MT: I think the only thing that we can accurately predict about fuel pricing is that it is going to be volatile. When you look ahead with your own supply chain budgets, how do you factor that in? Wher...
MT: I think the only thing that we can accurately predict about fuel pricing is that it is going to be volatile. When you look ahead with your own supply chain budgets, how do you factor that in? Where do you expect fuel pricing to go, and how are you preparing yourself for it?
Stapley: I feel it is important to work into your motor carrier agreement a discount. Fuel fluctuates and it can really throw your budget out of whack, so work in a discount of the fuel surcharge. When carriers come asking for a fuel surcharge increase or tell you that it is going to increase, I will go back and challenge the carrier to update me on what the company is doing to minimize fuel consumption. As a shipper, in the past few years I just felt like the carriers were just passing on the fuel to the shipper. Come to me with some sustainable solutions that your company is doing to minimize fuel consumption.
MT: As Laurie mentioned, there was concern in the past that what was happening with fuel pricing was that it was just getting passed on to the shippers, although I believe it had to be because the costs were enormous for a trucking company or any carrier to sustain. However, do you see shippers being more sensitive to that issue this time around in terms of demanding that carriers invest in more aerodynamic trucks in their fleet or training drivers better to maximize fuel economy, as Laurie suggests? Are you seeing yourselves getting more sophisticated in asking for those kind of things?
Kelly: We are definitely asking for it because our customers are asking for it. They are asking what we as a supplier are doing to decrease the footprint, and what we are doing with our vendors. I have received letters from our major carriers that this is the shopping list of things that they are doing to reduce energy and improve the environment. That is becoming a very common practice right now. We have already moved in that direction going from a percentage to a mileage rate basis. The sophistication in trucks now is you know at the end of your trip how much fuel you have used, and it is actually going to drill down to, “Okay, if you used $139 worth of fuel, then that is fuel on which I will pay the surcharge, and you show me the documentation to do that.” We are not there yet, but in the United States that is the way we are going.
MT: How critical do you see fuel efficiency being in your overall criteria when selecting a carrier? One of the complaints that we have heard from carriers is that they have invested all of this money in better training their staff and in more aerodynamic designs, and yet at the end of the day shippers do not seem to make that an issue. Do you see that changing? Do you see yourself making a decision whereby you say this particular trucking or courier company is not fuel-efficient enough, so you are willing to part ways with them and choose someone else who is?
Wiebe: Certainly from Loblaws’ perspective, when we ran the national tender last year, we asked each carrier to fill out a green survey, and we have now established a carrier advisory committee to come and meet quarterly with us to decide what our next steps are in terms of implementing solid benchmarks for carriers to meet. If they do not, there are penalties that at some point would see potentially a carrier losing that business. It certainly is a big issue on the cost side, but more on the green side. That becomes, obviously, a larger and larger conversation, especially for large retailers. We have got a corporate compliance committee that we have never had before in Loblaws, and obviously you have seen a lot of our president’s commercials; he is very much in favour of the green program. So that becomes a very large conversation issue, and it becomes a big issue with us in terms of our RFPs, and we will certainly begin implementing standards that carriers are going to have to meet if they want to haul for us. We will have to put it back in terms of what that is going to mean from a cost perspective. I always want to understand where a carrier is at, and what we are doing to be greener and reduce our carbon footprint, but I also have to have a mechanism when people pay bills that is going to work for us, and that people are going to be able to pay them on a consistent basis, and that the carriers understand that they are going to get paid on a consistent basis.
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