Food Industry Benchmarks Waver as Costs

Dec. 1, 2000
Rise Slightly and Sales Trend Upward The cost per mile for wholesale grocery delivery rose five cents in 2000. All measurements except cost as a percent

Rise Slightly and Sales Trend Upward The cost per mile for wholesale grocery delivery rose five cents in 2000. All measurements except cost as a percent of sales rose as well in 2000. However, a look at 10 years of food industry cost data shows trend lines for the major benchmarks that remain essentially flat. This data is reported in the Food Distributors International wholesale/retail transportation and fleet maintenance report prepared for the 2000 Food Industry Productivity Conference.

Cost per mile, which had gone up through most of the decade of the 1990s, rose again in 2000 after falling 10 cents to $2.04 per mile in 1999. Although cost per mile rose to $2.09 in 2000, it still is lower than the peak of $2.23 reached in 1996 and lower than the $2.19 reported in 1997 and $2.14 in 1998. While rising, the cost per mile benchmark remains 14 cents per mile lower than its 10-year high. Data for this cost survey was collected and analyzed by Richard H Kochersperger, Gerald Peck research scholar for wholesaling and retailing and director of the Center for Food Marketing of St Joseph's University in Philadelphia.

The Food Industry Productivity Conference and Exposition is sponsored by the Food Distributors International and Food Marketing Institute. Food Distributors International is the umbrella organization for the National American Wholesale Grocers Association and the International Foodservice Distributors Association. Other organizations sponsoring the Food Industry Productivity Conference included the National Grocers Association, the Canadian Council of Grocery Distributors, the Grocery Product Manufacturers of Canada, the General Merchandise Distributors Council, the National Food Processors Association, and the United Fresh Fruit and Vegetable Association. The conference was held in Minneapolis from October 22 to 25, 2000.

Wholesalers vs Retailers The transportation and fleet maintenance report differentiates between wholesale grocery and retail chain operations. The data usually shows that retail chains operate with a significantly lower cost structure than wholesale grocers. Apparently the customer service aspects of wholesale grocery delivery drive costs up far beyond the level experienced by retail chains that exercise tighter control over delivery operations. Retail chains deliver larger orders at each stop, travel fewer miles per route, and spend less time handling merchandise at stores. This tighter control of distribution is indicated by a 40-cent per mile drop in costs for 2000, down to an even $2 per mile from $2.40 in 1999. This drop follows a 60-cent increase from $1.80 per mile in 1998. Kochersperger explains that these large shifts are probably a reflection of which chains contributed data for the survey more than any basic change in the underlying cost of supermarket distribution operations.

Benchmark data for wholesale grocers in 2000 shows increased costs in all but two categories. Cost per mile rose five cents to $2.09, up from $2.04 in 1999. A look at cost per mile for the past 10 years shows a low of $1.83 in 1991 and a high of $2.23 in 1996. Cost per mile figures for 2000 and 1999 fall slightly above the midpoint of that spectrum.

Cost per route rose $26 to $490 in 2000 after dropping $31 to $464 in 1999, down from $495 in 1998. In previous years, the cost per route has been $511 in 1997 and reached its 10-year high at $527 in 1996. Cost per route was at a 10-year low in 1999; the second lowest level for this benchmark in the past 10 years was $477 in 1994. Delivery cost per case remains almost flat, rising only three cents to 37 cents per case for 2000, up from 34 cents per case in 1999. The two previous years, 1998 and 1997, delivery cost per case was 35 cents. This cost category seems to have stabilized after falling throughout most of the 1990s. In 1991, the delivery cost per case was 44 cents; it rose to 46 cents per case in 1992. By 1995, this benchmark dropped to 35 cents and has remained in that range since, with a recent high of 38 cents in 1996 and a low of 34 cents in 1999.

Delivery cost as a percent of sales for wholesale grocers dropped slightly to 1.90% for 2000, returning to the same level reported for 1998. In 1999, delivery cost as a percent of sales was 1.93%. In past years, delivery cost as a percent of sales has been relatively high with results such as 1.95% for 1997, 2.03% for 1995, 1.94% for 1994, 1.96% in 1993, and 1.94% for 1992. Long-term trends show an increase in delivery cost as percent of sales ever since FDI (then NAWGA) began recording the data in 1980. In that year, delivery cost as a percent of sales was 1.7%.

