Indianapolis-based Celadon Group Inc. is banking that a new federal food safety rule will help it take a bite out of its competition—in part because smaller carriers won’t be able to afford to comply.
But some smaller firms, including Indianapolis-based CMA Logistics—say they won’t be scared away so easily.
Last month, larger trucking companies, including Celadon, had to begin complying with the U.S. Food and Drug Administration regulation, which aims to keep food products safer from contamination during the transportation process. It’s part of the FDA’s Food Safety Modernization Act, which was enacted in 2011 and is being implemented in stages.
A big piece of the law went into effect April 6: Carriers of fresh food must be able to verify the temperature of their cargo, track the temperature, and produce the supporting data upon request.
Celadon is looking to grow its temperature-controlled freight business significantly and it sees this new rule as an opportunity, said Chad Hoffman, vice president of operations at Celadon Trucking.
“It’ll drive more business to us, and less business to the carriers that are not compliant with the law,” Hoffman said.
Celadon got into temperature-controlled shipping in 2013 when it acquired Rock Leasing Inc., based in Warren, between Marion and Fort Wayne. Celadon currently has 1,100 temperature-controlled trailers, which carry about15 percent of the company’s total freight, Hoffman said.
“We would like that to be, in the short term, upwards of 30 percent—and in the long term, five years down the road, potentially in the 50-percent range,” he said.
One reason for Celadon’s optimism: Temperature-controlled trailers are much more expensive and Celadon has invested in the technology. Other carriers, especially smaller ones, might not be able to afford it, Hoffman said. A temperature-controlled trailer costs about $65,000, compared to $25,000 for one that is not.
Smaller carriers have an extra year—until April 2018—to comply with the new rule. Hoffman said he expects to see a “trickle effect” over the next year or so, as non-compliant trucking companies drop out of the food transport business.
Mike Frewer, vice president at Indianapolis-based Thermo King Midwest, which sells temperature control systems for the transportation industry, also expects to see a shakeout. The company oversees nine Thermo King sales and service locations in Indiana, Ohio, Illinois and Missouri.
Refrigerated trucking has been on the increase in recent years, Frewer said, but tends to be concentrated among the larger carriers.
Cost aside, the new rule is making food shipping more complex overall, he said.
The food producer is the one who sets the transport standards for a shipment, including the temperature at which the food must be held and what protection must be offered from cross-contamination.
For instance, Frewer said, a producer of organic products might specify that it doesn’t want its items transported alongside non-organic items.
“There’s all these kinds of things that carriers and shippers have to have conversations about,” he said. “Most trucking companies haul, on any given day, a whole number of different loads for a whole number of different shippers … and very few of them have the same requirements.”
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