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Public Roads - Summer 2019

Summer 2019
Issue No:
Vol. 83 No. 2
Publication Number:
Table of Contents

From Farm to Table

by Chip Millard

Moving food and other agricultural products within the United States and also between countries presents many challenges and opportunities for the transportation industry.

Agriculture is a booming business in the United States and internationally, and the process by which food products get from their production location to consumers' dinner plates is complex and ever-evolving.

Most people are very good at handling the last 1.5 feet (0.45 meters) of the food supply chain—that is, eating the food that they consume at home or at a restaurant. However, they do not give much thought to how the food they eat gets to grocery stores and restaurants. The agriculture supply chain is a complex system involving various types of grain, fruit and vegetable, dairy, and meat products. Products are imported from other countries; transported from numerous regions within the United States; and distribution networks between food producers, stores, and end consumers.

Agricultural production is a big business in the United States—everyone needs to eat. According to the U.S. Department of Agriculture (USDA), agriculture, food, and related industries contributed $992 billion to the U.S. Gross Domestic Product (GDP) in 2015, which is 5.5 percent of the overall U.S. GDP. In addition, many jobs are tied to the agricultural sector. In 2017, a total of 21.6 million full- and part-time jobs were related to the agricultural and food sectors, which is 11 percent of the total U.S. employment.

How do all of the various aspects of food supply chains work? Read on for insights into how agricultural products are produced and transported from production locations to stores, restaurants, and—in this age of e-commerce—directly to end consumers' homes.

Imports and Exports

The United States exports and imports significant volumes of food. The globalization of food production broadened the types of products that are available to all consumers, made many seasonal food products available at all or most times throughout the year, and significantly reduced the threat to food availability posed by droughts, floods, and other naturally occurring events that negatively impact food production.

According to USDA, U.S. agricultural exports equaled about $140 billion in 2018, and the export share of U.S. agricultural production is about 20 percent of total production. Horticultural products (for example, fruits, vegetables, tree nuts, wine, essential oils, and other similar products), grains and feeds, and livestock products account for the largest share of U.S. agricultural exports. More than 70 percent of the tree nuts and cotton and greater than 50 percent of rice and wheat produced in the United States are exported.

In contrast with exports, U.S. agricultural imports totaled approximately $129 billion in 2018. Horticultural products, sugar, and tropical products (for example, coffee, cocoa, and rubber) accounted for nearly two-thirds of imports. In terms of percentage of imports to total consumption by food category, more than 95 percent of the coffee, cocoa, spices, fish, and shellfish; about 50 percent of fruits and fruit juices; and more than 30 percent of the wine and sugar consumed in the U.S. are imported.

U.S. agricultural exports and imports have grown significantly in recent years—both have more than doubled in monetary value terms between 2004 and 2018. Advanced refrigeration processes and techniques have played a major role in the expansion of food trade, along with more efficient transportation systems. These factors have enabled large farmers and other food producers to increase their market reach and helped more countries to become integrated into global food supply chains.

Large food distribution companies have taken advantage of greater market access. Increasingly, they have become able to efficiently distribute food around the world, lowering the cost of food for most consumers while also increasing the variety of food available.

Food Trade Patterns

U.S. food trade patterns reveal that Canada and Mexico are the leading sources of U.S. agricultural imports, while China, Canada, and Mexico are the largest U.S. agricultural export markets. Those three countries are also the United States' largest overall trade partners for all products. However, most U.S.-China trade is focused on imports from China while U.S.-Canada and U.S.-Mexico trade patterns are much more balanced.

In 2016, the U.S. exported $38.1 billion in agricultural products to Canada and Mexico. Those exports accounted for 28 percent of the United States' total agricultural exports. By contrast, during the same year the United States imported $44.5 billion in agricultural products from Canada and Mexico, or 39 percent of the United States' total agricultural imports. The somewhat higher value of imports than exports was a reversal of trends from earlier in the decade. The strong U.S. dollar, which makes U.S. exports more expensive in other countries and imports less expensive in the United States, played a role in the increased value of imported products.

