Good afternoon or good morning to those of you to the West. Welcome to the Talking Freight Seminar Series. My name is Jennifer Symoun and I will moderate today's seminar.
Today's topic is the Empty Miles Program – Matching Empty Containers with Available Freight.
Please be advised that today's seminar is being recorded. Today we'll have three presenters - Joe Andraski and Tony Galli of Voluntary Interindustry Commerce Solutions (VICS) Association and Steve Matheys of Schneider National.
Joe Andraski is the President and CEO of VICS (Voluntary Interindustry Commerce Solutions) Association. VICS was established in 1986 to provide a forum for parties to develop supply chain processes and technology that improve supply chain efficiency and effectiveness. Prior to joining VICS, Joe held several positions with Nabisco Foods, Inc. Those positions included Vice President of Supply Chain Management, Vice President of Customer Marketing, and Vice President of National Sales. He is considered to be among the retail industry thought leaders, and his work has been widely recognized.
Tony Galli is affiliated with VICS. He has been a management consultant for over ten years with a proven record of helping clients refine their business processes to improve their supply chains.
Prior to his consulting experience, Tony worked for Nabisco, Inc. (now a division of Kraft Foods) where he held senior positions in finance, strategic planning, supply chain management, and sales operations.
At Nabisco, Tony was a chief architect of various customer service measurement processes (scorecards), internal and external benchmarking, and highly detailed customer profitability systems.
Steve Matheys is executive vice president, chief administration officer for Schneider National Inc., a premier provider of transportation, logistics and intermodal services.
In this position he is responsible for strengthening Schneider's workforce development initiatives, leading the corporate procurement team and delivering the company's Asian business plan. Additionally, Mr. Matheys leads Schneider National's sustainability strategy and efforts. He also serves on the Voluntary Interindustry Commerce Standards (VICS) board of directors
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You can go there and allow your credit for the seminar. This seminar should be listed as well. We will now go ahead and get started. Today's topic for those who just joined us,
Empty Miles Program -- Matching Empty Containers With Available Freight. Presentation will be given jointly by Joe Andraski and Tony Galli and Steve Matheys. As a reminder, if you would have questions during the presentation,
type them into the chat box. They will be answered in the last 30 minutes of the seminar. With that, I will burn up the presentation. You can go ahead and begin.
Thank you very much, Jennifer. Hello, everybody.
It is our pleasure today to talk to you about the empty miles initiative, driving, savings, and curbing emissions. This program is about to match years old -- two years old.
We were looking to solve the empty miles problem, which was really identified to us by a major retailer who had a strategy planning section on transportation. There was up to some 25,002 miles a year to run. Often very expensive
and not only to reduce the transportation costs, but as we move more toward the environment -- issues around the environment, it was something we identified as a great opportunity to be able to meet during goals
and look for differentiation between companies and their competition. Steve is going to give an overview of the case study and provide [ inaudible ] program benefits.
The cost of fuel and truck operations, as you know, are escalating in have been contributing into the sawfly chain costs. Stephen back-to-back a few years ago -- Steve and I go back a few years ago.
I think we stole the first storm from something else, but the perfect storm back to then was the problems companies were having with drivers.
It was a lack of drivers interested in spending a week or more on the road. They were looking for more routes that would keep them home. Consequently, transportation companies were having a difficult time.
We could also look down this road at the environment, the cost of fuel, which we sought escalating. That was long before we got to the $150 per barrel cost.
The emphasis got to be on how we could better use the transportation resources that we have available to us along with all the EDI Transportation sets being used. "or able to do with the cooperation of GS1 Canada and U.
S. was -- gave companies the ability to reduce costs. We know many companies have established senior executives and the sustainability area. Emission reduction is a key plank in most companies' strategies.
We identified and understood that and are looking for ways to be to improve the entire month of practices -- improve the environmental practices.
VICS is an organization that represents companies.
Our members are somewhere in the two. $3 million -- $2.3 million.
They are able to use the VICS process these to be able to build their businesses, become more efficient.
So, transportation is a key area. Most companies transportation is the range of 70 per cent of their logistics costs. In some cases, it is even more than that. So, the mission is to take local leadership role
and the development of business guidelines and specifications. That really happens put the retailers, suppliers, companies such -- companies have a definite interest in Some of you may recognize this as a uniform co-counsel.
On the other side of it, which was EAN. Everything outside of the United States, which was the States, which was the organization developed and used the bar codes for identification of products within the supply chain.
