Transportation executives face several challenges today. They include skyrocketing fuel costs, driver turnover and integrating new technology, among others. What steps executives take will impact the overall success of their companies in an increasingly competitive environment.
"One of the good things today is that shippers in the food industry have really embraced the idea of collaboration and partnership with carriers and vendors across the supply chain," says Lisa Hebert, a consultant who focuses on transportation for the San Francisco office of Accenture. "Although we face difficult times, they are dealing with challenges together and doing so professionally. We've seen shippers respond to carriers and carriers respond to shippers appropriately. It could have been lot nastier," she says.
To find out if transportation executives are on the right road to deal with today's challenges, Food Logistics has put together a roundtable to discuss the issues. The panelists included:
- Bill Parry, vice president of logistics for Giant Eagle, a Pittsburgh-based regional supermarket chain;
- Bob Koerner, CEO of Total Logistic Control (TLC), a subsidiary of Supervalu Inc., the Minneapolis-based wholesaler/distributor;
- Bonnie Hardy, vice president of shared service for Slade Gorton & Co., a Boston-based importer and distributor of seafood;
- Denis Reilly, president of transportation for Ozburn-Hessey Logistics, a third-party logistics (3PL) provider in Brentwood, TN;
- Gregory Bostick, vice president of transportation for Pinnacle Foods Corp., Cherry Hills, NJ;
- George Abernathy, executive vice president and chief marketing officer of Transplace, a 3PL in Plano, TX.
What are the biggest challenges that you are facing today other than fuel costs?
Reilly: Layover, detention and inefficiencies at docks for loading/unloading. Also, EPA regulations on emissions control for tractors, which is causing higher maintenance costs, lower fuel economy and less power in the engines. Security challenges especially at the Canadian and Mexican borders. A number of carriers aren't compliant so capacity has shrunk. Road congestion has impacted transit times. LTL (less-than-truckload) transit time inconsistency.
Bostick: In Pinnacle Foods' case, it is the delicate balance between service and rates. Currently, capacity is the best it has been in some time so we do not see that as a major driver for our segment, but it's still on the radar. The difficulty with service and rates are the way we produce product. There are so many variables such as raw materials, production equipment and lack of storage space.
Carriers are often asked by Pinnacle to be in the "queue" and ready within a certain time range as opposed to a defined time. This will drive us to more drop carriers and less live appointments, thus limiting the number of carriers we can use. There are advantages in rate and service in both cases. Our challenge is to then align that with plant and DC scheduling efficiencies.
In the end, once we have committed to a carrier, we in turn expect them to commit to rates and service for at least one year. Meaning when times are good or bad, we will support each other. This allows Pinnacle and the carriers to commit to long-term capacity
Parry: Our biggest challenge today is safety. While we have what we believe to be an impressive safety record, Giant Eagle is strongly committed to preventing all accidents. We hope that the industry is not loosening its standards for acceptable applicants. We continue to be committed to employing only top professional drivers. Keeping the driver pool filled has become another challenge for us.
Hardy: Our greatest challenge is working to increase service levels while maintaining or reducing cost. We have seen a significant reduction in our LTL on-time deliveries largely due to delays that are neither in our control nor the control of the carrier. We are in the process of testing pool programs and working with "house" carriers in order to increase our on-time deliveries to our customers.