Cost Per Stop Rises Cost per stop rose sharply in 2000 to $239, up $43 from the $196 per stop reported for 1999. In fact, the 1999 figure is the 10-year low for this benchmark, and the 2000 result is the 10-year high. The previous high was $238, reported for 1995. This benchmark has moved up and down erratically for years.

Data for retail chain operations show a significant difference from that of wholesale grocers with lower costs across the board. Trends for retail chain costs are only now beginning to emerge, because FDI only began collecting data from them in 1996.

Cost per mile data from retail chains looks erratic, showing $2.00 for 2000, down 40 cents from $2.40 per mile in 1999. In 1998 and 1997, cost per mile for retail chains was $1.80, while in 1996, this benchmark was $1.88. Cost as a percent of sales rose slightly to 1.58% for 2000, up from 1.51% in 1999. Both these benchmarks are significantly lower than the 1.90% posted by wholesale grocers. Cost per stop for 2000 rose $10 to $180, up from $170 in 1999. This is $59 less than the cost per stop for wholesale grocers. Cost per route for chains jumped $43 to $439 in 2000, up from $396 in 1999. However, chains can still make a delivery stop for $51 less than wholesale grocers. Only in the cost per delivered case category do chains approach the cost structure of wholesale grocers. In 2000, it cost retail chains 32 cents to deliver a case of goods, up from 25 cents per case in 1999. This benchmark is only five cents per case higher than the wholesale grocery figure of 37 cents per delivered case.

In 2000, wholesale grocers reported gains in route productivity, while productivity for retail chains remained relatively flat. Wholesalers gained almost one thousand pounds of payload per route compared to a 10-pound decrease for retailers. Payload per route for wholesalers rose to 28,841 lb in 2000, up from 27,958 lb in 1999. This benchmark barely moved for retailers, actually dropping to 30,434 lb in 2000, down from 30,444 lb in 1999. These 2000 results follow a drop in productivity between 1997 and 1998. For those years, retailers reported a drop in route payload from 28,892 lb to 28,568 lb. For those same two years, wholesale grocers reported a drop from 27,454 lb in 1997 to 26,467 lb in 1998. While payload per route has begun to climb, it still does not match the peaks of 29,926 lb for wholesale grocers in 1995 or 31,258 lb per route for retail chains in 1996.

The average weight per delivered case seems to indicate that retailers and wholesalers continue to sell products packaged as single servings or as prepared convenience foods. Case weights as delivered by wholesale grocers started the decade at a high of 22.78 lb and reached a 10-year low of 20.5 lb in 1996 and 1997. The average weight per case reported by wholesale grocers in 2000 is 21.56 lb, up slightly from 21.47 lb in 1999. In contrast, average case weights from retail chains first appeared in the survey results at 23.39 lb in 1996 and fell steadily to an average of 20.38 lb per case in 1999. In 2000, retailers report average weight per case at 21.83 lb. With the implementation of new regulations designed by OSHA to prevent repetitive motion and stress injuries, the average weight per case is unlikely to rise in the future. In fact, reduction of average case weight will probably result.

Respondents Determine Data Survey results continue to illustrate how much the data depends on which companies respond. For instance, miles per route for retail chains shows extreme fluctuation from 1996 to 1998 and a small change for 1999 followed by another large change for 2000. Meanwhile the number of miles per route for wholesale grocers has risen but not changed drastically in any year since reaching a 10-year low of 210 miles per route in 1996.

The 2000 report indicates that retail chains run 218 miles per route, up 23 miles per route from 195 miles in 1999. The highest average number of miles ever reported by retail chains was 223 miles in 1997, which immediately followed the all-time low of 177 miles in 1996. In contrast, the 2000 route mileage average for wholesale grocers dropped six miles to 239 miles from 245 miles in 1999. The 10-year high for wholesale grocers was 278 miles per route in 1991, and the 10-year low was 210 miles in 1996. A change in the sample of retail chains is the best explanation for the wide swings in average miles per route. Regardless of the sample, one factor remains constant. Wholesale grocers run more miles per route than retail supermarket operators.

The number of stops per route is relatively stable, although wholesale grocers historically have made more stops than retail chains. For 2000, the number of stops per route for wholesalers and retailers is equal for all practical purposes, with wholesalers stopping 2.27 times per route and retailers making 2.26 stops. In the previous year, the difference in wholesale and retail operations was much more evident with wholesalers making 2.47 stops per route in 1999 compared to 1.79 stops per route by retailers. This benchmark for 2000 represents a 10-year low for wholesalers, down from the 10-year high of 2.75 stops per route in 1992 and 1995. It is the all-time high for retailers and follows the all-time low of 1.79 stops per route from 1999.