Let's get back to empty miles. The solution is low-cost collaborative solution. Tony, I would like you just to speak about this first point in terms of what we have seen from the companies that have begun to subscribe to empty miles. Tony?
Did we lose Tony?
Well, while he is getting hooked up, it is a web based service two carry ability. It is empty miles with transportation demand. It is delivered through Members only Internet portal. Members only, meaning,
not necessarily a member of VICS but a company that would subscribe to this service.
The idea is to subscribe to this service. You can decide several alternatives.
One would be to post empty miles that are currently being operated, and there is a potential of finding loads for those empty miles.
The others that some companies are doing are loading their entire route in guide into the system so it is an opportunity for companies to be able to identify a particular lane that may be attractive. To be clear,
this is not a load posting board that you might find in a truck stop. We, certainly, are not encouraging that as a business model at all. We are looking for companies that can establish some where between six month and a year relationship.
Once they get together and identify the movement of the product and the various operating guidelines, Pacific is something that would occur on an ongoing basis without having to be constantly renegotiated with every load.
The tool set is comprised of a collaborative process use.
I cannot underestimate the benefits of the benefits council letter. What that the potential gains you have dancing in the production of emissions. Let's go back to the legal agreement templates.
Early on there was an awful lot of work that went into developing the legal templates between companies that have engaged in the use of the of portal. In that particular case,
we had one company that spent maybe two months coming to an agreement of what it was from the legal aspect. "we were able to do is take that information and build into a standard way of going about the development of the legal agreements,
which makes it far less complex than what we had seen earlier on. This is information exchange capability for a few miles subscribers delivered through the portal powered by GS1 North America.
That is a combination of the work that GS1 Canada and U.S. are doing.
This is Tony. Apparently, my line was not opened up, so I dialed back in.
Great, Tony. I am on page five.
Do you have any comments you would like to make about what we have seen or learned as we have been implementing empty miles or we have seen companies implement and 2 miles?
Thank you for the opportunity to speak up on this. What we found was that the system evolved as we brought on members. For example, Joe indicated earlier on in the conversation that Schneider National
and a few other companies like Macy's and J.C. Penney were early adopters. As they started to from a rise themselves with the system, we realize there would be enhancements that would be required. For instance,
to facilitate the input of empty lanes or power lines, as we refer to them in the system. We set up that process where they could be entered in a mass load. That was a wave of the enhancements that helped productivity quite a bit.
We're just about to release the second wave of the enhancements that will even further increase the visibility of the lanes. In fact,
what we are looking at is setting up visibility of not just the empty lanes but also the shipper product move dirt lanes. Like I said, it is through this evolutionary process
and advisory team conference call that we want to do what a routine basis that we have been able to let the system grow with us.
Thanks, Tony. I just want to emphasize also that what we have here is the information, experience, and willingness to share on the part of industry experts. Individuals
and companies that are experts in the movement of freight understand the transportation network very, very well, understand the value of reducing empty miles. Our advisory group, which Steve Matheys plays a big role in,
helps us to make the necessary changes so that empty miles is able to provide information easily accessible that has value added.
We also want to comment that everything you see here has been looked at from the standpoint of adding value.
The value in terms of measurable reduction in transportation costs on one end, and the important aspect of being able to reduce the amount of CO2 Mac emissions on the other. The other aspect which we have not talked about,
which if we are successful and we continue to see these growth, as we are successful in taking equipment off the road, the contribution toward Pike gridlock congestion on the Hyde, Kiowas --
and they all know that a highway infrastructure is in need of repair. Going back, it was built by the end of the days of President Eisenhower. We have a lot of work to do to get it up to speed.
If we can reduce the amount of miles traveled by trucks that are not fall, there is going to be contribution. As this grows, we see great opportunity. I also want to point out that we do not really have a beginning and end point.
It is our intention to make this service available to our members and two others for the foreseeable future so it can be built in as a permanent part of doing business. Let me move to my next slide.
This just gives you some progress to date. Tony, why don't you take this.
Sure. Thank you, Joe. As Joe talked about in the beginning, the perfect storm, it was really one of the first meetings. This idea was conceived.
That goes back as far as the third fourth quarter of 2007.
Throughout 2008, we started to develop the system. We had a few prototypes along the way. We did a little piloting here and there and looked at it very one-to-one just to get the concept. Can the empty land be searched and found by others?
