Food Distributors Aggressively Conserving Fuel to Cut Costs: Study

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Food Distributors Aggressively Conserving Fuel to Cut Costs: Study

Diesel fuel prices, which peaked this June at an average of $4.64 per gallon, have driven wholesalers and self-distributing retailers to take aggressive measures to reduce fuel consumption, according to a new study by the Food Marketing Institute (FMI).

The study, "Transportation Benchmarks 2008," concludes that fuel price increases drove up transportation costs to 1.84 percent of sales for wholesalers in 2007, up from 1.59 percent in 2004, the last time FMI had tracked transportation costs. Among self-distributing retailers, transportation costs hit 2.06 percent of sales, up from 1.66.

In response, operators are getting creative at conservation.

"Distributors can't control the price of fuel, but they are conserving it in virtually every way imaginable," said Jeff Rumachik, FMI's v.p. of wholesaler and member services. "This begins with planning the most efficient routes, limiting trips, and loading trucks as full as possible. On the road, drivers are limiting speeds and reducing idling time. On return trips, they are looking for opportunities for backhaul or contract freight. Nobody wants to haul air in rigs that burn more than $4 every six miles."

According to the report, fleets log a median of 6.5 million miles a year, and are a chief contributor to why 99.1 percent of the transportation executives surveyed cited "cost of fuel" among their top five issues. Other important issues mentioned were far behind: fleet costs (64.4 percent), on-time deliveries (50.6 percent), driver availability and retention (46.2 percent), and compliance with government regulations (37.2 percent).

More than nine in 10 companies (91.7 percent) are using a wide variety of practices to conserve fuel. As an added benefit, many of these measures help the environment, saving energy and reducing fuel emissions.

For example, distributors:
- Limit the number of miles traveled per trip, often using software to identify the shortest routes and heavy traffic areas to avoid. These programs can decrease miles traveled by as much as 15 percent. More than two-thirds (68.1 percent) use computer-assisted routing programs.
- Reduce road speeds and idling time and use fuel-saving shifting and braking techniques. Many companies are re-educating drivers to follow these practices; and 86 percent equip trucks with on-board computers to help.
- Reward drivers who achieve optimum fuel economy with bonuses.
- Use the lightest truck that can carry the load to be delivered. This includes using aluminum wheels and low-resistance tires and eliminating personal items that add weight.
- Pack trailers as full as possible, consolidate loads, and make fewer deliveries, minimizing less-than-load or LTL shipments.
- Reduce or eliminate empty miles and pick up backhaul or contract freight on return trips whenever possible. Fleets report an average of 26.8 percent empty miles as a percentage of total miles, according to the report. The 28 percent of companies that set goals to decrease empty miles aim to achieve 12.5 percent.
- Properly maintain engines, replacing air and fuel filters and changing oil when required. Fleets perform preventive maintenance on tractors every 24,000 miles and on trailers every 180 days.
- Consider shortening the truck replacement lifecycle to take advantage of innovations that improve fuel economy.

The shortage of drivers, a major concern for many years, has eased somewhat: 38.5 percent of the companies surveyed are experiencing a shortage of qualified drivers. Of those companies, 91.4 percent consider the shortage "mild" or "moderate." This concern could grow, however, since many drivers are nearing retirement.

Drivers are the largest group of transportation employees, comprising 80 percent of the workforce in the typical company. They have strong safe-driving records, leading to an extremely low accident rate for the industry. In fact, one reportable accident occurs every 1.8 million miles, according to the report.

The report also features benchmarking data to help self-distributing retailers and wholesalers compare their performance with industry averages as well as data points by region, facility size, and company type.

These include basic fleet activity levels in the average week:
- Routes: 441.
- Stops: 917.
- Customers: 141.
- Cases shipped: 642,779.
- Weight shipped: 9.6 million pounds.
- Driver hours: 3,480.

FMI said the full report is available for purchase at: