Milling & Baking News - May 19, 2020 - 20

Transportation and Distribution

Coronavirus wreaks havoc
on transportation

Sharply lower fuel prices
offer scant consolation

L

ogistics at all levels and in all
modes have been in the thick
of the disruption caused by
the coronavirus (COVID-19) so far in
2020. Sharply reduced tonnage and
redirection of shipping routes were
just two of the most prominent ways
transportation was disrupted while
moving essential food and other items
during the peak of the pandemic.
Ocean freight and rail shipments
have tumbled during the pandemic,
while truck tonnage first surged and
then plunged. Freight rates for grain
and other products generally are
down from a year ago, some sharply,
as are fuel prices.
Effects of COVID-19 on grain movement have been mixed. The shutdown
of numerous ethanol plants due to low
fuel demand and prices has greatly reduced corn deliveries to those plants,
although much of that was local or at
most regional. Likewise, rail and truck
transportation needed to ship ethanol
has greatly declined.
But other grain shipping needs,
such as to mills and processors, surged
when near panic buying of flour and
other staples skyrocketed early in the
shelter-at-home period only to drop
to more normal levels, or even lower,
once that buying subsided. Grain and
oilseed exports, meanwhile, may have
experienced temporary port delays related to COVID-19 but generally were
more affected by regular supply-anddemand fundamentals existing before
20 / May 19, 2020

Milling & Baking News

the pandemic. And ocean freight rates
have been pressured as overall demand for ocean freight was reduced,
largely due to COVID-19.
One meaningful positive for consumers amid the economic slowdown
and sheltering at home was drastically
lower fuel prices. A crude oil price
war between Russia and Saudi Arabia in March created a global supply
glut. Then sharply lower fuel demand
contributed to historic weakness in
energy markets, providing some relief
to shippers in the form of lower diesel
fuel costs.
The US average highway price of
diesel fuel as of May 11 was $2.39 per
gallon, down 69¢, or 22%, from the
2020 high in early January and down
77¢, or 24%, from a year earlier, according to the Energy Information
Administration of the US Department
of Energy. However, prices appeared
to be stabilizing in May after dropping
sharply in the first quarter.
Lower fuel prices reduced the average railroad fuel surcharge in May to
7¢ per mile from 11¢ in April and from
14¢ in May 2019. Fuel surcharges for
certain routes were zero.
Much of the attention was on the
trucking industry, because of its high
visibility to consumers, because that's
what could be redirected most easily
during the pandemic, and because it is
trucks that are responsible for the "last
mile," delivering items to retail or directly to those using them, whether
that be food or personal protective
equipment for first responders, frontline health care staff or meat and food
plant workers. Even though truckers were deemed part of the essential
critical infrastructure workforce by the
US Department of Homeland Security,

and the US Department of Transportation temporarily relaxed certain
rules, drivers encountered numerous
obstacles such as closed public areas
and truck stops early in the shelterat-home period. Those conditions improved in April.
Truck demand rises, falls with virus
Truck freight rates increased early in
the pandemic but have dropped 16%
since the April peak, said Jim Ritchie,
president and chief executive officer
of Redstone Logistics, a North American truckload brokerage and logistics
management and consulting service
based in the Kansas City area. But
rates still were up from March.
He suggested shippers compare
spot and contract freight rates for the
best value in the next 60 days, noting
that spot rates currently were lower
in some cases. As demand begins to
increase, he expects trucking companies will try to raise rates too much,
too quickly because there still is excess
capacity, which will keep rates somewhat subdued, he said.
Mr. Ritchie expects truck freight demand will "run in place" through May
but then begin to increase. He noted a
12% increase in truckload volume at
his company through mid-May, which
he attributed to advanced ordering for
the reopening of businesses.
The American Trucking Associations' (ATA) Truck Tonnage Index in
March was 120.4 (2015=100), up 1.2%
from February and up 4.3% from
March 2019 on a seasonally adjusted
basis. The index for the first quarter
was up 1.5% from the October-December period and was up 2.4% from
January-March 2019.
"March was the storm before the
bakingbusiness.com / world-grain.com


http://www.bakingbusiness.com http://www.world-grain.com

Milling & Baking News - May 19, 2020

Table of Contents for the Digital Edition of Milling & Baking News - May 19, 2020