What is the best way to make those lanes available so enough information is out there so the link can be identified but yet not so much information is out there that there are security issues.
We were very conscious about the fact that an amenity was important to the poster of the lanes. We refer to that party as the owner of the lane. But in the empty mile system,
you never know owns the lane until you make contact with that person anonymously in. When a reply back to you, that is when you learn the identity.
I think we have accomplished a good bit of what was a concern. It kicked off in earnest in 2009. The first or second quarter or so, we started out with for the full 17th of false the buffs.
If that for the efforts of those earliest adopters and the continual working the system the empty miles portal would never have gotten off the ground. Once some of the initial successes were seen by Schneider and Macy's,
they were very aggressive at getting their Business Partners to take a look at empty miles. Fortunately, a number of others followed suit by adjourning.
We quickly ramped up to about 25 or 30 subscribers by mid year.
We ended the year with about 40 or so subscribers. Still a long way to go, but it has been this grass-roots attention and effort that has helped us get the word across. We are very thankful, actually,
for this opportunity to draw attention to the system I touched a little bit earlier on this technical enhancements that will bring about greater visibility to the empty miles portal. As a shipper, for example,
if they want their entire network or select grouping of lanes to be visible to others in the system, we have set up the capability to do that. It was a function of listening to our subscribers, hoping that the system could grow and do it.
We have been able to make a good deal of that happen over the past nine or ten months or so.
Thank you, Tony. I would also like to mention for anyone interested, we have a webinars that we have done. We have training that we can help you with. By merely contacting us, we would be more than happy to take you through the webinar
or answer your questions to do any training that would be necessary for you to better understand what has been put together and how it could be best used by your company or trading partners. Let me move on.
We are really talking about the sustainability movement where we are really taking action. We see Wal-Mart, No. three ranked private fleet operator working with suppliers to reduce the one of packaging the use.
More goods in the same truck, fewer shipments and lower fuel usage. I can think back to Christmas where they eliminated something in the range of 30
or 40 containers of a particular product that they have redesigned the finished goods packaging, so they were able to get more finished goods into fewer containers to be able to move products to the United States. Again,
it was a very important sustainability activity.
Kraft is testing technology to reduce fuel consumption, including replacing 25% of their tractors with cleaner-burning engines and auxiliaries. DuPont is not on this side,
but they are looking strongly into the whole area of of how they can do a better job of reducing the amount of CO2 emissions. We see her real are taking action. We have the IBM energy blueprint. We're looking at intelligent systems.
Somewhere down the road, and we're not that far away from it, that we are going to have products. And this has also turned up in IBM Research. Products are one to tell us where they are at without being inquired. By the technology,
products are going to tell us where they are at, how they got their, and of course the whole subject of a tree's ability and sustainability and product safety is high on the list of all companies today.
If you look at transportation systems where we have a circle of around transportation usage, reduce transportation congestion, reduce CO2 emissions coming increase mass transit usage, reduce energy uses, improve the environment.
Someone asked me the other day, do I see this is going to have competition let's stay with the movement of containers on a slide part? I really don't see that happening at all. There are certainly plenty of opportunities here.
We did some work a couple months ago, found out from a private truck Council that that bombing they estimate some 25% of trucks on the road are empty. I mentioned early on about the retailer going 25,000,002 miles a year.
Their objective was not to empty the 25 million miles. They were looking to take out some ten or 15%, which would give them a substantial opportunity to be able to reduce their costs. In their program and their strategic plan,
sustainability plays a key role. They want to go back to their board, go back to their partners and Community to explain what they have been able to do to contribute to the environment.
I will not go through each of these items. There is a significant amount of interest taken place in each of these areas. We think entity, and the miles will play a big -- empty miles will play a bigger role.
These are six points lie empty miles are different. Tony, I will ask you to take over the last three.
30% of subscribers of VICS and Tim Miles was listed in the top 500 grain companies. We were pretty and test with that. 75% of the top 20 prospects are in the top 500. We have the Macy Schneider case study,
which validates the program success. We were proud of the active role that Macy's has taken in the very active role that Schneider has taken. Both of these companies are experts in logistics' management. Because of their expertise,
they could see that this program has led. It has magic. They want to get behind it, and they have. Of course,
we are very proud of is that we have been endorsed by environmental protection agencies smart ways program where 55% of our antimissile subscribers are transport certified. If you're not familiar with smart way,
I suggest you call upon -- search for smart way. I will pick up on it and find that they are completely committed to efficient and effective transportation
and management that takes advantage of every opportunity to reduce the amount of CO2 emissions. They have endorsed the work that we have done in empty miles. Tony.
