Historically high fuel prices are driving bakers and snack producers crazy. Now, both independent distributors and fleet managers are exploring every possible avenue to control distribution and transportation costs.
Some people like things big. Some prefer them small. When it comes to shipping products, one size certainly doesn’t fit all.
That’s certainly the case with the staggeringly high costs of a gallon of gas and diesel gobbling up the profits over the past few years and forcing bakers and snack producers to repeatedly raise prices or tack on fuel surcharges.
Although fuel prices have declined significantly from their all time highs at an average of more than $4 a gallon for gasoline this summer, companies have continued to struggle simply because they couldn’t adjust quick enough to the new paradigm. In many cases, the lag time between the spike in fuel costs and the ability of businesses to get price hikes appeared like a game of “catch-up” with no end in sight.
As the economy slows down this fall and costs turn lower at the fuel pump, obtaining additional pricing is getting more difficult, especially since the industry’s customers are beginning to question whether those future increases are needed for the end of the year.
More often than not, both customers and consumers are saying “enough is enough.”
Consequently, bakers and snack producers also are searching for creative ways to reconfigure their route structure to reduce the total miles they travel delivering products to retailers and foodservice accounts.
“What we notice is that companies are looking at bigger trucks and fewer number of routes,” notes Mike Bush, CEO of Cincinnati-based Bush Truck Leasing, Inc. “They’re running fewer vehicles, and you’re seeing more route consolidation.”
Over the past couple of years, Bush says, the average length of route trucks has grown 4 ft. or more.
“Primarily, most [distributors] have gone from a 14 or 16 footer to an 18 or 22 footer,” he says. “ I would go as far as a 24 footer for some.”
Independent distributors, many who operate a single truck and who make up the majority of Bush Truck Leasing’s customer base, have sparked the move toward larger route trucks.
In addition to providing financing for trucks, Bush provides territory financing, health care benefits, truck maintenance, tax and bookkeeping and other services. It’s like a group insurer providing volume discounting for the self-employed.
“Instead of one company with 1,000 trucks, we’re dealing with 1,000 owners with 1,000 trucks,” Bush explains. “We try to hold down the costs for the individual distributor. We try to keep his truck costs low and his maintenance cost low because he can’t afford to break down. We put together a program to make him more successful.”
To lower costs, other bakers and snack food distributors are looking into alternatives, and not necessarily biofuels, compressed natural gas, propane or battery-powered hybrid technology.
Rather, the most common alternative for trucks distributing snacks and baked goods is much more prevalent.
“There’s a push toward more gasoline engines because of the fuel costs,” notes Bob Besse, director of marketing and product planning at Supreme Corp., Goshen, Ind.
That’s because gas is cheaper than diesel, he adds. Depending on the region of the country, a gallon of gas can be anywhere from 60 cents up to $1 gallon cheaper than diesel, resulting in tens of thousands of dollars in annual savings for the typical route truck driver.
Besse adds that Supreme Corp., which manufactures specialized commercial vehicles and truck bodies, has seen a move toward smaller vehicles, especially among intermediate wholesalers and regional businesses in congested areas like Chicago, Boston or New York City.
“We are seeing smaller routes in urban areas,” Besse says. “They’re looking for more efficient vehicles to go out there instead of the traditional cargo van that they have been using in the past.”
Specifically, he notes, they’re scouting out vehicles that can scoot around streets and in and out of tight parking places and garages. It could be an Izuzu low cab-forward chassis with a body on it and a side door on the curbside to get in and out of stops quickly. Or, Besse says, bakers are checking out a cutaway chassis option.
“These are the chassis based on a Ford or General Motors cargo van, but we put a body on the back so that they can get to the rear of the vehicle from the cab,” he says. “We continue to see those being popular because most of the cutaways have gas engines.”
Besse even has seen some businesses toying with 10- to 12-ft. insulated vans such as the Spartan MX to keep products cool. Typically, these companies are bakeries that have branched out and become commissaries that provide sandwiches and other prepared foods in addition to their core product lines.
To survive in today’s economy, companies need to steer their businesses in new directions. Taking the road less traveled can result in big savings in the long run.
Editor’s Note: For more information on transportation and
distribution, please visit
www.snackandbakery.com and, while you’re at it, check out SF&WB’s new digital edition.