Hy-Vee Fuel Efficiency Employee Owned Company Founded in 1930 Corporate Office – West Des Moines $7.2 Billion in Sales Last Year 235 Stores Over 60,000.

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Presentation transcript:

Hy-Vee Fuel Efficiency

Employee Owned Company Founded in 1930 Corporate Office – West Des Moines $7.2 Billion in Sales Last Year 235 Stores Over 60,000 Employees Chariton Hy-Vee Distribution Centers –Chariton, Iowa –Cherokee, Iowa Subsidiary Distribution –Perishable Distributors of Iowa –Lomar Foods –Florist Distributing, Inc.

Hy-Vee Sales History

Approximately 250,000 Square Mile Trade Territory

Hy-Vee - Transportation

Asset Allocation TractorsTrailers Chariton 144 Cherokee 66 PDI 95 Total 305 Chariton 320 Cherokee 75 PDI 120 Total 515 Total Acquisition Cost: $60,000,000

Miles Driven Chariton18,285,110 Cherokee 5,322,490 PDI 7,463,503 Total Company31,071,103 Equivalent to 1,248 trips around the world every year.

Transportation CharitonCherokeePDITotal Outbound Loads45,60812,64122,89181,140 Outbound Tons Hauled723,122317,053280,0001,320,175 Backhauls21,6624,64211,76538,069 Contract Backhauls2,376NA2,0044,380 % of Loads with Backhaul or Contract53%37%60%52%

Effect of Fuel Cost on Truck Expense

Truck Expenses 26.7 Million 18.2 Million 6.1 Million 3.1 Million 3.7 Million 9.2 Million

Fuel Economy

Projected Savings Fuel Economy over 6.4 mpg

GOAL:To improve transportation efficiencies without disrupting service to our stores. Load Planning Backhauls Outside Freight Income DSD’s

Technology Tractor/Trailer Aerodynamics Tires – Super Singles & Fuel Efficient Duals Onboard Computers – People.net Fuel – Biodiesel & Propane Load Planning – Retalix Transportation Optimization (RTO) Dispatch Visibility – CAMS Tractor Specification

Aerodynamics

Trailer Aerodynamics

SUPER SINGLE TIRES Began in 2005 with 5 tractors & 5 trailers (40 tires); expanded to additional units Test results with super singles on tractor & trailer showed 0.12 to 0.32 mpg improvement in fuel economy Fuel economy shown with super singles was wiped out by reduced tire wear & driver satisfaction Currently phasing out super single tires & have gone to a fuel-efficient dual tire

Fuel-Efficient Duals

PeopleNet Onboard Computers

PeopleNet Reports Records MPG –By Driver –By Tractor Records Idle Time Driver Speeds Driver Activity Reports Bread Crumb Trail Fuel Tax

Fuel – Soy Biodiesel 18 month test 5% blend Adds lubricity to the engine to offset the ultra-low sulfur diesel 183,000 gallons purchased No impact on fuel economy Cleaner fuel system Cost Prohibitive – Adding Soy Biodiesel increased fuel cost by $0.09 per gallon

Benefits of Fuel – Propane Mixture Reducing fuel cost & increasing fuel economy Improved engine horsepower Receive approximately 75 HP boost with propane Extended service intervals – Use of propane reduces particulates caught in the particulate trap – Oil soot samples have been reduced Reduced greenhouse gas emissions Warranty is still valid

Propane Diesel Injection System A small amount of propane is mixed with the air intake prior to the introduction of the air to the engine (20% propane & 80% diesel).

Propane Diesel Injection System Why it is so beneficial…. The small amount of propane increases the combustion efficiency of the diesel burn producing more mpg and less emissions and enhanced performance. Propane Comparison Plain Diesel MilesGallonsMPGCost/GallonCost/Mile Diesel125,00020, $3.64$0.593 Total Cost/Mile$0.593 Diesel + Propane MilesGallonsMPGCost/GallonCost/Mile Diesel125,00017, $3.64$0.522 Propane125,0003, $1.31$0.034 Total Cost/Mile$0.557 Difference$0.036 per mile savings

Estimate Annual Savings 145 Tractors 18,000,000 miles driven per per per mile=$720,000 Estimated Cost to Purchase & Install Propane System on Entire Fleet 145 Tractorsx$1,800=$261,000 18,000 gallon tank and 2 pumps=$40,000 $301,000 AmeriGas Agreement Will Install 18,000 gallon tank and 2 pumps- $40, units x $1,000 rebate-$145,000 -$185,000 Hy-Vee Investment$116,000 ROI of Approximately 4 months

Routing Software was installed in 2010 Interfaced with our Warehouse Management System & Electronic Dispatch Provides Dynamic Routing Retalix Transportation Optimization - RTO

CAMS Dispatch Software Allows visibility between Distribution Centers Interfaces with our warehouse management system, routing software, & onboard technology (PeopleNet) Streamline payroll Dispatch loads to drivers Reporting & analyzing equipment usage Tracks backhauls Manages drivers time off Track average delivery weight & cube by store

New Tractor Technology 2011/2012 Volvo Tractor – 2010 EPA emission standards – Aerodynamic body style – I-Shift automatic transmission – Disk breaks reduce stopping distance – Have purchased 60 over the last two years – Averaging 6.8 mpg as a group – Most popular tractors we have purchased

Increase Freight Capacity Maximize Outbound Weight & Cube 81,140 Loads Contract Freight 4,380 Loads Backhaul Freight 38,069 Backhauled Direct Store Deliveries Included in backhaul freight

Contract Freight - Hormel Partnered with Hormel in 2004 Hy-Vee’s private fleet delivers to Hy-Vee stores in a 7 state area Hormel has several plants in this 7 state area Currently pick-up 2,400 loads per year Stores Plants Chariton & Cherokee DC’s

Backhauls Backhaul over 50% of our loads Reduce empty miles Deliver to subsidiaries Major Suppliers: – Kraft – Premium Water – American Bottling – Kimberly Clark – Quaker – Hormel – General Mills – Unilever – Nestle

Direct Store Deliveries – DSD’s 8.4% of backhauls are DSD’s Allows stores to make better deals with vendors – Kraft – Premium Water – American Bottling – Kimberly Clark – Quaker – Hy-Vee Lawn & Garden

Questions?