Thank you. Joe eluded a little bit earlier about the fact that our highway system is feeling the crunch, if you will, of the traffic and congestion death of our highways. In her ticket, that causes -- in particular,
that caused by a tractor trailers. It is considered the average pounds that the tractor trailer weighs out there. It is an awful burden on highway systems that administration. We look at addressing some of the pending government action.
For example, cap and trade. [ indiscernible ] is in the house floor vote. If that makes its way into law, we will be required as business is to thoroughly understand our carbon footprint.
We will have a limit assigned to us that if exceeded will cost businesses additional tax dollars. If it can be contained, what it will enable businesses to trade a new form of currency. Understanding your footprint is a big piece of it.
We believe empty miles will offer a great currency, if you will, for delivering savings and reducing your carbon footprint.
As we've talked a little bit about GS1 and U.S., GS1 Canada, and VICS, the common thing is they are all non for We take nothing from the middle of that Steve, maybe will cover this,
but maybe what we need to talk about is that in every case everybody benefits. The company that has identified the empty miles, the transportation company that had been moving trucks empty,
the shipper that had been paying for that empty miles is part of the contract price. It is really a win, win, win for the companies engaged in this initiative. I think it is something that we will touch on perhaps a little bit more. So,
empty miles is really a quick win. Tony, this is your slide.
Why don't you talk to this?
Folks like this slide has helped me contains a number of North subscribers to join us. It lane is not a lane of travel in a highway. It is in origin destination pair. Thank you cities -- imagine looking in the empty miles system
and looking to find one lane that someone has posted as being routinely empty.
Let's assume it is a 500-mile lane. You are able to occupy or utilize that lane with your own product shipments. Let's just assume, as I said, it is 500 miles.
You have been able to use that because I talked about the strategic nature of the empty miles system. You are able to use that for one year. That will eliminate 41 tons of CO2 from the environment.
For anyone that cannot visualize what a ton of CO2 looks like, the picture on the right, that alone next to the double decker bus is 1 ton.
Roughly double the size of a double decker bus is what a ton of CO2 would look like in the environment.
Now we are talking about 41 of those. Diesel fuel. 3700 gallons in that example that I just described of diesel are saved. Tractor-trailers' are getting about 7 miles per gallon. That equates to at $2.70 per gallon,
which I know is a low price compared to what the rates would like today, that is a savings of $10,000. I did not take into account the wear and tear on the vehicle, nor did I take into account the labor savings.
That is just strictly to the amount of diesel fuel that has not been consumed and emitted into the environment. Based on some statistics I was able to find, there are about 9 gallons of diesel produced for every 45-gallon barrel of oil.
That equates to roughly 20 barrels of oil not needed to be purchased from our partners out there, or as I use the term loosely at least, are mid East partners where we are now protesting already about two thirds of our needs.
Imagine being able to cut that down just in the one lane by 20 barrels. It is pretty significant.
I had done a little bit of background information and research on a major grocer. I looked at their corporate responsibility page.
I saw that there are making strides to increase the amount of corrugated recycling that goes through their stores as suppliers ship products into this, the stores.
The chain talk about how much more they were going to focus on recycling that material.
They also talk about a program where they were going to accept plastic bags from their customers and offer them a rebate.
When I compared that program that they have on their corporate social responsibility page to what they could do with just matching one empty mile lane, they were blown away, because the numbers were just so much larger
and the potential was a much greater than what they had already published on there website as their part for the environment. The potential is just huge. That is our mission today to try to get that word out.
I think you've done a really fine job of exploiting the opportunities.
I think the two examples you have given certain made the case for action. We are not going to spend a lot of time, because I think we're about out of time. However, if your interested in spending more time, please get in touch and thus.
Todd would be happy to take you through it in as much detail or level of detail that you would like to talk about I think what it can do is help you understand the reduction of CO2 emissions in terms of kilograms or pounds
or in metric tons. This is a pretty dynamic tool that you can use to help identify those opportunities.
This is -- the next slide is the empty miles participation. We have just chosen a few of the companies that have signed. You can see these are many of the leading companies either in retail or service.
