Land O’Lakes lock in Texas-based capacity
Faced with the challenge of securing capacity in specific lanes, the iconic company broke with tradition and teamed up with Uber Freight to take a technology-based approach to improve service.
Transportation in the NewsPotential DSV acquisition of Panalpina takes a turn with Agility now in the mix FTR’s Trucking Conditions Index sees significant gain AAR reports mixed volumes for week ending February 9 XPO Logistics reports strong Q4 and full-year 2018 earnings results Chapter 11 filing and employee letter shed more light on NEMF’s bankruptcy development More Transportation News
Transportation ResourceeBook “Delivery: The New Moment of Truth.” Descartes has worked with a supply chain industry expert to create an eBook that explores how retailers are managing to meet their customers’ demands.
As one of the largest butter and cheese producers in the United States, Arden Hills, Minn.-based is a shipper with a supply chain that can seem more complex than most. And when you combine its core dairy-based product offerings with its animal nutrition and crop protection divisions, it’s hardly a surprise that the iconic brand moves billions of dollars of perishable goods throughout the United States and around the world.
But like just about every shipper, regardless of size or bottom line, securing truckload capacity over the last two years has proven to be a challenge for several reasons, including rising demand, an improving economy, the ongoing impact of electronic logging device (ELD) enforcement and a severe driver shortage. “We started focusing on capacity around 18 months ago,” says , Land O’Lakes’ chief supply chain officer. “It was truly a ‘perfect storm’ of a bunch of things working to reduce capacity, and happening all at once.”
According to Dewberry, Land O’Lakes traditionally secured capacity the way most shippers go about the process. “And that’s by lining up some contract carriers on a longer-term basis—but not knowing exactly what your demand is going to be on any given lane on any given day,” he says.
Dewberry and the team would also usually turn to the spot market to secure capacity as needed from brokers, a process also viewed as a traditional model. But what they quickly realized was that, as capacity got tighter, there would be more and more shippers going after that same type of capacity through the spot market.
A partnership is born
This “perfect storm” presented enough of a challenge that Dewberry decided to turn away from more traditional methods of securing capacity and move toward something more technology-driven and intuitive. One alternative option came in the form of the ubiquitous ride-sharing service Uber.
Dewberry had been reading that the company was making inroads through its Uber Freight app that matches trucking companies with loads to haul, taking a lot of guesswork out of finding and booking freight—which is often the most stressful part of a driver’s day.
“When our logistics group found Uber Freight, it realized that it was working in the same exact space, but on the opposite end by putting drivers in touch with freight,” says Dewberry. “And we realized that was how they would provide capacity to a market that really needs it.”
The Land O’Lakes team engaged with and the two set out on an initial collaboration project. “In any type of organizational pilot test, you try to find the ‘win-win’ for both organizations,” explains Dewberry. But in this situation, the question was: In what geographic market would Uber Freight make the most sense?
The teams started by looking for markets where Uber had already gathered capacity, and then paired it with where Land O’Lakes had enough density and capacity needs to make it work on the shipper’s end. The team landed on a lane between Nacogdoches and Fort Worth, Texas.
“It’s the service side that is most important,” says Dewberry. “If you think about why we started heading down this road, it was because of capacity…and capacity is about service. In a traditional process you call a broker or tender a broker electronically, but then wait to determine whether or not they can find a carrier. It could take 10 minutes or an hour to find you a carrier, and it’s that variability of not knowing that’s one of the issues.”
However, Dewberry observes that was not an issue as they started using Uber Freight, as a shipper can know almost instantaneously whether or not it has access to a carrier to move a load. He stresses that this, in no way, is meant as a criticism of brokers; however, putting things into comparative terms, he notes that a broker is working with a specific set of carriers and are giving a shipper the first carrier they find as a general rule.
“With a broker, you don’t know whether you received a good price or not, but you did receive the capacity you wanted, which is exactly what you asked them to do,” says Dewberry. “With Uber Freight, because they’re constantly surveying the market, you’re probably getting a better price—that’s the way I would describe it.”
Fast-forward several months, and now 100% of Land O’Lakes’ loads on this lane are handled by Uber Freight. And while Dewberry declines to disclose the number of loads moved on this lane or financial savings Land O’Lakes has accrued since the partnership began, he does note that the financial side has worked itself out over time.
“We’re just in the beginning stages, and we hope that this is the start of a long-term partnership,” says Dewberry. “We expect those numbers to continue to expand as time goes on.”
According to Dewberry, one example of how securing capacity through Uber Freight has been a positive change occurred when a carrier dropped a shipment on a Saturday, a situation that would typically make things difficult for a shipper in terms of re-booking a new carrier.
But through the Uber Freight app, the team was able to re-post the load, which was then grabbed by a new carrier in a matter of minutes—something Dewberry observed was previously not an option. “Try calling a broker on a weekend, you know what that’s like.”
Using technology to avoid these types of situations was a key driver in growing the partnership, says , senior transportation manager for Land O’Lakes. Along with that, he points out that Land O’Lakes has a “very heavy footprint” in Texas, Oklahoma, and Louisiana—a part of their network with lots of intra-facility volume and a region where Uber has plenty of drivers and small carriers on its platform.
“It made all the sense in the world to start there,” says Najjar. “Instead of having a bunch of different account managers making decisions for us at the detriment of the overall capacity pool, we now use a better solution that better utilizes the overall capacity pool.”
According to Najjar, there are a number of other aspects that provide advantages like driver feedback, carrier rankings and other ancillary communications benefits. “We’re finding that this is the most optimal usage of technology to use the overall capacity pool.”
Looking ahead, Dewberry and Najjar say that they’re looking to get more of their freight moving through the Uber Freight platform, adding that they’ve done similar runs in Florida, as well as ad hoc loads in other areas as well.
“A good partnership works when it benefits both parties,” says Dewberry. “We’re always trying to find a place where they have good coverage and we have good volume, so Texas was a good place, as is Florida. It’s about finding those places where it makes sense as they build their network out—that’s the idea. Over the long term, they will continue to build it out and build density and we will continue to work on this together.”
About the AuthorJeff Berman, Group News Editor Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman
Subscribe to Logistics Management Magazine!Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
State of Global Logistics: Time for a reality check Preview some of the innovations you will see at ProMat 2019 View More From this Issue