From minor changes in packaging to wholesale DC network redesigns, savvy companies are leaving few stones unturned in their quest to cut fuel expenses.
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
At tech titan Hewlett-Packard Co., a program to redesign the packaging for notebook computers has trimmed package weight by 8 percent and increased the number of boxes per pallet by 25 percent—a move that has reduced the number of trucks needed and, by extension, the company's fuel costs.
At home improvement giant Lowe's Companies Inc., an initiative to increase private fleet utilization has allowed the retailer to use 4,900 fewer trailers to ship the same product quantities, cutting the company's annual vehicle miles traveled by 1.3 million and slashing its diesel fuel consumption by 285,000 gallons.
At mega-retailer Kohl's Department Stores, a re-engineered truck backhaul program has cut empty miles by creating nearly 19,000 backhaul trips from stores to distribution centers. By filling trailers with vendor merchandise returning to its DCs, Kohl's eliminates 3.6 million miles of formerly empty truck hauls.
Businesses are leaving few stones unturned in their quest to cut fuel expenses. Whether it's a minor tweak in product packaging or a wholesale distribution network redesign, they're finding ways to root out inefficiencies and reduce their fuel spend. For all their progress to date, however, it seems there's always more they could do. Significant opportunities still lie ahead to achieve the often-entwined benefits of lower fuel expenditures and carbon emission reductions, experts say. "There is a lot of low-hanging fruit out there," says Judy Glazer, director of global social and environmental responsibility at HP.
HP's own efforts to harvest that low-hanging fruit have extended well beyond its packaging redesign. The electronics company has also made changes to its distribution operations that will help conserve fuel. For instance, the high-tech giant, which each day ships more than 1 million products worldwide, says on its Web site that it has expanded its use of plastic pallets, which are 70 percent lighter than traditional wood pallets and which cost less to ship. (The company did not provide specifics on the extent of the initiative.)
HP has also re-jiggered its distribution network to reduce fuel consumption, according to its Web site. For instance, last year, the company restructured its operation so that Chinese-made inkjet printers imported through the Port of Long Beach, Calif., are received at a DC on the U.S. West Coast rather than in Memphis, Tenn., where they were handled in the past. The net effect has been to reduce vehicle miles traveled from the port of entry to the distribution point for the shipments.
Calm before the storm
HP, Lowe's, and Kohl's are hardly alone. Following last year's unprecedented oil price run-up to $147 a barrel in July (which was followed by an equally violent collapse to the $30-a-barrel level), interest in fuel-saving initiatives has been running high. Although oil prices have now settled into a trading range of between $60 and $70 a barrel, the transportation community remains wary. And many companies appear to be moving proactively to at least mitigate the damage from higher future oil prices while the current environment remains reasonably benign.
Last year's oil shocks exacted a particularly heavy toll on asset-based service providers. Truck fleets spent $151 billion on fuel in 2008, a whopping $36 billion increase from 2007 and more than double the amount spent in 2004, according to the American Trucking Associations.
Although diesel prices today stand at about $2.50 a gallon, almost 50 percent below the all-time high of $4.76 a gallon recorded in July 2008, carriers haven't forgotten last summer's pain at the pump. Like their shipper customers, they're taking advantage of what some believe is the calm before the next oil price storm to put fuel conservation initiatives in place.
For example, 3PD, a Marietta, Ga., company that provides pickups and "last mile" deliveries from retail stores and distribution centers to consumer residences, has refined its transportation model to limit the distance between pickup and delivery points on the average route to no more than 12 miles. Prior to last year's fierce run-up in oil prices and the subsequent economic downturn, the average distance between 3PD's stops was 21 miles.
Russell A. Marzen, executive vice president, warehousing and logistics, says the tweaking allows 3PD to maximize the number of pickups and deliveries in a typical day—the company's retailer clients pay it by the stop—while minimizing fuel burn. "It is simply not sufficient for us if we can't get the distance between stops down to 12 miles or less," says Marzen. He adds that the company continually strives to compress the distances even further, no small feat given the increasing demand it is experiencing for its services.
Helping hand
Truckers are also turning to technology in their quest to conserve fuel. For example, fuel optimization software, which directs truck drivers to the best locations to purchase their fuel, became a hot property during the long, hot summer of 2008.
The software remains in demand even though diesel prices have cooled off. On Aug. 4, truckload carrier Knight Transportation Inc. announced it had installed "IDSC ExpertFuel," a software program that Knight licensed from TMW Systems, a Cleveland-based developer. Phoenix-based Knight said it uses the software across its 35 regional operating centers.
