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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