Josh Sosland
Updating its earnings guidance ahead of a presentation before the Consumer Analyst Group of New York annual conference, General Mills, Inc. cited rising costs for freight and logistics in North America as a principal factor cutting into the company’s fiscal 2018 operating profit growth outlook. The pronouncement added General Mills to a growing chorus of food and beverage companies warning investors about the problems posed by a tighter and pricier freight market, particularly for truck deliveries of 400 to 600 miles.

Tyson Foods, Inc. said the freight situation will add more than $200 million to the company’s costs this year, and TreeHouse Foods, Inc. estimated the rate of freight inflation at between 10% and 15%. Steven T. Oakland, president of U.S. Food and Beverage at The J.M. Smucker Co., said, “If you have to get a spot load today, you’re going to pay significantly more than we pay for a contracted load. Those charges are coming in at a multiple of what they used to be.”

More than two-thirds of the nation’s freight volume is carried by trucks, and numerous factors have been blamed for the deteriorating situation, including higher energy costs, a strong economy, trucker dislocations prompted by rebuilding after hurricanes in 2017, seasonal factors and an aging trucker population. Also blamed has been new a Electronic Logging Device mandate that went into effect in December. The problems raise costs and risks while threatening the efficiency of operations incorporating goals of just-in-time deliveries. Where appropriate, notably for agricultural shippers, regulatory clarification/relief merits immediate and serious consideration.