FMI, GMA URGE BACKHAUL COLLABORATION

MICHAEL GARRY

WASHINGTON -- Food Marketing Institute and Grocery Manufacturers of America here have issued a joint statement recommending that retailers and manufacturers form joint teams to manage transportation backhaul arrangements, bringing together their experts in logistics and transportation, sales, category management and procurement.

Their proposal, called the "Manufacturer & Distributor Customer Pick-Up/Backhaul Fairness Statement," aims to "ensure that backhaul discussions are not limited to rate information, but are elevated to transportation capabilities, and to meet the needs of all parties and consumer demand," the trade associations said.

"Ever since deregulation in the early 1980s allowed trucks to make multiple pickups and deliveries on the same round trip -- so-called backhaul or customer pickup -- the food industry has made enormous gains in distribution efficiency," said Tim Hammonds, president and chief executive officer, FMI. "In recent years, however, more companies have used their own carriers to reduce costs when greater collaboration could have allowed trading partners to share in the savings and increased the benefits for all."

"The Fairness Statement presents significant cost-saving opportunities when you consider that the food industry spends $26 billion a year on transportation, equal to 4 cents out of every consumer food dollar," said Manly Molpus, president and CEO, GMA.

Jack Block, the president of FMI's Wholesaler Division, added that the best practices in the statement "are especially useful to wholesalers and to the independent operators they serve." He said only 20% of wholesaler trucks are backhauling.

The FMI Distribution and GMA Logistics Committees created the Fairness Statement under the direction of Dennis Donelon, director, customer services, PepsiCo Beverages & Foods, and Mike Scott, vice president, logistics, Ahold USA.

The statement also recommends establishing performance measures covering pickup and delivery issues, loading practices, equipment compliance and participation. The statement suggests that these measures be built into a CPU/backhaul agreement.

The statement also covers backhaul allowances, encouraging suppliers to "unbundle supply chain cost components" such as transportation and unloading charges "to facilitate better collaboration between supplier and customer."

Trading partners are also encouraged to adopt "open book transportation management" in which they share information about their respective costs for fuel, freight, hauling and other items.