Driving Up Costs

Escalating fuel prices, HOS and driver shortages are placing a tremendous amount of pressure on shippers, according to GMA’s survey.


At Land O' Lakes, the most significant initiative underway is evaluating load planning software from Nistevo Corp., Eden Pairie, MN, to assess its potential value. The dairy company is developing a pilot to look at how the load optimizer can enhance the effectiveness of its transportation planning.

Another area being investigated is collaborative freight. A team of Land O' Lakes IT executives and representatives from Nistevo have developed a systematic process that would allow them to co-ship with another food manufacturer that is sited near one of their distribution centers. The company is looking for compatible freight and appropriate co-shipping partners at this time.

Welch's is working harder to be more "carrier-friendly" by:
- Switching to appointments from first come, first serve;
- Trying to get trucks turned around faster at the docks;
- Reducing the number of stops on multi-stop loads. "In extreme cases, we have shipped a truck light rather than add an additional stop, when it is cheaper to do so," says True; and
- Adding some small warehousing and crossdocking operations in areas where there is a significant amount of "small order" business to help reduce the number of multi-stop shipments. Welch's historically has shipped almost everything directly from its plants rather than from forward warehouses.

No Relief In Sight
How does the future look to manufacturers considering the fact that fuel prices will likely remain high? "Expensive," says Johnson of Land O' Lakes. "But cost pressure is nothing new to logistics. This environment puts even more emphasis on effective supply chains-addressing internal inefficiencies, partnering with your carriers and customers to make interfaces like docks and business practices more efficient, leveraging technology and hedging fuel."

O'Leary of Gillette predicts that the driver shortage will continue to be a major problem. "The fuel crisis is difficult to project and will be further impacted by the EPA requirements on diesel engines that are scheduled to take effect over the next several years," he says.

Shippers and carriers need to come to the table willing to talk through the issues, according to Hebert of Accenture. The carrier needs to make sure it has a viable customer base out there. They don't want to burn any bridges.

"This is a very cyclical industry," she continues. "At some point-it might be five years from now-carriers are going to have enough drivers and fuel prices are going to drop. Carriers are going to need to have their customer base, so carriers and shippers both need to recognize that and come to the table. That's what we're encouraging people to do-really talk through the issue and figure out how to manage better in the short term so that the long term doesn't bite them."

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