Leading agricultural trade products between the United States and its neighbors include meat, dairy products, grains and feed, fruits, tree nuts, vegetables, oil seeds, and sugar and related products. U.S. agricultural trade with its North American neighbors has grown dramatically since 1994, roughly quadrupling during that time.

Depending on a grocery store's location and the time of year, the various fruits and vegetables that line its shelves may come from a farm near the store's location, another U.S. region, or another country.

The increase in U.S. food exports and imports has resulted in some negative effects. For example, food production and transportation emissions have increased as a result of the extended supply chains. However, a 2008 study by researchers at Carnegie Mellon University determined that transportation-related greenhouse gas (GHG) emissions comprise a relatively small portion of agricultural supply chain emissions (about 11 percent). Food production creates the clear majority (approximately 83 percent) of GHG emissions related to the agricultural supply chain. In addition, production of different types of food creates different emission volumes. For example, the Carnegie Mellon researchers found that red meat production created 150 percent more GHG emissions than chicken or fish production.

Modes of Freight Transportation

According to a recent USDA report, "A highly competitive and efficient transportation system results in lower shipping costs, smaller marketing margins for middlemen, and more competitive export prices. Such efficiencies also result in lower food costs for U.S. consumers and higher market prices for U.S. producers."

Many farms produce large volumes of agricultural products, including vegetables. More efficient freight transportation networks and improved refrigeration processes enable farms to ship their products greater distances, increasing the size of the market farms can serve.

Transportation patterns for shipping agricultural goods within the United States are complex. All freight transportation modes play a role in the food supply chain, but some modes play a larger role than others. Shipments under 500 miles (804 kilometers) are almost always transported by trucks, which are a relatively fast and flexible transportation mode. Trucks are also the dominant mode for relatively time-sensitive shipments.

Rail is the second-most used mode and is more commonly employed for shipments that are more than 750 miles (1,207 kilometers) where economies of scale give the mode a comparative advantage. It is also often used for bulk product shipments, including in some cases at shorter distances.

Barges are frequently used for grain shipments produced at farms near navigable rivers, and are often cheaper than trains and trucks for transporting heavier, bulkier food products. Barge use is also common for exported agricultural shipments.

Ocean-going ships transport most non-North American exports and imports where land-based modes are not an option. In many cases, refrigerated containers or other climate-controlled equipment is necessary to enable products that are shipped internationally to remain fresh and edible through delivery to the destination market.

Pipelines are utilized to ship a limited number of liquid products that need to be transported long distances. For example, some liquid fertilizers can be shipped via pipelines.

Finally, airplanes carry a limited number of high value and/or highly perishable goods. They may be the best mode for goods that need to be delivered to the consumer market rapidly. Airplanes are often the mode of choice when there is a critical shortage of a given product that needs to be replenished quickly.

Changing Trends

Shipment patterns by mode have changed significantly over time, particularly for domestic agricultural shipments. A 2001 Iowa State University study found the truck-rail mode split for produce shipments to the Chicago, IL, market changed from 50 percent truck and 50 percent rail in 1981 to 87 percent truck and 13 percent rail in 1998. Modal split trends in more recent years for other goods have shown less dramatic but similar patterns.

According to the Transportation Services Division of USDA's Agricultural Marketing Service, domestic and export grain shipments, which include corn, wheat, soybeans, barley, and sorghum, measured by tonnage remained relatively flat for rail and barge between 2000 and 2016 but for truck shipments increased by nearly 75 percent during the same timeframe. By mode split, trucks captured 50 percent, trains carried 32 percent, and barges transported 18 percent of grain shipments in 2000. By 2016, the mode split was 61 percent trucks, 25 percent trains, and 14 percent barges.