Milling & Baking News - May 19, 2020 - 1
Milling & Baking News - May 19, 2020 - 1
Milling & Baking News - May 19, 2020 - 2
Milling & Baking News - May 19, 2020 - 3
Milling & Baking News - May 19, 2020 - 4
Milling & Baking News - May 19, 2020 - 5
Milling & Baking News - May 19, 2020 - 6
Milling & Baking News - May 19, 2020 - 7
Milling & Baking News - May 19, 2020 - 8
Milling & Baking News - May 19, 2020 - 9
Milling & Baking News - May 19, 2020 - 10
Milling & Baking News - May 19, 2020 - 11
Milling & Baking News - May 19, 2020 - 12
Milling & Baking News - May 19, 2020 - 13
Milling & Baking News - May 19, 2020 - 14
Milling & Baking News - May 19, 2020 - 15
Milling & Baking News - May 19, 2020 - 16
Milling & Baking News - May 19, 2020 - 17
Milling & Baking News - May 19, 2020 - 18
Milling & Baking News - May 19, 2020 - 19
Milling & Baking News - May 19, 2020 - 20
Milling & Baking News - May 19, 2020 - 21
Milling & Baking News - May 19, 2020 - 22
Milling & Baking News - May 19, 2020 - 23
Milling & Baking News - May 19, 2020 - 24
Milling & Baking News - May 19, 2020 - 25
Milling & Baking News - May 19, 2020 - 26
Milling & Baking News - May 19, 2020 - 27
Milling & Baking News - May 19, 2020 - 28
Milling & Baking News - May 19, 2020 - 29
Milling & Baking News - May 19, 2020 - 30
Milling & Baking News - May 19, 2020 - 31
Milling & Baking News - May 19, 2020 - 32
Milling & Baking News - May 19, 2020 - 33
Milling & Baking News - May 19, 2020 - 34
Milling & Baking News - May 19, 2020 - 35
Milling & Baking News - May 19, 2020 - 36
Milling & Baking News - May 19, 2020 - 37
Milling & Baking News - May 19, 2020 - 38
Milling & Baking News - May 19, 2020 - 39
Milling & Baking News - May 19, 2020 - 40
Milling & Baking News - May 19, 2020 - 41
Milling & Baking News - May 19, 2020 - 42
Milling & Baking News - May 19, 2020 - 43
Milling & Baking News - May 19, 2020 - 44
Milling & Baking News - May 19, 2020 - 45
Milling & Baking News - May 19, 2020 - 46
Milling & Baking News - May 19, 2020 - 47
Milling & Baking News - May 19, 2020 - 48
https://www.nxtbook.com/sosland/mbn/2020_06_02
https://www.nxtbook.com/sosland/mbn/2020_05_19
https://www.nxtbook.com/sosland/mbn/2020_05_05
https://www.nxtbook.com/sosland/mbn/2020_04_21
https://www.nxtbook.com/sosland/mbn/2020_04_07
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https://www.nxtbook.com/sosland/mbn/2020_01_28
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https://www.nxtbook.com/sosland/mbn/2019_12_17
https://www.nxtbook.com/sosland/mbn/2019_12_03
https://www.nxtbook.com/sosland/mbn/2019_11_19
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http://digitalmbn.bakingbusiness.com/sosland/mbn/2019_02_12
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http://digitalmbn.bakingbusiness.com/sosland/mbn/2018_11_06
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http://digitalmbn.bakingbusiness.com/sosland/mbn/2018_10_09
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