Change - It may not be all you hoped for
Responding to Service and Operational Requirements from
Consumer to Producer
Panel Introductions
• Dr. Karl Manrodt, Georgia Southern University
• Chris Owens, SuperValu
• Mike Cole, Kraft
• Steve Wutke, Prime Inc.
Change - It may not be all you hoped for
A Retailer’s / Wholesalers Perspective
Chris Owens, Director Supply Chain Strategy
macro pressures
• Economy
– impact to units, dollars, profits
• Product Cost / Price fluctuations
– shipper price inflation followed by deflation
• Supply Chain Productivity Pressures
– Must adjust to de-leveraging of units and $
EconomyInflationDeflationEarningsInventoryRegulation
Response
Lower operating cost
Leverage Assets
shipper
Typical Retailer
Retailer is a Receiver• Unloading policy changes
– Received seal intact, subject to count and inspection
– Economic order quantities
• Utilization of DSD – vendors deliver to the store– High volume promotions skip the DC
Retailer is a Carrier
• Store delivery cycles
• Combination loads
• Right size fleet
• More backhauls
• Vendor collaboration
• Store delivery cycles
• Combination loads
• Right sized fleet
Retailer is a shipper
• Alternative Modes -
• Regular bidding cycles……
• Secure long term capacity
• Electronic invoicing
Change - It may not be all you hoped for
A Shipper’s Perspective
Mike Cole, Director N. A. Transportation
2010 “The Perfect Storm” External Variables…
Rate Compression Bidding
Driver Capacity
Productivity Pressures
HOS
Economic Uncertainty
Fuel Pricing
Asset Capacity
CSA 2010
15
Annual Internal Variables Driving Expectations
Internal Shift to Regular Bid Cycles
M&A Activity
Productivity Pressures
Private Fleet Rationalization
Lower Volume
CPU
Sustainability
Network Shifts
Key to Successful Transportation Solution is to Balance Internal and External Variables…
Internal Shift to Regular Bid Cycles
M&A Activity
Productivity Pressures
Private Fleet Rationalization
Lower Volume
CPU
Sustainability
Network Shifts
Industry Shift to Regular Bid Cycles
Driver Capacity
Productivity Pressures
HOS
Economic Uncertainty
Fuel Pricing
Asset Capacity
CSA 2010
What is the Industry Saying …
• “The largest factor within the trucking industry that affects its health is the cost of diesel fuel”, according to Chris Work associatecontent.com
• Nearly two out of three trucking executives surveyed by Transport Capital Partners in the fourth quarter said, they expected freight volume to improve in the next seven to twelve months
• According to truckinginfo.com, “Gone with the trucks are as many drivers, paving the way for a driver shortage worse than the industry has ever seen – a shortage that will be exacerbated by new stricter federal safety regulations such as CSA 2010 and regulations targeting driver health issues.”
What are our opportunities / expectations …
Issue / Opportunity• Rate inflation without capacity
increases• Customer collaboration
expectations• Bid award reconciliation• Freight Forecasting• Mode Balancing
Potential Resolution• Maintaining “Shipper of
Choice” mindset with bidding predictability
• Balancing win/win solutions with retailers & carrier partners
• Forward baseline development vs. historical baseline
• Introduction of Terra Forecasting
• Rightsizing Private/Dedicated/CC
18
Change - It may not be all you hoped for
A Carrier’s Perspective
Steve Wutke, VP Sales and Marketing
WEATHERING THE STORMTHE NEXT CHAPTER
REEFER GROSS RATE VS. NET RATE
$0.03 $0.03 $0.03
$0.13 $0.13
$0.32
$0.42
$0.46 $0.47
$0.50
$0.33
$-
$0.05
$0.10
$0.15
$0.20
$0.25
$0.30
$0.35
$0.40
$0.45
$0.50
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Gross Rate Net Rate
THE NEXT CHAPTER
REEFER DRIVER EARNINGS VS. NET RATE
2000 2005 2010
$41,920
$59,180
$45,220
An
nu
al E
arn
ings
Bas
e Bas
e +
$.3
3
Bas
e +
$.2
4
THE NEXT CHAPTER
EQUIPMENT CHANGES & FUEL
EPA COMPLIANT
o 2002 EGR (Exhaust Gas Recirculation)
o $5,000 & 130 lbs.
o 2007 ATD (After Treatment Device)o $8,400 & 400 lbs.
o APU’s an additional $8,000 & 450 lbs
o 2010 SCR (Selective Catalytic Reduction)o $9,000 & 450 lbs.
EIA 2000 = $1.50
EIA TODAY = $2.87
THE NEXT CHAPTER
REEFER DRIVER EARNINGS VS. REEFER TEAM PERCENTAGE
20.0%
22.0%
24.0%
26.0%
28.0%
30.0%
32.0%
34.0%
36.0%
38.0%
40.0%
$150
$250
$350
$450
$550
$650
$750
$850
$950
$1,050
$1,150
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Team
%
Dri
ver
We
ekl
y Ea
rnin
gs
Driver Earnings Reefer Team %
THE NEXT CHAPTER
SUSTAINABILITY
•Idle reduction
•Improved aerodynamics
•Improved logistics
•Driver training
•Automatic tire inflation systems
•Single wide base tires
•Low viscosity lubricants
•Reduce highway speeds
•Weight reduction
•Hybrid power train technology
•SensorTRACS
Prime’s Score = 1.25
*highest score given
THE NEXT CHAPTER
BEWARE OF THE NAKED MAN THAT OFFERS YOU THE SHIRT OFF OF HIS BACK!
THE NEXT CHAPTER
Questions / Responses
• Panelist
• Audience