Hy-Vee Fuel Efficiency
Chariton
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Employee Owned Company
Founded in 1930
Corporate Office – West Des Moines
$7.2 Billion in Sales Last Year
235 Stores
Over 60,000 Employees
• Hy-Vee Distribution Centers
– Chariton, Iowa
– Cherokee, Iowa
• Subsidiary Distribution
– Perishable Distributors of Iowa
– Lomar Foods
– Florist Distributing, Inc.
Hy-Vee Sales History
$8.0
$7.0
$6.0
$4.0
$3.0
$2.0
$1.0
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
$0.0
2000
Billions
$5.0
Approximately 250,000 Square Mile Trade Territory
Hy-Vee - Transportation
Asset Allocation
Tractors
Trailers
Chariton
Cherokee
PDI
144
66
95
Chariton
Cherokee
PDI
320
75
120
Total
305
Total
515
Total Acquisition Cost: $60,000,000
Miles Driven
Chariton
18,285,110
Cherokee
5,322,490
PDI
7,463,503
Total Company
31,071,103
Equivalent to 1,248 trips around the world every year.
Transportation - 2011
Chariton Cherokee
PDI
Total
Outbound Loads
45,608
12,641
22,891
81,140
Outbound Tons
Hauled
723,122
317,053
280,000
1,320,175
Backhauls
21,662
4,642
11,765
38,069
Contract
Backhauls
2,376
NA
2,004
4,380
% of Loads with
Backhaul or
Contract
53%
37%
60%
52%
Effect of Fuel Cost on Truck Expense
Effect of Fuel Cost on Truck Expense
Fuel Price Per Gallon
Fuel Cost Per Mile
$4.00
$0.70
$3.50
$0.60
$3.00
$0.50
$2.50
$0.40
$2.00
$0.30
$1.50
$0.10
$0.00
$0.00
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
$0.50
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
$0.20
$1.00
Truck Expenses
9.2 Million
3.7 Million
26.7 Million
3.1 Million
6.1 Million
18.2 Million
Wages
Fuel
Depreciation
Group Insurance
Vehicle Repair
Other
Fuel Economy
Projected Savings
Fuel Economy over 6.4 mpg
GOAL:
To improve transportation efficiencies
without disrupting service to our stores.
Load
Planning
DSD’s
Backhauls
Outside
Freight
Income
Technology
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Tractor/Trailer Aerodynamics
Tires – Super Singles & Fuel Efficient Duals
Onboard Computers – People.net
Fuel – Biodiesel & Propane
Load Planning – Retalix Transportation
Optimization (RTO)
• Dispatch Visibility – CAMS
• Tractor Specification
Aerodynamics
Trailer Aerodynamics
SUPER SINGLE TIRES
• Began in 2005 with 5 tractors & 5 trailers (40 tires);
expanded to additional units
• Test results with super singles on tractor & trailer
showed 0.12 to 0.32 mpg improvement in fuel
economy
• Fuel economy shown with super singles was wiped
out by reduced tire wear & driver satisfaction
• Currently phasing out super single tires &
have gone to a fuel-efficient dual tire
Fuel-Efficient Duals
PeopleNet Onboard Computers
PeopleNet Reports
• Records MPG
– By Driver
– By Tractor
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Records Idle Time
Driver Speeds
Driver Activity Reports
Bread Crumb Trail
Fuel Tax
Fuel – Soy Biodiesel
• 18 month test
• 5% blend
• Adds lubricity to the engine to offset the
ultra-low sulfur diesel
• 183,000 gallons purchased
• No impact on fuel economy
• Cleaner fuel system
• Cost Prohibitive – Adding Soy Biodiesel
increased fuel cost by $0.09 per gallon
Benefits of Fuel – Propane Mixture
• Reducing fuel cost & increasing fuel economy
• Improved engine horsepower
• Receive approximately 75 HP boost with propane
• Extended service intervals
– Use of propane reduces particulates caught in the
particulate trap
– Oil soot samples have been reduced
• Reduced greenhouse gas emissions
• Warranty is still valid
Propane Diesel Injection System
• A small amount of propane is mixed with the
air intake prior to the introduction of the air to
the engine (20% propane & 80% diesel).
Propane Diesel Injection System
Why it is so beneficial….The small amount of propane increases
the combustion efficiency of the diesel burn producing more mpg and
less emissions and enhanced performance.
Propane Comparison
Plain Diesel
Miles
Diesel
125,000
Gallons
20,358
MPG
Cost/Gallon
6.14
Cost/Mile
$3.64
$0.593
Total Cost/Mile
$0.593
Diesel + Propane
Miles
Gallons
MPG
Cost/Gallon
Cost/Mile
Diesel
125,000
17,934
6.97
$3.64
$0.522
Propane
125,000
3,289
38.01
$1.31
$0.034
Total Cost/Mile
$0.557
Difference
$0.036 per mile savings
Estimate Annual Savings
145 Tractors
18,000,000 miles driven annually
@
$0.02 per mile
=
$360,000
@
$0.03 per mile
=
$540,000
@
$0.04 per mile
=
$720,000
Estimated Cost to Purchase & Install Propane System
on Entire Fleet
145 Tractors
x
$1,800
18,000 gallon tank and 2 pumps
=
$261,000
=
$40,000
$301,000
AmeriGas Agreement
Will Install 18,000 gallon tank and 2 pumps
- $40,000
145 units x $1,000 rebate
-$145,000
-$185,000
Hy-Vee Investment
ROI of Approximately 4 months
$116,000
Retalix Transportation Optimization - RTO
• Routing Software was
installed in 2010
• Interfaced with our
Warehouse
Management System &
Electronic Dispatch
• Provides Dynamic
Routing
CAMS Dispatch Software
• Allows visibility between Distribution Centers
• Interfaces with our warehouse management
system, routing software, & onboard
technology (PeopleNet)
• Streamline payroll
• Dispatch loads to drivers
• Reporting & analyzing equipment usage
• Tracks backhauls
• Manages drivers time off
• Track average delivery weight & cube by store
New Tractor Technology
• 2011/2012 Volvo Tractor
– 2010 EPA emission standards
– Aerodynamic body style
– I-Shift automatic transmission
– Disk breaks reduce stopping distance
– Have purchased 60 over the last two years
– Averaging 6.8 mpg as a group
– Most popular tractors we have purchased
Increase Freight Capacity
• Maximize Outbound Weight & Cube
• 81,140 Loads
• Contract Freight
• 4,380 Loads
• Backhaul Freight
• 38,069 Backhauled
• Direct Store Deliveries
• Included in backhaul freight
Contract Freight - Hormel
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Partnered with Hormel
in 2004
• Hy-Vee’s private fleet
delivers to Hy-Vee
stores in a 7 state area
• Hormel has several
plants in this 7 state
area
• Currently pick-up 2,400
loads per year
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Stores
Chariton &
Cherokee DC’s
Plants
Backhauls
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Backhaul over 50% of our loads
Reduce empty miles
Deliver to subsidiaries
Major Suppliers:
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Kraft
Premium Water
American Bottling
Kimberly Clark
Quaker
Hormel
General Mills
Unilever
Nestle
Direct Store Deliveries – DSD’s
• 8.4% of backhauls are DSD’s
• Allows stores to make better deals with
vendors
– Kraft
– Premium Water
– American Bottling
– Kimberly Clark
– Quaker
– Hy-Vee Lawn & Garden
Questions?