"Whether diesel prices are high or low, pennies per gallon make a huge difference for our fleet," David Jackson, Knight's CFO, said in a statement. (Knight operates more than 3,700 trucks.) TMW customers generally save between 4 and 11 cents per gallon for each truck, said TMW Vice President David Schildmeyer.
Another solution, and one that seems quite basic, is addressing driver habits. Dedicated contract trucker Ruan Transport Inc., which consumes between 80 million and 85 million gallons of diesel fuel each year, says the difference between the behaviors of a competent and an incompetent driver is equivalent to a 30-percent swing in fuel spend per year.
Not surprisingly, Ruan puts driver training at the top of its priority list. "We believe that if you are safe, you are also efficient," said Jim Mulvenna, Ruan's vice president of administration and safety, in a recent webinar.
Other truckers have taken a similar tack. At carrier Stan Koch & Sons Trucking Inc., a program to reward drivers who reduce vehicle idle times helped the company cut idling by 75 percent from 2005 through 2007. Trucker Covenant Transport Inc. has taken a slightly different approach to the same problem: It charges drivers an hourly fee for idling in excess of a pre-set maximum level.
As these programs show, there are many ways to attack the oil monster. Which is a good thing, for companies will want to have plenty of arrows in the quiver for the next time they face the beast.
A move by federal regulators to reinforce requirements for broker transparency in freight transactions is stirring debate among transportation groups, after the Federal Motor Carrier Safety Administration (FMCSA) published a “notice of proposed rulemaking” this week.
According to FMCSA, its draft rule would strive to make broker transparency more common, requiring greater sharing of the material information necessary for transportation industry parties to make informed business decisions and to support the efficient resolution of disputes.
The proposed rule titled “Transparency in Property Broker Transactions” would address what FMCSA calls the lack of access to information among shippers and motor carriers that can impact the fairness and efficiency of the transportation system, and would reframe broker transparency as a regulatory duty imposed on brokers, with the goal of deterring non-compliance. Specifically, the move would require brokers to keep electronic records, and require brokers to provide transaction records to motor carriers and shippers upon request and within 48 hours of that request.
Under federal regulatory processes, public comments on the move are due by January 21, 2025. However, transportation groups are not waiting on the sidelines to voice their opinions.
According to the Transportation Intermediaries Association (TIA), an industry group representing the third-party logistics (3PL) industry, the potential rule is “misguided overreach” that fails to address the more pressing issue of freight fraud. In TIA’s view, broker transparency regulation is “obsolete and un-American,” and has no place in today’s “highly transparent” marketplace. “This proposal represents a misguided focus on outdated and unnecessary regulations rather than tackling issues that genuinely threaten the safety and efficiency of our nation’s supply chains,” TIA said.
But trucker trade group the Owner-Operator Independent Drivers Association (OOIDA) welcomed the proposed rule, which it said would ensure that brokers finally play by the rules. “We appreciate that FMCSA incorporated input from our petition, including a requirement to make records available electronically and emphasizing that brokers have a duty to comply with regulations. As FMCSA noted, broker transparency is necessary for a fair, efficient transportation system, and is especially important to help carriers defend themselves against alleged claims on a shipment,” OOIDA President Todd Spencer said in a statement.
Additional pushback came from the Small Business in Transportation Coalition (SBTC), a network of transportation professionals in small business, which said the potential rule didn’t go far enough. “This is too little too late and is disappointing. It preserves the status quo, which caters to Big Broker & TIA. There is no question now that FMCSA has been captured by Big Broker. Truckers and carriers must now come out in droves and file comments in full force against this starting tomorrow,” SBTC executive director James Lamb said in a LinkedIn post.
The “series B” funding round was financed by an unnamed “strategic customer” as well as Teradyne Robotics Ventures, Toyota Ventures, Ranpak, Third Kind Venture Capital, One Madison Group, Hyperplane, Catapult Ventures, and others.
The fresh backing comes as Massachusetts-based Pickle reported a spate of third quarter orders, saying that six customers placed orders for over 30 production robots to deploy in the first half of 2025. The new orders include pilot conversions, existing customer expansions, and new customer adoption.
“Pickle is hitting its strides delivering innovation, development, commercial traction, and customer satisfaction. The company is building groundbreaking technology while executing on essential recurring parts of a successful business like field service and manufacturing management,” Omar Asali, Pickle board member and CEO of investor Ranpak, said in a release.