Mixed Productivity Data Productivity data for retail chains seems mixed with respondents reporting delivery of 597 cases per stop in 2000, down more than 200 cases from the all-time high of 834 cases per stop in 1999. This wide swing is almost a repeat of the two previous years when retail chains reported delivery of 786 cases per stop in 1997 followed by a drop to 670 cases per stop in 1998. Wholesale grocers reported a large shift in this benchmark as well with the number of cases rising from 515 in 1999 to 620 cases per stop in 2000. Prior to 2000, the data had been much more consistent for wholesalers with cases per stop fluctuating in a narrow range from a 10-year low of 464 cases per stop in 1991 to a previous 10-year high of 539 cases in 1997. In some years such as 1994 and 1995, the average changed by as little as two cases - 517 in 1994 to 515 in 1995.

These numbers are reflected in the weight delivered at each stop. Retailers delivered an average of 14,001 lb per stop in 2000 compared to 16,998 lb per stop in 1999. In previous years, retailers delivered 13,936 lb per stop in 1998, 16,935 lb in 1997, and 15,680 lb per stop in 1996. The fluctuating results reflect the wide range of case count per stop for those same years.

Wholesalers report increased productivity with the delivery of 13,370 lb per stop in 2000, up from 11,443 lb per stop in 1999, which was up from 10,352 lb per stop in 1998. Wholesalers have made great progress in weight delivered per stop from the 10-year low of 8,715 lb in 1997.

According to the transportation and fleet maintenance report, retail chains continued a much higher equipment utilization rate in 2000 than wholesale grocers. However, the gap seems to be narrowing some. For example, retailers logged an average of 95,498 miles per tractor in 2000 compared to 96,555 miles per tractor in 1999. This compares to tractor utilization of 68,288 miles per tractor in 2000 for wholesalers, which is up slightly from 67,629 miles per tractor for wholesale grocers in 1999. This remains much the same as the 1998 survey results that showed 94,319 miles per tractor for retailers and only 68,240 miles per tractor per year for wholesalers. The gap between retailers and wholesalers was particularly large in 1997 with retailers reporting annual tractor mileage of 119,363 to only 67,982 miles per tractor per year for wholesalers.

Trailer utilization for both retailers and wholesalers is up for 2000 with the benchmark for retailers showing a significant increase. In 2000 retailers ran trailers an average of 37,702 miles compared to only 25,439 miles per year in 1999. This places trailer utilization for retailers above the previous all-time high of 35,716 miles per year posted in 1996. Wholesale grocers made progress with trailer utilization also, but at a slower pace, logging an average of 32,644 miles per trailer in 2000, up from 30,404 miles per year in 1999. The result for 2000 is a 10-year high and is well above the 10-year low of 26,760 miles per year posted in 1998.

Retailers still operate considerably more trailers per tractor, although the difference is less glaring. In fact, the 2000 survey says that retailers run 3.6 trailers per tractor, down from 4.9:1 in 1999, 3.99:1 in 1998, 3.85:1 in 1997, and up only from 3.35:1 in 1996. Among wholesalers, the trailer-to-tractor ratio dropped slightly to 2.64:1 in 2000, down from 2.75:1 in 1999. However, this benchmark is above the 2.55:1 posted in 1998 and 2.54:1 in 1997.

Although retailers run more miles per trailer per year than wholesale grocers, the average number of refrigeration hours per year is almost equal with retailers logging an average of 1,843 hours per unit per year compared to 1,821 hours per unit in a wholesale grocery fleet in 2000. Refrigeration unit utilization is up from the 1,808 hours per unit per year posted by retailers in 1999, but still below the all-time high of 2,138 hours per year reported for 1996.

Unit Utilization Rises The wholesale grocer unit utilization average of 1,821 hours in 2000 is up from 1,791 hours per unit in 1999. The 10-year high for wholesalers is 1,955 unit hours per year set in 1997; the 10-year low of 1,676 hours per unit per year was reported for 1998.

This is the sixth year that data from retail grocery chains has been included in the transportation and fleet maintenance report. Retail chains provided 37 responses to the report questionnaire, almost double the 19 responses in 1999 and up from only 10 responses in 1998.

