NEWS: Transportation Driving Up Production Costs - Market Wire 7/13/

[Guest guest]

Hmm... This one seems to go with the Locavores article about only

eating food grown within 100 miles.

 

Sorry to be flooding people's mailboxes. All these articles are noted

in the "Food System Insider". These seemed like good talking points for

our preaching on cow protection and localized agriculture.

 

ys

hkdd

***************

 

Distribution Source : Market Wire Wednesday, July 13, 2005

 

http://press.arrivenet.com/tra/article.php/667720.html

 

 

Transportation Driving Up Production Costs, CPG Industry Survey Finds

 

WASHINGTON, DC -- (Market Wire - Jul 13, 2005) -- Transportation is

driving up production costs in the food, beverage and consumer products

industry, according to the Grocery Manufacturers Association's (GMA)

fifth benchmark survey on logistics. The survey was conducted by IBM

Business Consulting Services in conjunction with GMA.

 

The GMA 2005 Logistics Survey found that transportation costs have

increased 23 percent to an average of $1.69 per mile in the past three

years. In fact, transportation now accounts for 62 percent of all

logistics costs. The survey concluded higher than anticipated fuel

prices were a major contributing factor to the increasing cost of

transportation.

 

In addition to fuel prices, the GMA survey found that changes to the

hours-of-service regulations for truck drivers had a domino effect. By

limiting the average distance a truck driver can cover in a single day,

carriers found it more difficult to retain enough drivers to meet demand

and overall shipping capacity dropped. Additionally, the survey

respondents reported that more retailers are relying on manufacturers to

address the challenges of moving freight in today's environment.

 

"For CPG companies, responding to the needs of retail customers and

reducing costs are constant goals," said GMA Senior Director of Industry

Affairs, Karin Croft. "However, achieving these goals is more

challenging than ever as transportation costs continue to escalate."

 

Consumer products companies are addressing increased costs, reduced

shipping capacity and retailer concerns in a variety of ways, according

to the survey. Companies are shifting to different modes of

transportation where possible, better utilizing trailers, taking

advantage of continuous move opportunities and partnering with carriers

to secure year-round capacity.

 

"Current margin pressures are severe," said Karen Butner, associate

partner, IBM Institute for Business Value. "In an effort to improve

customer service and reduce costs, we see many consumer products

companies reducing the fixed costs and capital requirements of supply

chain operations and moving to a more variable cost structure that can

be controlled and managed 'on demand.'"

 

For the first time, The GMA 2005 Logistics Survey also asked respondents

about their compliance with information management initiatives,

including RFID and data synchronization. Executives participating in the

survey confirmed the following findings:

***********************

-- RFID is being fully implemented within only a small percentage of

consumer products companies, with the majority (69 percent)

investing only

 

enough to comply with retailer demands.

 

 

 

-- Ten percent of respondents stated that RFID was extremely effective in

meeting their business objectives.

 

 

 

-- Implementation of data synchronization continues to progress, with 52

percent of survey participants reporting a moderate to high level of

adoption.

 

********************************

Other issues addressed in the survey include:

-- How CPG companies are responding to increasing retailer demands for

customized packaging and/or specialized, floor-ready displays

 

 

 

-- To what extent manufacturers believe they have been affected by

Sarbanes-Oxley in the areas of trade promotion, freight payment,

inventory

control and customer invoice audits.

 

*****************

About the survey:

 

The GMA 2005 Logistics Survey captures significant trends and

establishes operational benchmarks in several areas of supply chain

logistics, including distribution and transportation practices,

outsourcing, information technology, and inventory management.

Thirty-two companies participated, representing a cross-section of GMA

member companies in the food and beverage (86 percent) and health and

beauty care sectors (14 percent). The survey has been conducted every

three years since 1993.

 

About GMA:

 

The Grocery Manufacturers Association (GMA) represents the world's

leading branded food, beverage and consumer products companies. Since

1908, GMA has been an advocate for its members on public policy issues

and has championed initiatives to increase industrywide productivity and

growth. GMA member companies employ more than 2.5 million workers in all

50 states and account for more than $680 billion in sales. The

association is led by a board of member company chief executives. For

more information, visit the GMA Web site at www.gmabrands.com.

 

About IBM Business Consulting Services:

 

With consultants and professional staff in more than 160 countries

globally, IBM Business Consulting Services is the world's largest

consulting services organization. IBM Business Consulting Services

provides clients with business process and industry expertise, a deep

understanding of technology solutions that address specific industry

issues and the ability to design, build and run those solutions in a way

that delivers bottom-line business value. For more information, visit

www.ibm.com/bcs.

 

Media Contacts:

 

Stephanie Childs

 

GMA

 

202-337-9400

 

schilds (AT) gmabrands (DOT) com

 

 

Linda Hanson

 

IBM

 

914-642-5447

 

hansonmu (AT) us (DOT) ibm.com