s causing the historic run-up in prices?

It’s a combination of things, but Russia, supply chain trying to play catch-up and lower production along the East Coast are all adding to the dire supply situation.

“Diesel supply is short all over the world due to sanctions against Russian oil and much higher post-pandemic demand as supply restocking takes place,” says Peter Meyer with S&P Global Commodity Insights.

Meyer adds the “just in time” supply chain model only exacerbates the problem as the supply chain works through issues that date back to the Covid-19 pandemic.

Some farmers are now even reporting farm diesel prices are higher than on-road diesel, which is typically not the case.

Record prices are one thing, but getting your hands on enough diesel may be the next issue for farmers.

“Certain areas of the country have seen shortages already and we expect that to continue. Supplies at New York Harbor–a hub for diesel distribution–are at a 30-year low,” says Meyer. “As such, the East Coast of the U.S. has been hit especially hard, resulting in diesel prices above $6.00 per gallon in that area, well over the equivalent of $250 per barrel. Exports of U.S. gasoline, diesel, and jet fuel to Latin America is also very high, adding to the tightness.”

(Farm Journal)

The bottlenecks in the diesel supplies are not a shortage of oil that the U.S. is dealing with, even with the sanctions against Russia. Instead, Meyer says it’s a shortage of refining capacity on the East Coast.

The problem on the East Coast is refining capacity, not so much the supply of oil,” he says. “East Coast capacity has been cut in half from 1.6 million barrels per day to 800,000 barrels per day over the past 10 years as half of the refineries in the east have shuttered. Lower production capacities and higher post pandemic demand has caused this squeeze in the eastern U.S.”

Meyer says making price forecasts is proving to be extremely difficult considering, but margins are enticing refiners to produce as much diesel as possible.

“When the profit margin on producing diesel is over $70 per barrel, every refining company in the US will be doing all they can to produce as much as they can,” says Meyer. One bright spot may be that after a cold spring, heating oil demand will obviously diminish quickly in the summer months.”

Meyer also says renewable diesel production may actually benefit from the historic spike in diesel prices, but he points out soy oil, which is still the predominate feedstock, continues to take its lead from the oil product markets and is overpriced for many.

Diesel Export Ban Looming?

There’s a higher demand around the globe for products like diesel, heating oil and jet fuel, which are known as “middle distillates” since they are made from the middle of the boiling range when oil is turned into products. The U.S. currently exports more than 1-million barrels of distillates every day to countries such as Mexico, Brazil and Chile.

So could an export ban be coming for diesel fuel?

AgriTalk host Chip Flory put that question to Farm Journal Washington analyst Jim Wiesemeyer during this week’s “Signal to Noise.” Wiesemeyer says while it’s not known to be on the table at this point, anything his possible. You can listen to that discussion here.

Cutting Into The Center Of Meat Processors' Labor Pains, This State Is Rolling Out A Hot Dog Factory On Wheels

Mon, 01 Nov 2021 17:43:40 GMT

In July, USDA Secretary Tom Vilsack announced $500 million in new funds to expand meat processing capacity across the U.S., funds designed to be used to help small and medium processing operations. And while details of how that money will be dispersed are still being ironed out, the funds could provide a major boost to help revive small and medium size plants.

A current meat processing plant being built in the Midwest, which will have the capacity to process up to 40 head of cattle per week and 80 hogs, is costing around $8 million to build today. A smaller facility that recently opened, which processes 50 head of cattle per week and tapped into technology to help the quality of meat processed, came in at a price tag of $3 million.

While the money could answer a major need, it doesn’t solve the biggest pain point for meat processors of all sizes today: a shortage of labor.

“One thing that we did learn during the pandemic is that this is a nation of meat eaters, and demand was quite high,” says Bryon Wiegand, division director, Department of Animal Science at the University of Missouri.

As the pandemic caused some restaurants to shut down, the return to freezer beef and pork became a craze. And a favorite of Columbia, Mo., carnivores is a student-run meat processing facility located right on the University’s campus.The Mizzou Meat Market is a mainstay on the University of Missouri campus, and during the COVID-19 pandemic, it became an essential source for shoppers searching for protein.