Among wholesale grocers, the number of respondents had remained fairly stable for eight years, but dropped sharply for 2000. In 1999, 104 wholesale grocers responded to the survey questionnaire up from 102 in 1998. For 2000, the number of wholesale grocer responses dropped to only 72. The wholesale grocer data includes responses from large distributors such as Supervalu, Fleming, and Roundy's. The largest respondent had annual sales of $5.7 billion, compared to sales of $41 million for the smallest respondent.

Drivers account for the bulk of the cost of food industry delivery operations at $1.151 per mile or 55.1% of total transportation cost. Operating expenses, including maintenance, tires, and fuel add another 43.5 cents. Fixed costs, including licenses, insurance, depreciation, taxes, and leases, add up to 24.4 cents. Two of these benchmarks, driver wages and benefits and operating costs, are up slightly. Fixed costs showed a slight reduction for 2000. In 1999, driver costs were $1.149 per mile, and operating expenses were 40.5 cents. Fixed costs were 26.6 cents per mile in 1999. In 1998, driver costs were $1.164, operating expenses were 46.1 cents, and fixed costs were 28.5 cents per mile. Some of the highest recent expenses were reported in 1997 with fixed costs at 30.5 cents per mile and operating expenses at 43.2 cents per mile. That year, 1997, drivers cost $1.104 per mile.

Most wholesale grocery cost categories trend upward in 2000. Delivery cost per route for 2000 is up to $490 from $464 in 1999. This benchmark is still slightly lower than the $495 reported in 1998 and the $511 shown in the report for 1997. The highest level for delivery cost per route was posted in 1992 at $574.

Wholesale grocery fleet cost per stop jumped upward to $239 for 2000, up from only $196 in 1999. This benchmark has moved erratically for the past 10 years, starting the decade at $202 in 1991, rising to $223 in 1992, falling to $207 in 1993, and falling again to $202 in 1994. Cost per stop jumped sharply to $238 in 1995, fell to $210 in 1996, and rose again to $222 in 1997 and $229 in 1998. The cost per stop has more than tripled since 1980 when the average was only $73.

Wholesale grocery delivery cost-per-case for 2000 rose slightly to 37 cents, up from 34 cents in 1999. This follows a drop from 38 cents per delivered case in 1996 to 35 cents per case in 1997 and 1998. For four years of the past decade, 1994, 1995, 1997, and 1998, cost per delivered case remained the same, falling from a 10-year high of 46 cents per case in 1992.

Increased Mileage and Stops The average wholesale grocery fleet ran more miles and served more customers per four-week period in 2000 than in 1999. Respondents reported an average of 405,414 fleet miles per four-week period in 2000 compared to 320,871 miles per period in 1999. They serve 433 customers at 3,513 stops per period up from 321 customers and 3,392 stops per period in 1999. This is a fairly significant change from 1998 when survey respondents ran an average of 242,989 miles every four weeks, making 2,867 stops to serve 478 customers. In 1997, wholesalers ran 262,449 miles every four weeks, making 3,466 stops to serve 398 customers and ran 288,421 miles every four weeks to 3,396 stops at 320 customers in 1996.

Comparable data for retail chains differs greatly from that of wholesalers. In 2000, retail fleets ran an average of 719,985 miles to 6,651 stops at 195 store locations. The averages for 1999 were 730,806 miles for 8,552 stops at 126 stores. In 1998, retail fleets ran 719,657 miles for 7,645 stops at 188 stores, and in 1997, the chains reported 854,051 miles for 7,273 stops at 211 stores for an average four-week period.

In 2000, the average wholesale grocery fleet ran 1,636 routes every four weeks to deliver 2.19 million cases weighing 47.19 million pounds at 3,513 stops. This is an increase from 1999 when the average wholesale grocery fleet ran 1,373 routes every four weeks to deliver 1.82 million cases weighing 39.25 million pounds at 3,392 stops. The four-week averages for 2000 also are higher than those reported in 1998 when the average wholesale fleet ran 1,108 routes every four weeks to deliver 1.46 million cases weighing 29.33 million pounds at 2,867 stops.