In addition to the mode shipment disparities, product shipment disparities also exist. Between 2012 and 2016, corn, which is mostly grown for the domestic market and often produced in areas relatively close to large population centers, was transported by truck for 72 percent of shipments, by rail for 19 percent of shipments, and by barge for 9 percent of shipments. The truck, rail, and barge breakdown for wheat shipments, much of which are exported from the United States, was 29 percent truck, 54 percent rail, and 17 percent barge during the same time period, while for soybean shipments, which are often grown near major waterways, the mode shares were 51 percent truck, 22 percent rail, and 26 percent barge during the 2012 to 2016 timeframe.

Percentage of Grain Shipments by Transportation Mode: 2000 Versus 2016

Year Transportation Mode
Truck Rail Barge
2000 50 32 18
2016 61 25 14

Source: USDA.

Percentage of Grain Shipments by Type of Grain and Transportation Mode in 2016

Type of Grain Transportation Mode
Truck Rail Barge
Corn 72 19 9
Wheat 29 54 17
Soybeans 51 22 26

Source: USDA, 2012–2016.

The changing trends for grain shipments are likely because of multiple factors, which may include: a push by food retailers to carry smaller inventories, encouraging the use of faster, more flexible modes such as trucking; an increased focus by the railroad industry on higher value intermodal container shipments; and the growth of trade with Canada and Mexico because of the North America Free Trade Agreement. Shipments to Canada and Mexico can be handled by trucks as well as railroads. Based on continued focus on just-in-time deliveries throughout the supply chain industry—not just within the agriculture industry—the trend toward using trucks to a greater degree for agricultural shipments will likely continue at least in the near-term. That trend could have significant implications for food transportation, particularly on intercity corridors and corridors that connect to major water ports or international border crossings.

Distribution to End Markets

Like export, import, and domestic shipments, the transport methods for getting agricultural products to stores and homes via e-commerce orders are also varied and multifaceted. Food producers distribute their products to end markets in various ways. For example, for foods shipped to grocery stores, the most common method for large-scale farmers and other food producers is to rely on third-party food distribution companies. Grocery stores tend to use distributors because they can provide consistent, large-volume deliveries of many products. By buying large quantities of products, stores often receive volume-based price discounts.

Large grocery chains determine what products to store at the distributor's warehouses and where those products are stockpiled. The chains do this to improve product quality and maximize supply chain efficiency. Some very large grocery store chains remove the third-party distributors from the equation by operating as their own distributors and running their own distribution networks. Those chains establish direct relationships with large farms and agricultural producers.

Many food distributors specialize in certain types of grocery deliveries. Smaller, specialty, or regional distributors often supply dairy products and cheese, alcohol, and natural or specialty foods that are specific to a region or are highly perishable.

Though farmers and other food producers send most of their products to market via distributors, they also use other ways to sell foods, both indirectly and directly. With some products, farmers and other producers sell and deliver directly to stores, restaurants, schools, and other venues that need fresh food supplies on a regular basis. Products distributed and sold in this manner most frequently include artisanal products, baked goods, some fruits and vegetables, and some meat and seafood products. Stores sell fruits, vegetables, meats, and seafood products that they receive from both distributors and local farmers directly; the exact product supply mix depends on the time of year and the types of products.

Many dairy products are hauled entirely by truck and serve a regional market area because of their perishable, time-sensitive nature. In general, more agricultural products, especially relatively high-value agricultural products, are transported by truck today compared to decades ago because of the improved roadway network and trucks' faster and more flexible operating characteristics.

In some cases, farmers may sell their products directly to consumers. For example, direct sales occur at farmers' markets, on-farm stores, and other community-supported merchant venues. Selling products at farmers' markets cuts out the middlemen—the distributors and grocery stores—from the equation. Farmers gain a greater net share of the sales this way and typically sell fresher products. On the negative side, selling products at farmers' markets and similar venues restricts the size of the market population with access to the goods.

