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Texas surpasses California in freight volume from Mexico

Texas surpasses California in freight volume from Mexico
Texas outpaced California this month (June 2015) and has claimed the title as the state with the highest refrigerated freight volume.

There is a shortage in Texas, the latest hot spot in the nation for refrigerated truck-trailers, vans and drivers to help move millions of tons of fresh produce and other food items across U.S. highways. Some say it’s a solid indication the Lone Star State has surpassed California as the major transportation port for the movement of fresh foods across the nation.

Texas outpaced California this month (June 2015) and has claimed the title as the state with the highest refrigerated freight volume - referred to as “spot reefer” freight - according to a freight industry analyst at DAT Solutions.

The latest numbers mark the first time Texas has surpassed the Golden State in refrigerated freight volume in a summer season.

According to DAT analyst Mark Montague, Texas is currently garnering more refrigerated freight volume and demand than any two states combined.

Montague credits the rise of Texas as a hot bed for the demand of reefer freight services on a combination of higher volumes of fresh produce grown in the Rio Grande Valley, the movement of more cattle and refrigerated meat from packing houses in western regions of the state, an improved highway system in Mexico and the surge of imports from across the border in recent weeks.

Montague posted on the DAT Solutions website last week that there has been a big increase in Mexican imports in Texas border towns, especially in McAllen-Pharr, Laredo and El Paso. Analysts say Texas international ports of entree are proving to be more accessible and popular than Nogales, Arizona, which has long been the previous volume leader for refrigerated loads awaiting movement across the United States.

Aiding the Rio Grande Valley as the new, most popular shipping point for Mexican imports are the growing number of refrigerated warehouses located along the Texas-Mexico border. Once imports cross the international bridges connecting the Valley with the new highway system in Tamaulipas and Nuevo Leon states in Mexico, they must be inspected, and this generally occurs while they are in warehouse storage.

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Following inspection, the route to Midwest and East Coast markets is shorter from Texas than from Arizona according to Montague.

Big investment

"Mexico has spent billions of dollars to move fresh products from their popular Pacific Coast produce-growing region across a super highway system and one of the highest suspension bridges in the Western hemisphere," he said.

While Mexico's super highway and the many new bridges connecting the Pacific coast to the Texas border has shifted Mexican import traffic from Arizona and California to the Texas, changes in production of domestic produce in the U.S. also made a major impact on shipping demand.

Texas experienced a record-breaking multi-year drought, but rains during the fourth quarter of 2014 and record-setting rains in the first half of 2015 have revitalized the state's agricultural economy. In contrast, crippling drought conditions in California are taking a toll on agricultural operations on the West Coast.

Production of fresh produce in California especially has been hard hit this year causing a decline in fruit and vegetable production numbers. Freight industry analysts say the decline has adversely affected reefer freight transportation at a time when demand would normally be high.

On the other side of the coin, Montague reports fruit and vegetable production in Texas has recovered some lost ground since 2013, increasing the demand for refrigerated freight. Also of significance is the increased demand for non-refrigerated van transport.

"The heightened reefer activity contributes to a shortage of vans in the same markets. Any carrier with a reefer trailer is deploying it right now, diverting power units and drivers to the more lucrative, seasonal freight. When a reefer market is as hot as these Texas markets are today, rates rise for vans as well," Montague posted on his blog last week.

Mexican imports and non-perishable produce such as melons are keeping the demand high for van transport on short distance runs, holding the overall demand for non-refrigerated transport similarly high, creating a one-two punch for transportation demand in Texas for both refrigerated and non-refrigerated freight.

Montague says to expect freight rates to continue trending up in Texas markets for at least the next few weeks until pressure begins to drift northward as far as Canada with produce harvests into the fall months.

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