Retailers, wholesalers and the companies that assist them in getting products to their stores are figuring out ways to become more fuel-efficient in case the cost of fuel again spikes.
The rise in the cost of gasoline during the weeks leading up to the war with Iraq has prompted companies that are involved in transporting groceries to implement some cost-saving measures to minimize their fuel expenditures.
"Gas prices have been creeping up for some time, but in the past year or so, we've been able to mitigate the costs with software that we use for better route scheduling," said Marc Jampole, spokesman, Penn Traffic, Syracuse, N.Y. "But it is another cost increase, just like health care and pensions, and it's for every supermarket company, not just us."
Gas prices actually slid sharply in many areas in late March after 13 weeks of increases, although the national average last week of $1.63 per gallon was still 21.7 cents higher than year-ago levels, according to statistics from the U.S. Department of Energy. Although food distributors generally obtain wholesale prices for fuel, the cost fluctuations trend similarly to those at the pumps, industry sources told SN.
Transportation companies that serve the supermarket industry said they try to eke out savings by making their routing more efficient and focusing on the basics.
"You can't just throw your hands up in the air and say, 'There's nothing I can do about it,"' said Mark Murfin, senior vice president, sales and marketing, Ruan Transportation, Des Moines, Iowa. "You need to continue to do the right things to measure, monitor and control it."
He said running well-maintained engines helps keep fuel costs down, as does reminding drivers not to speed.
"The more expensive fuel gets, the more critical it is that we do those things," he said.
Although Ruan's contracts with supermarkets allow the company to pass along fuel-price increases to retailers, the contracts also provide incentives for the company to minimize its delivery costs per case, Murfin explained.
Brent Hagenbugh, chief financial officer, Brisk Transportation, Dallas, said his company also seeks more efficient routing during times of high fuel prices. In addition, he said the company sometimes can lower its fuel costs by taking advantage of the cold weather to minimize its use of refrigeration.
"If the temperature is cold enough, we can cut down on [refrigeration] fuel," he said. "And we always redouble our efforts and try to keep our mileage down."
He said fuel costs in recent months have been up about 20% this year.
The high costs of energy also could drive product costs for supermarket operators, said Tim Hammonds, president and chief executive officer, Food Marketing Institute, Washington, in a recent interview with SN.
"As fuel prices go up, agriculture is very vulnerable," he said, citing the use of energy not only in the day-to-day operations of farming, but also in the manufacture of fertilizer.
