Michigan shippers search for ways to cut costs - The Packer

Michigan shippers search for ways to cut costs

11/18/2011 10:19:00 AM
David Mitchell

With diesel fuel prices hovering near $4 a gallon, distributors are finding it hard to ignore the pinch.

The national average price of diesel fuel was $3.915 on Nov. 9, according to AAA. The average price was even higher, at $3.996, in Michigan.

“We’re all touched by the freight issue,” said Michael Badalament, salesman for Detroit-based R.A.M. Produce Distributors, which ships product to customers in Michigan, Indiana, Ohio and Canada.

Ron Stewart, president and owner of Detroit-based Simon & Leeman Corp., said his company is running two of its 12 trucks on biodiesel, which typically costs about four cents a gallon less than diesel.

“We track everything, and use our most efficient trucks on our longest routes,” said Stewart, whose company uses about 2,000 gallons of fuel each week.

Stewart isn’t necessarily stopping at alternative fuels. He’s considering switching his medium-duty trucks from diesel to gasoline, which was nearly 50 cents a gallon less than diesel in the AAA’s Nov. 9 report. Gas engines, he said, have fewer emissions and last longer than diesel engines.

Simon & Leeman is a member of Pro*Act, the Monterey, Calif.-based foodservice distribution network.

Stewart said Pro*Act encourages its customers to eliminate delivery days.

“Pro*Act has been very aggressive with some customers,” he said. “We have a stated delivery charge. If the customer eliminates a delivery day, they eliminate a delivery charge.”

Stewart said Simon & Leeman also tries to make deliveries during non-peak drive times to reduce idling time in traffic.

Consolidating and eliminating delivery routes was the strategy taken by Heeren Bros. Inc., though the Grand Rapids-based company still delivers to customers within a 275-mile radius, president Jim Heeren said.

“Some of what was being delivered by semis now goes on straight trucks, so we’re saving tires,” Heeren said. “We definitely feel the fuel issue as it bounces back and forth. The other day it went up 30 cents a gallon for no apparent reason.”

The biggest losers because of the high cost of fuel are the growers, said Todd De Waard, sales manager for Hudsonville-based Superior Sales Inc.

“Unfortunately the costs seem to be taken out of our farmers,” he said. “The customer doesn’t want to pay more for the product so it seems at times the trickle-down effect ultimately ends up hurting the farmer the most.”

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