A new report, Transportation Benchmarks 2008, from the Food Marketing Institute (FMI) shows that grocery wholesalers and self-distributing retail chains are taking steps to reduce the amount of money they spend on moving product through the supply chain to the store.
Transportation costs for wholesalers grew to 1.84 percent of sales in 2007, up from 1.59 percent in 2004. That was the last time that FMI tracked transportation costs as a percentage of sales. Among chains, the number rose from 1.66 percent in 2004 to 2.06 percent last year.
"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, vice president of wholesaler and member services at FMI, in a press release.
One of the methods that some companies are using to improve efficiency is paying bonuses to drivers that reduce fuel costs.
Discussion Questions: Where do you see the greatest opportunities for grocery distributors to reduce transportation costs? Is it time that the supermarket industry made a big push for vehicles that run on compressed natural gas in the U.S. by setting up stations that not only fuel their fleets but consumer vehicles, as well?