2. .
USDA Farm Resource Regions of the US Highest crop diversity is found in the Fruitful Rim and the Northern Crescent regions
Aguilar J, Gramig GG, Hendrickson JR, Archer DW, Forcella F, et al. (2015) Crop Species Diversity Changes in the United States: 1978–2012. PLoS ONE 10(8): e doi: /journal.pone

3. VOLUME MOVEMENT BY MODE 2007
OF ALL U.S. FREIGHT ORIGINATES, TERMINATES OR PASSES THROUGH THE CHICAGO REGION Source: CMAP
OVER
1/4
RAIL
BARGE
TRUCK
OF FREIGHT IS MOVED BY TRUCK IN THE CHICAGO REGION Source: CMAP
67%
232
BILLION
ANNUAL VALUE OF FOOD TRUCK FREIGHT THAT ORIGINATES, TERMINATES OR PASSES THROUGH THE CHICAGO REGION
Source: FAF, 2007

4. Chicago metro region has the largest concentration of food warehouse square footage in North America.

5. Concentration in the Chicago Grocery Industry
Aldi-148 total
Sav-a-Lot 20 total
405/506
2014: Dominick’s closes 72 stores
Mariano’s buys 11 locations (32 total)
Whole Foods buys 7 locations (25 total)
Jewel-Osco buys 9 locations (180 total)
28 vacant Dominick’s locations
2015: Kroger buys Roundy’s (Mariano’s parent company)

6. Key Question
How can we optimize freight movements for individual regional shippers to access the Chicago market?
After we met with Michelle the first time, this is what we came up with.

7. Freight Market Dynamics
106 Empty Miles
147 Loaded Miles
93 Empty Miles
145 Loaded Miles

8. Freight Market Dynamics
Lower price for shipper
Improved Asset Utilization
Load Consistency and/or Communication

10. CRE: Colton Drop Yard for LA region
Keys to Success
Freight market dynamics
Close relationship between customer and carrier
Operational efficiency
Initial Operational Structure
Decoupled short-haul (within LA congestion zone) and long-haul (>100 miles) fleet
Initially little coordination between fleets
Struggling utilization on line-haul fleet
New Operational Structure
Regional drop yard 55mi outside LA
Line fleet continuously moving, local fleet could wait at the docks
Local LA Market

11. Close Shipper/Carrier Relationship
15+ years of doing business
CRE had visibility to load data before any other carrier
Allowed CRE to prioritize capacity by selecting the best loads and delivery times
Pricing saved shipper hundreds of dollars per load off the market rate

12. Freight Market Dynamics
Contracted rate structure allowed for efficiencies gained in using drop yard
Communication between short-haul and long-haul fleets made it possible to know when to deliver loads and how to plan capacity
Ability to match demand for loads with capacity available in the market was possible with support from other business units
Rural leg savings greater than urban costs so carrier could pass the difference to shipper
Market Rate
$2.35 LA  Central Cal
Carrier Price Structure
Contracted rate per mile
Market Rate
$1.84 Central Cal  LA
Carrier Price Structure
Contracted rate per asset (e.g. fixed cost/truck/week)
Local LA Market

13. Operational Efficiency
Communication between short-haul and long-haul fleets to know when to deliver loads and how to plan capacity
Ability to match demand for loads with capacity available in the market through support from other business units

14. Regional Drop Yard: Chicago
Solves fragmented deliveries and congestion issues shippers and carriers face moving products into the Chicago marketplace; Issues which affect implementation include multiple carriers and scale issues that may increase cost barriers
Assumptions:
$600 base revenue/day
$2k Fixed cost per truck
10 trucks/wk, 260 pallets
No back haul – spot market rate
No amenities at drop yard
Different companies running urban & rural legs
No incentives to offset fixed asset costs
Fuel costs at current rates
Total Cost/Pallet with Regional Drop Yard: $60
Total Cost/Pallet without Regional Drop Yard: $45.50
Aggregation Point Cost/Pallet: $22.70
147 Loaded Miles
Transportation Cost/Pallet: $22.80
Regional Drop Yard Cost/Pallet: $0.27
Metro Mile Delivery Cost/Pallet: $14.23
Regional Wheeling Drop Yard
Final Delivery Point

15. Alternative Fuel: LNG & CNG
Fuel costs represent one part of the transportation expense equation but accounts for the most of the variable cost
Alternative fuel is attractive when diesel fuel prices are high

16. LNG & CNG: Current State

17. LNG & CNG: Future State