2008 FMI Transportation Report: Food Distributors Aggressively Conserving Fuel to Cut Costs Oct 6, 2008 ARLINGTON, VA — October 5, 2008 — Wholesalers and self-distributing retailers are taking aggressive measures to reduce fuel consumption trucking food from distribution centers to stores throughout North America, according to the Food Marketing Institute (FMI) Transportation Benchmarks 2008 report, which was released here today. The chief reason is spiking diesel fuel prices, which peaked this June at an average of $4.64 per gallon, according to the federal Energy Information Agency. These 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 gathered this information. Among self-distributing retailers, this figure increased to 2.06 percent, up from 1.66. “Distributors can’t control the price of fuel, but they are conserving it in virtually every way imaginable. 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,” said Jeff Rumachik, FMI vice president of wholesaler and member services. Fleets log a median of 6.5 million miles a year, according to the report. With diesel fuel prices doubling over the past four years, companies are seeking ways to take all unnecessary costs out of the transportation process. These figures explain why the “cost of fuel” is cited among the top five issues by 99.1 percent of the transportation executives surveyed for this report. The other top 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).How Companies Are Improving Fuel EconomyMore than nine in 10 companies (91.7 percent) are conserving fuel using a wide variety of practices. 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; 86.0 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.Driver Shortage Has Eased SomewhatThe 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. Basic Transportation BenchmarksThe report features extensive 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. Companies aim for a high rate of on-time deliveries. In fact, all fleets meet their goal on at least 85 percent of deliveries.Financial BenchmarksThe ratios for various transportation costs include: Per mile, $2.48. Per route, $619 Per stop, $310 Per case, $0.42.Methodology and Ordering InformationThe data in this report are based on surveys from 129 fleets representing 38 different companies. To purchase a copy, contact the FMI Store at 202-220-0723 or visit www.fmi.org/store/. The cost is $95 for FMI Retailer/Wholesaler Members, $175 for FMI Associate Members and $250 for nonmembers.