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Texas becomes top state for refrigerated freight transport

Texas surpasses California as the top state for refrigerated transport.
/ Industry News & Trends /

By: Phil Sneed

Texas has surpassed California as the No. 1 state for refrigerated freight transportation on the spot market, according to DAT Solutions. The whole market for refrigerated freight increased 8.1 percent from April to May, the organization's North American Freight Index revealed. DAT Solutions – the world's largest freight information provider – cited three reasons Texas can now claim this spot for temperature controlled transportation.

Increase in production
DAT said there has been an increase in the number of exports from Mexico. In particular, the country is shipping out more agricultural products. U.S imports of Mexican agricultural do not look to be slowing down anytime soon. According to a late May report from Reuters, April was the second straight month in which exports from Mexico rose. The news agency said this could be a sign of strong U.S. demand for goods from its southern neighbor. Likewise, Mexico's National Institute of Statistics and Geography said agricultural exports increased 7.6 percent from January to April 2015. 

Increased production is not the only factor. Recently constructed highways and roads have made it easier to transport goods from Mexico to the Texas border towns of Laredo and El Paso. DAT Solutions noted these areas make transporting produce from Texas to the Midwest and East Coast easier and shorter. When goods are transported from California, they are typically inspected in Arizona, which, due to distance, often leads to long transportation times to the more eastern parts of the country. The Texas inspection areas are therefore decreasing the amount of time it takes to transport fresh produce and agricultural goods, which is essential as consumers continue to demand more fresh organic produce.

Mexico is not the only country increasing agricultural production. Texas markets – such as the Rio Grande area – have been growing more vegetables and fruits. The state's cattle and meat packing industries are also contributing to greater shipments that require the use of specialized refrigeration equipment.

California lags behind
The extended drought hitting California is no secret. The state is entering the fourth year of an extensive and damaging drought. The lack of rainwater has dried lands and drained lakes, reservoirs and rivers. As a result, the state's agricultural sectors have taken a massive hit. According to the Public Policy Institute of California, an approximate 9 million acres of farmland accounts for 80 percent of the state's water consumption. Even ranchers are affected, as they have had to sell underweight cattle to buyers residing in the east, according to CBS News. Cattle are being sold because they have no land to graze on after the drought.

DAT Solutions noted California has dominated U.S. agricultural production since at least 1886, when the first refrigerated train cars left the area. Texas has thus stepped up to increase food and agriculture transportation and production. A study from the University of California, Davis, found spot market transportation funding will likely be reduced as the drought continues to cut into California's agricultural revenue.

Load increase
All these factors have contributed to 9,800 refrigerated loads started in Texas, according to DAT Solutions. California's load totals were numbered at 5,200. DAT's Hot Market Map also revealed where demand is highest in Texas. The state's southern portion – the McAllen Market – is an area that currently faces high demand. The need for trucks is so high that they are actually in short supply in the area bordering Mexico. As of June 5, 2015, total load posts numbered 2,000.

For the foreseeable future, Texas is likely to keep its spot as the nation's top refrigerated freight transportation on the spot market.