Wholesalers have found that sometimes the best way to increase transportation efficiency is to let someone else do the job.
Outsourcing of transportation needs, ranging from leasing tractors or trailers to using third-party mechanics and drivers, is becoming a more viable option in the wholesale grocery industry.
Spurring the increase in outsourcing is the potential of immense cost savings. As aging truck fleets need to be replaced, and costs associated with driver safety regulations and mechanical repairs rise, wholesalers are viewing outsourcing as one possible route to follow.
"With any company, [outsourcing] is something that needs to be looked at," said Rick Bennett, director of distribution at Camellia Food Stores, Norfolk, Va. Camellia, which outsourced to Ryder Truck Rental, Miami, last year, has seen a 20% reduction in transportation costs.
"We just wanted to get out from under the maintenance issues," Bennett said. "We were ready to replace the entire fleet, so it was a lot more cost-effective to lease back the equipment we had. It was a more effective way to get state-of-the-art equipment on the road."
Camellia now has an upgraded fleet requiring half the number of trucks. "We didn't have a huge capital outlay, but we do have all brand-new equipment on the road now," he said. "All our fleet is basically homogeneous, and we've eliminated our maintenance department as far as salary is concerned in transportation."
Outsourcing also has enabled the wholesaler to invest in equipment it normally would not have been able to afford. "Instead of having to borrow money to purchase new equipment, we now are able to make lease payments over a specified period of time, which increases our cash flow."
"There's always a degree of outsourcing you can do," Bennett said. "You can do tractors or trailers or even outsource your drivers if it comes to that."