“Here at the Mizzou Meat Market, we actually got permission to stay open as an essential business through the University,” says Wiegand. “I would argue that we probably had our best sales year ever in 2020, and into 2021.”

The influx of consumer demand wasn’t just happening here, but at local meat processors across the state and country.

“It wasn’t that there wasn’t product in the pipeline, but the pipeline got wrinkled up, essentially,” points out Wiegand.

And as those processors continued to be pinched for labor, the state of Missouri stepped in with $20 million dollars to help support small processors across the state through the Coronavirus Aid, Relief and Economic Security Act, or what’s referred to as the CARES Act.

“That was anything from upgrading their refrigeration to expanding coolers, essentially. The idea was that we were going to increase slaughter capacity at the local level,” says Wiegand. “That effort, I would argue, was successful in that they did award $70 million of those funds. And we actually took on 27 new inspected facilities in the state.”

Mobile Processing Unit

With $3 million still unused, Missouri Director of Agriculture Chris Chinn asked Wiegand for ideas to put that $3 million to work, crafting a grant in just six weeks.

“We started the brainstorming and went back to something we looked at for a long time. And that was a workforce development program in meat processing to help support that shortfall that we just discussed in the labor pool,” he says.

With one part of the grant money dedicated to upgrading equipment at the campus processing facility, the second piece is a project still being carved out.

“Maybe even more exciting is that we’ve ordered two mobile units, which are trailers that are self-contained processing plants for going out into the state,” he adds.

The unique concept is one he’s dubbed “a hot dog factory on wheels.” And the mobile processing unit could fill many meat processors’ biggest need: workforce development.

The reality is that we want to put skilled labor into these existing businesses,” says Wiegand. “If you go back to the mission of our institution, we’ve got Extension and research and teaching, and we’re trying to combine the elements of that.”

Taking the Classroom on the Road

And tapped to bring the idea to life is Ty Peckman, the newly hired director for the program, who’s just a few weeks on the job. He says the biggest challenges are combining skillsets and knowledge needed in the meat sciences industry, and crafting key lessons and modules that carve out the skill sets needed to keep small meat processing plants employed.

“We’ve taught several courses that cover a lot of the aspects from food safety,” says Peckman. From the basics to further processed meats, and the principles of meat science, it’s really then how do we take this from a college course level, and how do we distill it to what’s essential for folks who may not come in with that background knowledge.”

As Peckman works with Wiegand and others to craft a program that works, he says the workforce development program will be practical and adaptable and will evolve as the program grows. And the driving factor is the way the program will ensure context remains king.

“It’s understanding just enough of the science to why it is important that whenever we talk about humane animal handling and animal care, whenever we receive those animals, what’s the importance of doing that, not only from the animal’s well-being sake, but from the betterment of a product down the line standpoint. So, we want to tie in just enough of the technical with kind of the background education to hopefully submit some of the why in things,” says Peckman.

Influx of Grants

Grants, like the one received for Workforce Development, are just one example of what’s happening at the University of Missouri, according to Christopher Daubert, vice chancellor and dean of the College of Agriculture, Food and Natural Resources (CAFNR) at the University of Missouri. He says grants are pouring into CAFNR, thanks to the committed work of the entire faculty.

“The college was up 45% in shared credit awards within the college during that pandemic cycle than they were the year prior,” he says. “So, 45% is a huge increase in awards coming into the college.”

The dean says this specific grant is an example of how the land-grant mission continues to thrive.

“It’s about taking the research – the work that we do in our classrooms and in our laboratories – and taking that knowledge and taking it out to the state. That is truly the land-grant mission,” he adds.

Coming to a Town Near You

As the custom mobile meat processing units are set to be complete by the spring of 2022. Wiegand says it’ll expand beyond much more than just animal science, even bringing in lessons from the University Food Science, Agricultural Economics and Agricultural Business.

“For us, putting those on the road is going to be the first major win,” he adds. “And we’re actually communicating with some of our community colleges and some of their workforce programs, so that we can have a bigger network in the state and take these trailers and land on their place and deliver the content.”

As the group taps into a new tradition, the mission remains the same.

“We need to have trained personnel in these small businesses, and they need to have staying power,” says Wiegand.

And as this program shows, Mizzou Animal Science is continues it’s quest to be a cut above the rest.