Retail Fleets More Active Fleets at retail chains were much more active in 2000 than fleets at wholesale grocers, running 2,782 routes every four weeks to deliver 3.9 million cases weighing 83.99 million pounds spread across 6,651 stops at 195 stores. Average activity was higher in 1999 when retail fleets ran 3,979 routes every four weeks to deliver 6.3 million cases weighing 128.3 million pounds at 8,552 stops at 126 stores. Activity was higher in 1998 as well, when retail fleets ran 3,723 routes every four weeks to deliver 5.1 million cases weighing 106.4 million pounds at 7,645 stops at 188 stores.

Sales per case rose to $20.38 for wholesale grocers and to $19.67 for retail chains in 2000. This is an increase from $19.09 for wholesale grocers and $19.08 for retail chains in 1999. This indicator has been somewhat volatile throughout the 1990s with the value of a case reaching a high of $22.43 in 1991 and a low of $17.35 in 1996. Data for retail chains is more limited with the highest value per case at $19.66 in 1996, the first year that retail chains were included in the report. Case value for retail chains reached its lowest point at $17.39 in 1998.

Route mileage for wholesale grocers declined slightly in 2000 to 239 miles per route, an improvement of six miles per route from 245 miles in 1999. In grocery delivery, miles are a cost rather than a revenue producer as in for-hire trucking. In that light, wholesale grocery fleets were not as productive in 2000 or 1999 as in the previous years when fleets ran an average of 224 miles per route in 1998 or 233 miles per route in 1997. During the 1990s, route mileage peaked at 278 miles in 1991 and fell to a low of 210 miles in 1996.

Retail chain fleets are expected to outperform wholesale grocery fleets in this productivity category. The results for 2000 show retail fleets besting their wholesale grocer counterparts, while experiencing a drop in their own productivity as average route mileage rose from 195 miles per route in 1999 to 218 miles per route in 2000. However, the two best years for retail fleet route productivity - 177 miles per route in 1996 and 190 miles per route in 1998 - bracket the worst year on record when retail fleets ran an average of 223 miles per route.

Sales Dept Impacts Fleet Costs Fleet managers responding for the 2000 transportation report said that the sales department has the largest impact on transportation costs. This is because sales has the power to dictate delivery times and conditions. The sales department can also add to transportation costs by demanding delivery of add-on orders late in the distribution cycle. However, cooperation between sales and transportation seems to be improving. Warehouse operations is another department with a heavy impact on transportation costs. At most distributors, late deliveries, shipping mistakes, and product damage can be directly related to the warehouse personnel responsible for loading trailers. Warehousing also can impact transportation productivity by handling backhauls slowly. Failure to unload backhauls in a timely manner raises costs because trailers are being used for storage rather than transportation.

"Very few companies allow the transportation manager to charge other departments for costs incurred from special customer services such as product storage, extra trips, or special deliveries to correct buyer mistakes," the FDI report says. "As a result, wholesalers often are making decisions about the business without the correct economic information. For example, if buyers were charged for trailer usage, less inventory would be purchased and fewer trailers would be used for temporary storage."

The number of food distributors and retailers continues to shrink as the industry consolidates in search of economies of scale. Chains such as Albertsons, Kroger, and Safeway all are actively seeking to purchase additional sales volume, although the stock market has not been kind to traditional food retailers. Competition comes from abroad as well with global companies such as Ahold, Carrefour, and Tesco seeking to grow worldwide. The trend is global; Wal-Mart recently purchased retail chains in Germany and the United Kingdom.

Wal-Mart is certainly a driving force in North America as it continues to roll out supercenters as fast as they can be built. These megastores impact the sales of every retail food outlet within 20 miles of the supercenter, the FDI report says. Some distributors and retailers experience significant sales losses competing with Wal-Mart. However, other wholesale grocers have made substantial gains by providing logistics services for chains such as those owned by Ahold as well as supplying K-Mart, Kroger, and Target.

Some wholesale grocers see consolidation as an avenue to growth. Spartan Stores in Michigan recently merged with Seaway-Foodtown in Northwestern Ohio. In addition, URM recently acquired Rosaur's.

Wholesalers and retailers that once depended on store sales for growth also are looking to the foodservice market for increased volume. Ahold has purchased Alliant, once the foodservice arm of Kraft Foods, and JP Foodservice, until recently a division of Sara Lee. Just recently The McLane Company, a convenience store distributor owned by Wal-Mart, purchased the remains of Ameriserve, which had at one time been the second largest foodservice distributor in the US prior to its bankruptcy.

