Message for Distributors: You Can Do More

While keeping up engine updates and fuel consumption is a daunting task for an industry that depends on trucks for its livelihood, perhaps the sincerest advice was made by Keith Pittman, senior vice president, Ben E. Keith Foods, Fort Worth, Texas, who presented a case study about its successful third-party fuel procurement initiative with FuelQuest.

In response to a question by ID Access about the panel's takeaway for distributors, Pittman said: "There's more you can do."

Regardless of what a distributorship is doing about keeping its trucks in tip-top condition and running on the best, low-emission fuel that was bought at the best price, Pittman pointed out that there's more that can be done.

"Fuel purchasing is an extremely important part of your business and it's one that is often overlooked. People need to focus on fuel and see if there's something that they can do differently and better. You may think that all that you're doing is all that you can do but then you're a victim of the market. But that isn't true. We found alternative ways of purchasing fuel and moving up the supply chain a little bit better," Pittman said.

Though average national costs of gasoline and diesel fuel, the No.1 topic of concern for distributors, has significantly dropped in recent months (see chart), the International Foodservice Distributors Association, Falls Church, VA, showed farsightedness in its decision to convene the first industry-wide Fuel Summit on the tail end of its successful inaugural Foodservice Distribution Conference and Expo here. Indeed, distributors have said the drop off in price is temporary and many are bracing for an upswing next year.

"There's more you can do." – Keith Pittman
"Anyone who attended this meeting has been exposed to some of the major questions we have today and we've provided them with a lot of the answers so that they can make informed decisions in the future. Everyone who came to the summit today knows more about ULSD and 2007 engines than they did before they got here," observed Steve Potter, IFDA senior vice president of industry relations. "I think that people realize that purchasing fuel is a very complex situation with many different strata of costs. Although it may have been a little overwhelming, it was certainly extremely informative and opened a lot of eyes."

Potter said the current price decreases may have been triggered by an absence of any devastating hurricanes and an abundance of reserves. However, increasing demand and decreasing supply will lead to unstable pricing, he said.

Nonetheless, emission controls, ultra low sulfur diesel fuel, efficient engines, smart fuel procurement and a host of transportation issues will remain continuously critical to distributors' small margins.

In addition to Potter, other speakers included Art Trahan, senior manager, technical assistance and new products development, Ryder Systems, Miami; Richard Nelson, National Biodiesel Board; Howard Lukens, general manager, Southeast region, Freightliner/Detroit Diesel; Ron Fernandez and Mike Rickert, Thermo King/Ingersoll Rand; Keith Pittman and John Fershtand, Ben E. Keith Foods; and James Nicolaou, vice president, fuel management services, FuelQuest.

Potter reminded the nearly 100 participants that every penny increase in the price of fuel cumulatively equals $800,000 in additional expenses for all IFDA members and more than $1 million for the entire foodservice distribution industry.

Describing the new government-mandated truck engines that will be available next year along with fuel usage and maintenance techniques, Ryder's Trahan assured distributors that their costs will increase as a result of the new regulations.

Nelson of the Biodiesel Board said in researching and developing diesel fuel with soy-based additives for trucks, the quality of the fuel is of utmost importance. Tax credits will be available to users of biodiesel fuel, he said. He listed two useful websites: www.biodiesel.org and www.biotrucker.com.

Freightliner's Lukens elaborated on the use of aerodynamic studies in designing the most efficient truck on the road while Rickert of Thermo King said truck refrigeration equipment is waiting the introduction of cryogenic technology to enhance cost savings and resourcefulness.

Describing Ben. E. Keith's efforts to devise the best procedure to procure fuel, Pittman said the eighth largest distributorship according to the ID Top 50 survey spends $12.5 million per year on a variety of fuels. After beginning to procure fuel via FuelQuest, Pittman said the foodservice side of corporate owner Ben. E. Keith Co. was purchasing its needs 5-14 cents better than the beer segment of the business, which is a lot better than it was doing in the past.

Pittman discounted ideas about getting involved in fuel futures trading because of the risk of overpaying when prices come down as they have recently done and the three-four hours a week employees would have had to spend searching for the best price. He said another benefit of FuelQuest's services was reconciliation of invoices, a process that the broadliner did not do well. Now it has a detailed account of what was bought, delivered and used.

"If you think that you're doing the best you can then that's fine. But in our case, we were not and I feel a lot better about what we're doing now," he said.


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