Land O’Lakes Chief Supply Chain Officer, Yone Dewberry, recently made a bold statement at a logistics conference, saying “We’ve created it” (the truck driver shortage). “As an industry” (shippers), “we’ve done this to ourselves.”
Land O’Lakes is a member-owned cooperative best known for dairy products, but the company also has divisions devoted to animal nutrition and seeds/crop protection. When it comes to securing transport, it is easier if you have predictable demand, use standard trucks, and have long lead times. That does not fit any of their businesses.
The animal feed business does not have seasonal peaks, but 40 percent of deliveries are same day or next day. The dairy business has “huge peaks” according to Mr. Dewberry. Forty percent of butter is sold in November and December and needs to be transported in refrigerated trucks. “Getting refrigerated trucks during the busy season is tough.” Finally, the Ag service business is “peaky.” “When the weather gets warm, farmers want to plant. It is hard to predict these peaks. And when it rains, farmers are apt to ask for fungicides, and they want those fungicides delivered the same day. 80 percent of deliveries from this business are same or next day.
The trucker shortage is being driven by several factors, including retirement and low unemployment rates. But a big reason for the shortage is that “we’ve forced our carriers to drive their prices down. Trucking companies don’t have many levers. There is fuel, carriers can not control that. And there are driver wages. For many years, driver wages were not keeping up with wage growth in other sectors. So, there is a driver shortage. Companies are having a harder time maintaining existing service levels, much less moving to more demanding business to consumer ecommerce type expectations for quick deliveries,” said Mr. Dewberry.
Land O’Lakes is doing something right, though. They average 1,000 shipments per week. In the last year, only three shipments were left on the dock because of an inability to find a carrier willing to take the load. So how does the company solve their freight problems? XYpper.com has a solution.