Some of taken this into -- some have taken this into their strategic plan to be able to offer to their customers in the case of a couple of the transportation providers an opportunity to be able to substantially reduce their costs while
they themselves may not benefit directly, but it would be an offer to be able to be more holistic in their service offerings. We find that empty miles right now we have over 40 participants. We have a couple that just came in yesterday,
which we are excited about. We have been endorsed by the Council of supply chain management professor else, between eight and 9,000 members.
I don't know what the numbers are now, but it is greater than 2500 live posted lanes. Of course, we're very happy with the National retail Federation who is in force us.
I have already that -- I have already mentioned that a smart way is a supporter of VICS and the miles. Publicity is growing. We found ourselves being written up in a number of articles. If you go to the supply chain Management Review,
there is a very interesting article that they have posted about empty miles. I think we have been up there twice in the last couple months. We're now getting more and more speaking opportunities where people are asking us to come
and talk about anti miles because there is a high level of interest now I am going to turn us over to my dear friend, Steve Matheys, executive vice president and chief administrative officer for Schneider.
He is one to talk to the National case study. Steve, it is all yours.
Thank you, Joe and Tony for that good set up. Good morning to some of you, good afternoon to others. Again, I am Steve Matheys.
I work for Schneider National. Schneider National is celebrating the 75th anniversary this year of business.
One of the largest, most diversified transportation logistics companies in the marketplace. We have been safely moving for 75 years. Again, the thing that is important to understand as our company has evolved in today's market,
we're moving on average, give or take, somewhere around 5.5 million miles a day on our trucks. Things like empty miles and other things could become a critical aspect of our business.
I have the honor today of walking through the case study. I will do that rather quickly. Macy's wanted to be with us, but they have a couple of conflicts. They could not be here, so I will speak to some of the things that they have seen.
Joe and Tony did not mention this, but the case study is available with talk sheets through the VICS website if you have an interest in reading that further. If you try to think about, so, what did we do here? What is it that happened?
I guess what I would like to suggest is that what I would define as fairly progressive companies, Macy's who everyone knows as a premier provider of retail apparel to the industry, and Schneider who I've just talked about a little bit.
What we did was decided to join forces to go about trying to solve the problem that has, basically, been here forever. Many questions that I have taken over the last year plus our people are wondering, are you solving a different problem?
Really, the answer is, no. This problem has been around for a long time. We think we are trying to solve it in a different way. Hopefully, we will kind of articulate that in the course of our discussion here today.
What the solution really is about is trying to find a solution to the problem that creates Mutual Value, which is critical to this been working. It is also about the taking out cost and also addressing environmental concerns.
We are doing that in what I would define as a durable manner. In other words, as been mentioned by Tony and Joe, this is not about a posting. It is not about trying to fill the truck tomorrow.
This is about trying to find areas within networks where there are gaps, and those gaps are somewhat repeatable. There is a commitment between two companies to solve that. In the Macy's/snyder, the Schneider case,
I have just put in the results that occurred. A lane is an origin destination. So, Dallas to Chicago or seven like that. And the savings on one particular lane in the course of a year can be quite significant as is outlined there.
I will apologize. I believe the 150 tons is actually defined as a round trip and as you will see on the next page, the savings on once in bouquet one is more in the range of 60 tons. In either case,
it click dramatic -- it is quite dramatic. The benefits are real and substantial. These are things that are quantifiable. They are laudable, if you would like to look at it that way. And they are not intangible. They are not subjective.
When you solve these problems, it has real bottom-line results.
The areas we were able to see our sustainability, and Joe has talked about the significance of that. It creates an opportunity for increased revenue. It allows you to decrease your costs. It is kind of good when you can do both.
It creates an opportunity for business that you may have not had before. And it truly does strive enhanced satisfaction, which is always a good thing for creating additional market opportunities down the road. As I stated before,
and as Joe stated, we measure what the actual improvements are.
The solutions we have put in with Macy's are in the range of saving 60 tons of carbon dioxide, 147 tons of [ indiscernible ]. Particulate is the set that comes out of the stack of a truck.
The nitrous oxide is the after effect of the burn of a fuel. Nitrous backside is an attitude that does not burn cleaner. Both of those are not good things to be discharging into the air. And the gallon savings, as you can see,
are certainly significant.
Joe showed you the cost per gallon and kind of calculated that.
Macy's is also confident that they have seen similar types of improvements. They have not necessarily put for [ inaudible ] savings plan together, but they're planning to do that going forward.