The result is a slow-growth sales pattern, the report says. The significant increase in competition from such alternative sales formats such as drug stores and take-out food outlets, coupled with corporate restructuring, has created a difficult business environment. In the future, executive efforts will continue to focus on squeezing out unnecessary expenses in all aspects of wholesale grocery operation. This new business philosophy is putting more pressure on the transportation department to reduce costs and to become more efficient.

Transportation costs seem to be under control but are still rising. Eight factors seem to play a large part in keeping costs under control. Fuel cost is probably the most obvious. (1) Fuel costs rose sharply through most of 2000. Fleet fuel economy remained fairly flat following a few years in which new equipment with electronic fuel controls had a positive impact on costs. That new equipment allowed some fleets to post fuel economy averages above seven miles per gallon. However, urban traffic congestion has had a large impact on fleet efficiency. The industry average for 2000 is 6.36 miles per gallon, down from 6.47 mpg in 1998 and 6.4 mpg in 1997. This is a clear indication that the operating environment for food distributors is more important to fuel economy than new, high-performance equipment. (2) Many companies have introduced effective cost control programs for reducing growth in insurance and worker compensation expenditures. (3) Labor contracts are being negotiated for longer periods of time at higher salary and benefit levels, causing higher wage costs. This is particularly true as the driver shortage intensifies for wholesale grocery fleets. Finding qualified drivers with good work skills is becoming more difficult in many parts of the country. (4) Wholesalers are controlling costs charging customers for the real cost of delivery. This includes unloading incentives and charging for lost time resulting from operating inefficiencies. More technology, including routing software programs and on-board driver productivity recorders, is being brought to bear on delivery costs. (5) Delivery equipment is designed to run longer and to operate at significantly lower costs. Many fleets are shifting their maintenance strategy from repair during long service life to preventive maintenance with repairs performed by vendors for equipment covered by extended warranties. Many fleets are purchasing longer trailers to reduce the number of trips per day. (6) Weight-per-case will continue to decline as manufacturers focus on ergonomically designed packaging to improve pallet patterns and reduce in-transit damage. In addition, carton size may decrease to meet new federal ergonomic standards aimed at preventing repetitive motion and stress injuries. (7) Distributors are adopting new technology such as global positioning to track equipment movement, radio frequency warehouse systems, and other sensors that help monitor equipment utilization and provide data for fleet forecasting. (8) Food safety concerns are finding their way into fleet design and purchasing decisions. Managers are facing the reality that proper temperature control for all products is necessary as retailers pay more attention to order delivery condition. To meet these concerns, more fleets will begin to need multi-temperature refrigeration systems with positive temperature control in two to as many as four temperature zones.

72 Grocers, 37 Retailers Respond Data in the 2000 transportation and fleet maintenance analysis was compiled from 72 responses from wholesale grocers and 37 retail chains throughout North America. Sixteen of the responses were from Canada. These 109 respondents operate an aggregate fleet of 42,494 tractors, trailers, straight trucks, and refrigeration units. Outright ownership is the preferred acquisition method with fleets holding title to 67% of the equipment. If equipment does not fit a company's fleet standard, it is slightly more likely to be leased. For instance, 67% of single axle tractors are leased compared to 62% of tandem drive tractors that are owned. Fleets that run refrigerated straight trucks lease 74% of that equipment.

According to 2000 information, the average wholesale grocery or retail chain fleet operates 59 tractors of which 57 have tandem drive, two straight trucks, and 216 trailers of which 106 are refrigerated, 88 are dry vans, and 13 are used for storage. This average fleet runs 106 refrigeration units - 94 in single temp applications and 12 multi-temp units.

The average age of a tractor in wholesale grocery and retail chain fleets dropped to its lowest point in 10 years, falling to 3.9 years in 2000, following a drop to 4.9 years in 1999, previously the youngest average age on record. In 1995, the average tractor was 5.42 years of age, an average which fell to 4.95 years in 1996. In 1997, the average rose again to 5.1 years and moved up again to 5.4 years in 1998. All these averages are well below the decade-high of 6.95 years in 1993.

This lower average age for 2000 is reinforced by a drop in the percentage of tractors still in the fleet after 11 years. That figure for 2000 is 4.32%, down from 5.84% in 1999 and 5.69% in 1998. These percentages are much lower than the 7.29% posted in 1997 for tractors older than 10 years, and show a precipitous drop from the 16% reported in 1992.

