Weather Ups and Downs
Weather, not surprisingly, is an on-going headache. “Mother Nature is our biggest challenge,” asserts Gregosanc. “It’s tough,” he adds, but knows it is out of his control. During the harshest Midwestern winters, not only does produce supply plummet, causing prices to rise, but snowstorms and sub-zero temperatures cause many consumers to skip or limit grocery visits. This, in turn, can lead to a dramatic drop in sales.
“Two years ago, El Niño was harsh on produce,” says Sugrue. “Produce was harder to source and consumers didn’t want to go outside and shop in the cold.” However, he says, this is simply the nature of the produce business.
“When you’re talking about the heart of our business—produce supply—it’s important to remember that agriculture is cyclical in nature,” Sugrue points out. “There are down years, and there are up years. In the down growing years, we involve our geographically diverse network of producers to help fill any gaps in our local or committed supply.”
And as online grocery fulfillment programs gain traction, Sugrue says this could help boost produce sales during even the most brutal winter storms—since they allow consumers to shop for produce and other grocery items from the warmth and comfort of their own home.
Of course delivery could be affected by inclement weather, but it’s still a viable option more consumers are embracing.
Neither was much of problem this year, though, as Chicago had a record-breaking mild winter with little snow or ice, and few days with frigid temperatures—a signature of the Windy City—which were far below the average.
Transportation Struggles
For many Chicagoland distributors, transportation is by far the greatest challenge. As business costs rise and new regulations take effect, some drivers, independent owner-operators, and brokers are throwing in the towel.
Gregosanc says there are a number of “independents saying they can’t do this anymore. The insurance, the fuel, the hours of service, it’s tough. These third and fourth generation truck drivers just cannot afford to stay in business.”
In the second quarter of 2016, 120 U.S. trucking companies with an average fleet size of 17 tractor-trailers closed up shop, according to an analysis by re-searcher Avondale Partners LLC. That’s an additional 70 firms more than the same quarter in 2015.
