Industry Spotlight: Refrigerated Trucks
PATH is excited to present this industry spotlight in partnership with industry experts Associated Warehouses, Inc. (AWI).
Refrigerated trucks (aka: reefer trucks) haul freight that require temperature-controlled climates. Such freight can include produce, other food items, or medicine. The trailers have a built-in temperature-controlled system that keeps the freight safe during transportation.
Growth of industry is estimated at a Compound Annual Growth Rate or CAGR of 5.51% and is expected to reach $23.3 Billion by 2027.
The refrigerated truck industry was not as severely affected by the COVID-19 pandemic as other industries as the need to transport medicine increased during the pandemic.
The US produces over 95% of all new medication on the market and this medicine needs to be safely transported thus driving demand for refrigerated truck transport.
While the food and beverage industry required less refrigerated transportation during the lockdowns, this industry is quickly recovering as lock-downs are lifted and are once again relying on refrigerated trucks to transport their goods.
There is a growing demand from quick-service restaurants, hotels, and other eateries as they recover from the pandemic.
Top Opportunities by Segment
Vehicle Type: Light commercial vehicles, which will gain $ 5,454.2 million of global annual sales by 2025.
Temperature: Single temperature segment, which will gain $8,581.1 million of global annual sales by 2025.
Application: Poultry, meat, and seafood, which will gain $ 4,462.7 million of global annual sales by 2025.
Advantages of a Reefer Truck
Stability. There is always a need to transport perishable goods.
Adaptable. Because they are temperature controlled, they can also carry dry goods or loads with some temperature-sensitivity.
Secure. Reefer trucks are well secured and easily deter bad weather and thieves.
Disadvantages of a Reefer Truck
Cost. The motor and other technology increases fuel consumption. There is also more equipment to maintain.
Depending on the goods shipped, cost can be recouped by increasing pricing. For example, shippers typically charge more to transport goods with high temperature-sensitivity such as ice cream. It does not take much of a temperature change for ice cream to lose its consistency. Most reefer trucks can’t maintain temperatures under –10 degrees. Therefore, ice cream needs to be shipped in a super-insulated container.
Carriers can also charge more for shipping, in general, compared to dry trucks. The national average rate for reefer trucks is $2.93 per mile compared to $2.56 for dry trucks.
Time. Loading and unloading can take time as the product can have special requirements. Additionally, the trailers need to be thoroughly cleaned in between loads. Loading requires more prep time compared to other trailers. Reefer trucks need to be pre-cooled before loading.
Distance Covered. Currently, shipping companies are regional. When they need to reach a market outside their region, they need to connect with another shipper and hand-off the load.
The market is currently fragmented but is expected to move towards consolidation by 2026.
Key Players in the US
C.R. England Inc. (Revenue: $1.47 billion)
Prime Inc. (Revenue: $2.001 billion)
KLLM Transport Services (Revenue: $917 million)
Stevens Transport Inc. (Revenue: $668.73 million)
Marten Transport Ltd. (Revenue: $874 million)
Swift Refrigerated (Revenue: $4 billion)
TransAm Trucking Inc. (Revenue: $297 million)
*Frozen Food Express (Revenue: $185 million) - only company that is truly a US nationwide shipper.
Industry Trends
Eco-Friendly. There is a strong push to reduce the carbon footprint in the trucking industry as a whole. Electric reefer trucks are being developed and tested. Thermo King (Trane Technologies) has invested $100 million to deliver fully electric trucks to the Americas by 2024. In 2022, Lion Electric teamed up with CM Truck Beds, Knapheide, Morgan and Thermo King to build zero-emission commercial trucks. These trucks, which were displayed at The World Truck Show, offer a max range of 200 miles. However key players in the trucking industry continue to invest in research and development of zero-emission refrigerated trucks and thus this technology is expected to advance quickly.
Drivers Wanted. Great news for reefer drivers, they are always in high demand! There is always a need for fresh food and medicine, so job security is typically not an issue. In fact, the refrigerated truck segment offers the most secure employment opportunity for drivers in the trucking industry. Additionally, reefer drivers get paid well, but with great pay comes greater responsibilities. Reefer drivers must constantly check, adjust, and maintain the temperature of their trailer. Despite the higher pay, there is still a shortage of reefer truck drivers.
Recruitment Strategies
To retain drivers, companies are starting to offer salary programs, instead of the traditional pay by the mile, guaranteed bonuses, team bonuses, and guaranteed annual increases.
Embrace social media! Highlight the stability, pay, and importance of being a reefer driver.
Hiring AI experts. An AI driven system is seen as a pivotal key in the industry. Improves hiring, fulfillment, and transportation processes. Drivers will need high level training in order to become comfortable with AI technology. Having experts on staff can make this training efficient and they are there to continuously improve the technology.
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Resources
https://truckstop.com/blog/refrigerated-trucking/ https://www.marketresearchfuture.com/reports/refrigerated-truck-market-9993 https://www.mordorintelligence.com/industry-reports/united-states-refrigerated-trucking-market https://ratings.freightwaves.com/best-refrigerated-trucking-companies/ https://www.greenbiz.com/article/electrification-meets-refrigerated-trucks https://www.hardworkingtrucks.com/alternative-power/battery-electric/article/15290028/lion-electric-builds-trucks-with-major-industry-players https://www.imarcgroup.com/refrigerated-transport-market https://www.businesswire.com/news/home/20220509005901/en/The-Worldwide-Refrigerated-Transport-Industry-is-Expected-to-Reach-160.7-Billion-by-2027---ResearchAndMarkets.com https://truckstop.com/blog/dry-van-vs-reefer-which-is-best/ https://www.atsinc.com/blog/reefer-temperature-freight-rate-impact#:~:text=It%20doesn't%20take%20much,maintain%20temperatures%20of%20%2D20%20degrees https://www.dat.com/trendlines/reefer/national-rates