.

USDA Farm Resource Regions of the US

Highest crop diversity is found in the Fruitful Rim and the Northern Crescent regions

Aguilar J, Gramig GG, Hendrickson JR, Archer DW, Forcella F, et al. (2015) Crop Species Diversity Changes in the United States: 1978–2012. PLoS ONE 10(8): e0136580. doi:10.1371/journal.pone.0136580http://journals.plos.org/plosone/article?id=info:doi/10.1371/journal.pone.0136580

OF ALL U.S. FREIGHT ORIGINATES, TERMINATES OR PASSES THROUGH THE CHICAGO REGION Source: CMAP

OVER 1/4

VOLUME MOVEMENT BY MODE2007

67%

232 BILLION

OF FREIGHT IS MOVED BY TRUCK IN THE CHICAGO REGION Source: CMAP

ANNUAL VALUE OF FOOD TRUCK FREIGHT THAT ORIGINATES, TERMINATES OR PASSES THROUGH THE CHICAGO REGION Source: FAF, 2007

RAIL

BARGE

TRUCK

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Chicago metro region has the largest concentration of food warehouse square footage in North America.

Concentration in the Chicago Grocery Industry

2014: Dominick’s closes 72 stores Mariano’s buys 11 locations (32 total) Whole Foods buys 7 locations (25 total) Jewel-Osco buys 9 locations (180 total)

• 28 vacant Dominick’s locations

2015: Kroger buys Roundy’s (Mariano’s parent company)

Key Question

How can we optimize freight movements for individual regional shippers to access the Chicago market?

Freight Market Dynamics106 Empty Miles

145 Loaded Miles

93 Empty Miles

147 Loaded Miles

Freight Market Dynamics

Lower price for shipper

Improved Asset Utilization

Load Consistency and/or Communication

CRE: Colton Drop Yard for LA region

Local LA Market

Initial Operational Structure

Decoupled short-haul (within LA congestion zone) and long-haul (>100 miles) fleet

Initially little coordination between fleets

Struggling utilization on line-haul fleet

New Operational Structure

Regional drop yard 55mi outside LA

Line fleet continuously moving, local fleet could wait at the docks

Keys to Success

Freight market dynamics Close relationship between

customer and carrier Operational efficiency

Close Shipper/Carrier Relationship

15+ years of doing businessCRE had visibility to load data before any other carrier

Allowed CRE to prioritize capacity by selecting the best loads and delivery times

Pricing saved shipper hundreds of dollars per load off the market rate

Freight Market Dynamics Contracted rate structure allowed for

efficiencies gained in using drop yard Communication between short-haul and long-

haul fleets made it possible to know when to deliver loads and how to plan capacity

Ability to match demand for loads with capacity available in the market was possible with support from other business units

Rural leg savings greater than urban costs so carrier could pass the difference to shipper

Market Rate$1.84 Central Cal LA

Market Rate$2.35 LA Central Cal

Local LA Market

Carrier Price StructureContracted rate per mile

Carrier Price StructureContracted rate per asset (e.g. fixed cost/truck/week)

Operational Efficiency

Communication between short-haul and long-haul fleets to know when to deliver loads and how to plan capacity

Ability to match demand for loads with capacity available in the market through support from other business units

Regional Drop Yard: Chicago

147 Loaded Miles

Aggregation Point Cost/Pallet: $22.70

Transportation Cost/Pallet: $22.80

Regional Drop Yard Cost/Pallet: $0.27

Metro Mile Delivery Cost/Pallet: $14.23

Solves fragmented deliveries and congestion issues shippers and carriers face moving products into the Chicago marketplace; Issues which affect implementation include multiple carriers and scale issues that may increase cost barriers Assumptions:

• $600 base revenue/day• $2k Fixed cost per truck • 10 trucks/wk, 260 pallets• No back haul – spot market rate• No amenities at drop yard• Different companies running

urban & rural legs• No incentives to offset fixed asset

costs• Fuel costs at current rates

Total Cost/Pallet with Regional Drop Yard: $60

Total Cost/Pallet without Regional Drop Yard: $45.50

Regional Wheeling Drop Yard

Final Delivery Point

Alternative Fuel: LNG & CNG

Dec-2010 Jun-2011 Dec-2011 Jun-2012 Dec-2012 Jun-2013 Dec-2013 Jun-2014 Dec-2014 Jun-2015 Nov-2015

3.222

3.885 3.807 3.6763.937 3.871 3.867 3.86

3.46

2.7622.478

Average Midwest Diesel Retail Prices

Fuel costs represent one part of the transportation expense equation but accounts for the most of the variable cost

Alternative fuel is attractive when diesel fuel prices are high

LNG & CNG: Current State

LNG & CNG: Future State