According to Pickle, its truck-unloading robot applies “Physical AI” technology to one of the most labor-intensive, physically demanding, and highest turnover work areas in logistics operations. The platform combines a powerful vision system with generative AI foundation models trained on millions of data points from real logistics and warehouse operations that enable Pickle’s robotic hardware platform to perform physical work at human-scale or better, the company says.
Bloomington, Indiana-based FTR said its Trucking Conditions Index declined in September to -2.47 from -1.39 in August as weakness in the principal freight dynamics – freight rates, utilization, and volume – offset lower fuel costs and slightly less unfavorable financing costs.
Those negative numbers are nothing new—the TCI has been positive only twice – in May and June of this year – since April 2022, but the group’s current forecast still envisions consistently positive readings through at least a two-year forecast horizon.
“Aside from a near-term boost mostly related to falling diesel prices, we have not changed our Trucking Conditions Index forecast significantly in the wake of the election,” Avery Vise, FTR’s vice president of trucking, said in a release. “The outlook continues to be more favorable for carriers than what they have experienced for well over two years. Our analysis indicates gradual but steadily rising capacity utilization leading to stronger freight rates in 2025.”
But FTR said its forecast remains unchanged. “Just like everyone else, we’ll be watching closely to see exactly what trade and other economic policies are implemented and over what time frame. Some freight disruptions are likely due to tariffs and other factors, but it is not yet clear that those actions will do more than shift the timing of activity,” Vise said.
The TCI tracks the changes representing five major conditions in the U.S. truck market: freight volumes, freight rates, fleet capacity, fuel prices, and financing costs. Combined into a single index indicating the industry’s overall health, a positive score represents good, optimistic conditions while a negative score shows the inverse.
Specifically, the new global average robot density has reached a record 162 units per 10,000 employees in 2023, which is more than double the mark of 74 units measured seven years ago.
Broken into geographical regions, the European Union has a robot density of 219 units per 10,000 employees, an increase of 5.2%, with Germany, Sweden, Denmark and Slovenia in the global top ten. Next, North America’s robot density is 197 units per 10,000 employees – up 4.2%. And Asia has a robot density of 182 units per 10,000 persons employed in manufacturing - an increase of 7.6%. The economies of Korea, Singapore, mainland China and Japan are among the top ten most automated countries.
Broken into individual countries, the U.S. ranked in 10th place in 2023, with a robot density of 295 units. Higher up on the list, the top five are:
The Republic of Korea, with 1,012 robot units, showing a 5% increase on average each year since 2018 thanks to its strong electronics and automotive industries.
Singapore had 770 robot units, in part because it is a small country with a very low number of employees in the manufacturing industry, so it can reach a high robot density with a relatively small operational stock.
China took third place in 2023, surpassing Germany and Japan with a mark of 470 robot units as the nation has managed to double its robot density within four years.
Germany ranks fourth with 429 robot units for a 5% CAGR since 2018.
Japan is in fifth place with 419 robot units, showing growth of 7% on average each year from 2018 to 2023.
Progress in generative AI (GenAI) is poised to impact business procurement processes through advancements in three areas—agentic reasoning, multimodality, and AI agents—according to Gartner Inc.
Those functions will redefine how procurement operates and significantly impact the agendas of chief procurement officers (CPOs). And 72% of procurement leaders are already prioritizing the integration of GenAI into their strategies, thus highlighting the recognition of its potential to drive significant improvements in efficiency and effectiveness, Gartner found in a survey conducted in July, 2024, with 258 global respondents.
Gartner defined the new functions as follows:
Agentic reasoning in GenAI allows for advanced decision-making processes that mimic human-like cognition. This capability will enable procurement functions to leverage GenAI to analyze complex scenarios and make informed decisions with greater accuracy and speed.
Multimodality refers to the ability of GenAI to process and integrate multiple forms of data, such as text, images, and audio. This will make GenAI more intuitively consumable to users and enhance procurement's ability to gather and analyze diverse information sources, leading to more comprehensive insights and better-informed strategies.
AI agents are autonomous systems that can perform tasks and make decisions on behalf of human operators. In procurement, these agents will automate procurement tasks and activities, freeing up human resources to focus on strategic initiatives, complex problem-solving and edge cases.
As CPOs look to maximize the value of GenAI in procurement, the study recommended three starting points: double down on data governance, develop and incorporate privacy standards into contracts, and increase procurement thresholds.
“These advancements will usher procurement into an era where the distance between ideas, insights, and actions will shorten rapidly,” Ryan Polk, senior director analyst in Gartner’s Supply Chain practice, said in a release. "Procurement leaders who build their foundation now through a focus on data quality, privacy and risk management have the potential to reap new levels of productivity and strategic value from the technology."