The Rise of Direct Delivery

With the growth of e-commerce, some consumers have moved away from obtaining much of their food at grocery stores. Instead, these consumers have food delivered directly to their homes and other preselected locations. Many e-commerce food delivery companies now exist, and direct shipments of produce and prepared food directly to consumers have increased in recent years. Usually these companies provide their own transportation to deliver the goods, but, in some cases, the customers pick up the prepackaged shipments themselves.

Most e-commerce food delivery companies use an on-demand third-party representative to pick up the foods at a local grocery store and deliver them directly to the customer's residence or designated delivery location. Shipments to customers may occur by car, van, bike, or on foot depending on the community's development density.

Storing goods such as milk and dairy products at appropriate temperatures both during transport and at stores is critical to maximize their shelf life and reduce product waste.

Another similar approach is for an employee or third-party representative to obtain customers' orders at nearby regional food warehouses (many times as leveraging "dark stores"—a term used to describe facilities that resemble conventional supermarkets except they are not open to the public and are only used to fill online orders). E-commerce food delivery companies sometimes operate the warehouses and then deliver orders to the customers' homes by car or van. In some cases, the food company employees work with the warehouse staff to assemble the shipment, while in other cases a meal kit is prepared in advance of company pickup and then delivered to customers.

A third approach for e-commerce meal deliveries is for the food delivery company to bring the customers' shipments to a local delivery depot or store and have the customers pick up their shipments there (known as "click and collect" or "in-store pickup"). This approach is less convenient for the customers in most cases, but it is easier and cheaper for the delivery companies, resulting in savings that may be passed on to the customers.

Today's farmers and other agricultural producers are also able to get their food products to customers by using e-commerce grocers that operate their own food preparation facilities. Some companies are obtaining foods directly from farms and preparing the food shipments themselves, rather than relying on grocery stores or food warehouses to gather food for their customers' orders.

For example, a former Virginia-based online grocer serving the Washington, DC, market relied on 150 suppliers to obtain a variety of locally grown, organic, and "conventional" (distributor-obtained) foods that they then sold to customers. Approximately half of the company's range of products and sales came through conventional distributors, but roughly a third of the products and sales were via local farmers and other regional agricultural producers. The grocer also had an inhouse butchery, seafood, and meal planning services to maximize the freshness and quality of its product offerings.

"The combination of the broad availability of low-cost, last-mile, and 'click-and-collect' technologies, and the multitudes of pick-pack-delivery partner options (that handle perishables) has vastly expanded and improved the optionality for food-oriented e-commerce platforms to offer their catalogues online," says Caesar Layton, founder/partner with Cultivate Ventures, the company behind the Virginia-based online grocer. "As these factors continue to improve, the number of food retailers leveraging e-commerce (regardless of size, location and offering) will continue to grow exponentially."

E-commerce food deliveries not only provide convenience benefits for customers, they also can reduce vehicles miles traveled by consolidating deliveries for multiple customers living near one another and reducing individual consumer trips to grocery stores.

The growth of e-commerce may also provide opportunities for food delivery companies to use emerging technologies such as robots, autonomous carts (for example, mini vehicles), or drones for their operations. The adoption of such technologies depends on deployment costs, technology reliability, delivery security, and the future ease or difficulty to make conventional deliveries, especially in urban areas.

Many Components, One Goal

The United States agricultural supply chain has many components—export, import, and domestic shipments; shipments by trucks, trains, ships, pipelines, and airplanes; deliveries to grocery stores, restaurants, and schools; and direct e-commerce deliveries to people's homes. All methods of food transportation need to function efficiently for the agricultural supply chain to function effectively. Fortunately, the food supply chain usually works well, and enables end consumers to obtain the foods they want, where and when they want them.

Chip Millard is a transportation specialist in the FHWA Office of Freight Management and Operations. He manages the Talking Freight webinar series and internal freight discipline activities, and researches freight economic trends. Millard holds a master's degree in geography from Indiana University of Pennsylvania and a bachelor's degree in psychology from Juniata College.

For more information, contact Chip Millard at 202–366–4415 or