Younger Trailer Fleet The trailer fleet is almost two years younger in 2000 than in 1999 with an average age of 5.58 years in 2000 compared to 7.46 years for 1999. For the previous five years, the industry trailer fleet showed an average age of more than seven years - 7.25 in 1998, 7.73 in 1997, 7.51 in 1996, and 7.82 in 1995. The current average age is a significant improvement from the 9.11 years posted in 1993.

Although the average trailer age is down, refrigeration unit average age remains fairly high, rising to 6.83 years in 2000 from 6.72 years in 1999 and 6.4 years in 1998. Average age of refrigeration units was at its recent high of 7.15 years in 1995, before dropping to its most recent low of 6.18 years in 1996.

A significant portion of the trailer and refrigeration unit fleet still is older than 11 years. The percentage of trailers older than 11 years dropped to 26.2% for 2000 down from the recent high of 37.61% in 1999. This percentage for 2000 is higher than the 20.91% posted for 1998, the 23.15% shown in 1997, and the 22.31% reported for 1996. The percentage of refrigeration units older than 11 years in 2000 fell as well, dropping to 18.2%, down from 24.22% in 1999. However, this percentage is still much higher than the 13.96% reported in 1998.

Managers Worry About Age Average age of the delivery fleet is a concern to industry transportation managers. A full 77% of survey respondents voice moderate, severe, or critical concern about the age of their fleets with 48% stating moderate levels of concern. Only 23% of managers say that fleet age is only a mild concern.

Equipment utilization data for 2000 shows an increase across the board for tractors, trailers, and refrigeration units. Industry averages that include wholesale grocery and retail chain fleets show that tractors ran 75,814 miles in 2000, that trailers logged 35,011 miles, and that refrigeration units ran 1,750 hours. These increases for 2000 from 1999 continue a three-year pattern.

Trailer utilization for 2000 went up almost 3,000 miles a year to 35,011 for 2000 from 32,434 in 1999. More importantly, trailer utilization is up roughly 11,000 miles a year from 1998. Refrigeration unit usage remained fairly flat, rising to 1,750 hours in 2000, up from 1,744 hours in 1999. Unit utilization was at its recent peak at 2,386 hours annually in 1993.

Technology enhancement and computer support continue to top the list of the most pressing needs cited by fleet managers. The need for information in all aspects of the transportation operation is forcing managers to embrace computer, radio frequency systems, cellular telephones, global positioning systems, and satellite communications, the report says. In addition, the driver shortage that has affected truckload carriers for years has become real to wholesale grocers and retail chains. The shortage is severe in some parts of the country. Driving a truck is not a particularly attractive job as the labor pool continues to shrink, the report says.

While the 2000 report recognizes a driver shortage, driving a truck for a wholesale grocery or retail chain fleet remains a stable occupation with 47% of survey respondents reporting driver turnover of 3% or less. However, the situation is deteriorating because in 1999, 54% reported turnover rates less than 3%. In 1998, this figure was 56%. A better indicator, however, may be at the top end of the turnover scale, where 13% of respondents reported turnover rates in excess of 20%. This is twice the 6% reporting 20% or more turnover in 1999. Retirement remains the main reason that a driver at a wholesale grocery or retail chain fleet leaves the labor force. The 2000 survey report shows that 34% of drivers left jobs for retirement, down from 45% in 1999.

In the 2000 transportation report, working hours were reported as the second most important reason, at 18% of respondents, for leaving a wholesale grocery fleet. However, a tight labor market has boosted leaving for other employment into a tie for second place at 18%, up from 11% in 1999. Running a close third, and perhaps adding to the number that leave for other employment, is drivers leaving because they are dissatisfied with wages. Fifteen percent of respondents to the 2000 survey report losing drivers because of low or unsatisfactory pay scales. In this regard, the majority of drivers for wholesale grocers and retail chains are full-time union workers 41 to 50 years of age who are on the clock for 46 hours a week at a base pay of $17.78 per hour. The average fleet has 90 drivers with a small management team and support staff.

Sources for new drivers haven't changed much. Among respondents in 2000, 58% report following the longstanding industry practice of hiring new drivers from within the company's existing work force. When wholesale grocery fleets reach outside the company, they follow about the same methods used by other companies seeking to attract drivers. Sixty-six percent of 2000 transportation report respondents use newspaper advertising to recruit drivers, down from 70% shown in the 1999 report. Another 15% seek drivers from vocational-technical schools; 5% use training companies.

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