Supply Chain Challenges


Alex Stark | March 16, 2012

At the Food Shippers Transportation Conference in late February, one theme dominated hallway discussions:  rising fuel costs and what to do about them.  Here are strategies we regularly employ:

  • Load consolidation.    CPG companies can cut O/B freight costs 20%-35% by shipping with others moving goods to the same retailers.  It requires co-locating inventory at a 3PL distribution center with a concentration of CPG customers.
  • Route optimization.   Rising fuel costs and new Hours of Service restrictions make it essential to have drivers in the right place at the right time.  Software helps automate route optimization, but many companies still struggle with inefficient routing and, consequently, clock more miles than they should.   
  • Updating Fleets.   Use of newer model equipment ensures continuous improvement in fuel economy.  As truck manufacturers build more efficient vehicles, it may soon be common to see tractors getting over 8 MPG.  Adding features such as auxiliary heating/cooling units that run off battery packs and automatic shut-off systems only adds to the savings. 

The future could involve alternative fuel technology such as LNG and CNG tractors.   KANE is taking a hard look at replacing some of its existing units with alternative fuel technology to help further reduce our diesel costs and carbon footprint.   
When it comes to controlling fuel costs, we all need to get proactive and think about strategies to address the challenge.  It's likely to get worse before it gets better.

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