Transportation Management Focus : Our Weekly Feature Article on Transportation Management Strategies, Best Practices and Technologies for the Transportation and Logistics Practioner  
 
 
  - April 30, 2008 -  

Logistics News: Strategies to Combat Ridiculously High Fuel Costs          

 
 

Forget Shipping Containers Filled to 75%; More and More Freight Being Moved to Rail

 
 

 

SCDigest Editorial Staff

SCDigest Says:
Private fleet managers and common carriers are continuing to make physical improvements to trucks that they hope can reduce fuel usage.

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With oil prices seeming on a never-ending climb and diesel cost now well over $4.00 per gallon in most areas of the US, companies are doing everything they can to reduce fuel consumption. Achieve those savings seemed important two years ago as diesel costs began to spike. Now, finding such savings has become an imperative to avoid letting transportation costs crush the bottom line.

Jim Lane, a senior director of logistics at children’s apparel maker Carter’s, says his company is putting more focus on building out full containers of product being sourced from Asia. For less than full container shipments, Carter’s is routing vendor shipments to consolidation centers near ports to maximize container utilization and reduce total ocean miles.

He said the company is also moving more containers via intermodal – total freight moved by rail is up 15% in the last year at the company. On the outbound side, Carter’s is trying to do a better job of outbound shipment consolidation, and is increasing its use of pool distribution for store deliveries.

Finally, Lane said the company is also being more proactive in collaborating with retail customers to identify backhaul opportunities.

Meanwhile, private fleet managers and common carriers are continuing to make physical improvements to trucks that they hope can reduce fuel usage. That includes adding auxiliary power units to run cabs when drivers are resting, rather than running the engine, automatic tire inflation systems, streamlining the aerodynamics of the equipment design and adding enhancements such as spoilers to reduce wind resistance.

Wal-Mart, for example, has stated a goal of doubling the fuel efficiency of its massive fleet by 2015 using these and other strategies. – a challenging goal, to be sure, but one which would save the company hundreds of millions of dollars or more annually.

Consumer goods maker SC Johnson is trying to increase its use of “day cab” vehicles – trucks without a sleeper berth. Those vehicles are 3000 pounds lighter and can deliver more pallets per trip.

(Transportation Management Article - Continued Below)

 
 
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Kimberly-Clark’s Supply Chain Network of the Future

Consumer products giant Kimberly-Clark recently cited rising transportation costs as a key factor in its supply chain network redesign, dubbed the “network of the future” by the company. The new distribution network will significantly reduce number of miles the company will drive to deliver Kleenex and Huggies to its customers, and also allow the company to make greater use of intermodal carriage. The redesign, still in progress, has already reduced transportation miles by 2.8 million.

Many companies are also focused on reducing product packaging, resulting in less weight and or cube per SKU. Unilever, for example, was able to reduce the amount of packaging in its Knorr soup product line by 50 percent, allowing more cartons per pallet.

SC Johnson also found that by changing its thinking about trailer loading, it could improve utilization. It began more optimally mixing pallets of Windex and Zip Lock bags on deliveries from plant to DC, versus loading trucks with just a single product previously. The result: reduced fuel consumption (among other benefits) of 168,000 gallons a year.

“It’s amazing the effort and ingenuity that $4.00 per gallon diesel prices will generate,” said SCDigest editor Dan Gilmore. “Should we have been looking at many of these opportunities before? Probably. But the price for not doing so now has become unacceptable.”

What steps is your company taking to reduce transportation mileage and fuel costs? Where do you think the greatest opportunities are? Let us know your thoughts at the Feedback button below.

 
     
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