Transportation is the key to success in the commodities business, and as the world's premier supplier of agricultural products, Archer Daniels Midland Co., or ADM as it's more commonly called, has created the world's largest agricultural transportation system, moving its products over water, rail and, of course, road.
The company's private fleet subsidiary, ADM Trucking Inc., exemplifies the ag giant's transportation expertise, using a blend of contracted carriers and its own tractors and trailers to handle over-the-road movement of corn sweeteners, alcohol, vegetable oil, flour and other bulk products throughout the country while maintaining the highest standards for both safety and cost-effectiveness.
Established in 1981, the trucking subsidiary operates as a profit center, generating revenue through competitive freight rates and covering 100% of its operating costs. Today, with a fleet of 450 tractors and 850 trailers, it handles approximately half of the company's volume moving by truck, competing on service and price for every load with for-hire carriers.
“It doesn't make sense for us to handle all of our loads,” says ADM Trucking president Bill Patterson. “We can't compete with a carrier that's able to get a 95% utilization rate on its [dry] van trailers, so it makes sense to contract out the loads they can handle. But on the bulk side, it's regional hauls with dedicated equipment that's restricted on what it can haul (to food-grade commodities). We can compete on cost there, while also offering better service.”
Last year, ADM's own equipment and drivers ran over 35 million miles, covering all 48 continental states as they moved bulk products in and out of 19 ADM terminals. While some of the fleet's routes are as long as 700 miles, it also handles many shorter runs at rail-to-truck terminals that can generate as many as 12,000 bulk loads a month.
The key to profitability in this type of varied operation is optimizing driver and equipment utilization, a goal that ADM sees as inseparable from its safety efforts. “We switched to an automated [driver's] log system about six years ago, and we've just recently moved to Qualcomm's wireless [communications] system to help us get full utilization of drivers and equipment,” says Patterson.
The automated logs and wireless dispatch also allows ADM to better manage driver fatigue. “The body's circadian schedule works best with regular hours, so we set dispatch so drivers get as close as possible to the same hours on duty every day,” Patterson says. “We also make fatigue management part of our new-driver orientation.”
As a result of its focus on safety, ADM has gone from a less than admirable safety record 10 years ago to the highest safety rating awarded by the Federal Motor Carrier Safety Administration. “Safety also goes hand-in-hand with new security concerns and the need to maintain a strong chain-of-custody with food transportation,” says Patterson.
Long-term, improved safety also improves cost efficiency and customer service, closing the circle on ADM Trucking's efforts to run a premier private fleet for a parent company that expects no less.