What is also interesting is that when you are involved and ask for it to the soft for Rob -- additional opportunities for revenue.
Every mile you can put on there that has revenue opportunity. And cost Misti's experienced 30 additional back haul loads a week. In what is interested -- what is interesting is you can make a lot of money on the fringe.
You do not have to solve 90% of the problem to see substantial bottom-line results. I really believe that is what has occurred in this particular situation.
The other thing that is interesting is not only do you create an opportunity for the fourth potential relationships, but through this process of hosting and matching, in almost acts as a surrogate for a sales process.
It can lead you to Macy's has been very, very out in the marketplace and public about their commitment to sustainability.
Macy's is also one to take the lead on many thousands. They have been very aggressive in urging their suppliers to get involved in empty miles. Some degree of volume. It is important to get people involved.
They certainly work dutifully to get that to happen.
Macy's has also been wonderful to work with in that they are very open to where the opportunistic. The thing about is that there are not a lot of emissions. If you start carving things that are eligible or not eligible,
you'll start to reduce the solutions that. That can make it difficult to find things.
What Macy's would have told you if they were here , they found 44 additional lane opportunities were there company can directly benefit. I think their story is pretty clear and certainly pretty profound. From our perspective,
we sought as a similar opportunity.
This has not been mentioned, but the design of empty miles in the original intent was to go after private fleet empty miles, which means that if a shipper, manufacture, however, had their own trucks,
they would be a candidate for these types of services because their trucks tend to run empty. As Joe stated, the National truck Council would indicate that number is somewhere in excess of 25%.
It was also designed for carriers to run their own dedicated fleet so they are specifically networked to go from one point to another to another and then back. That was really the intriguing part on our part.
The other thing is that the problem is not a new problem, as I stated earlier, but the solutions have never really had this concept of durability.
The things that people have done with boards and things like that, they tend to be more [ indiscernible ] in the transaction in nature. The DOT -- the design of this was about parties willing to engage in this work
and making sure that what they were going to come up with was going to create benefits but it was something that would be durable and something people would commit to
and contact for once they find the solutions so you could kind of rely upon the solution both as the shipper and the carrier, which creates kind of this long-term values stream as opposed to the individual streams.
The nature of finding the solutions requires some work, so it is not a technological thing that just the push a button solves a problem.
This is about letting people through opportunities and having participants decide that this is laudable enough to get the benefits we just articulated.
Here is a quote from a person at Schneider. This individual actually spends they're entitled they trying to fill empty miles along our highway infrastructure.
You will see that the bottom line from our perspective is that the empty miles solution is good for the economy, good for the environment. It is also good for business. In this case, it is good for Macy's business.
What does success look like? I've tried to come up with how I would summarize this for you. You know, two companies with a common objective is pretty important. You've got to be committed to drive out the waste. As I said before,
it requires some work. You have to look to find solutions that create value on both sides of the spectrum. You know, you want both parties to be winning. I believe empty miles set up both parties, if not more.
Sometimes it is a three party relationship. But it is a solution that allows all people to win. There will be obstacles. There have been obstacles.
Joe alluded to some when he talked about putting together some contractual frameworks. The people that have been successful in this program so far have had a committed set of leaders that helped the teams get through the obstacles.
It is not that there won't be some. And I would only clothes that by saying,
those that have been the most successful seem to be the folks that have the strongest belief that there are better ways to do things than running a large part of the nation's trucking capacity at 25% empty.
And I think people will believe in that are finding ways to get to a better solution. The great about it is it doesn't take much to get going. You can log on to the VICS website through the webinar referenced earlier.
You can log onto the empty miles system itself. Within that system are a set of frequently asked questions and some video self-paced tools to help people get oriented to what it is.
There is a nominal fee that is charged for members of VICS and trading partners, remembering that this is not a software company or a company trying to make this their marquee money-making product.
This is about trying to solve an industry issue through the collaboration of folks who want to make a difference in this particular area. You get that stuff started, then you start posting your capacity,
start searching for additional capacity and you get savings. Tony mentioned there will be a new release in March that will enhance some of the capabilities.
Certainly, all of us involved are excited about that. Really, that kind of brings us to the the question and answer session.
I appreciate the opportunity of sharing some of my thoughts on behalf of Macy's and Schneider and some of the things we have seen from the case study perspective.
It looks like we got done seven minutes early, so we are kind of like the on-time machine here. I will turn it back to Jennifer to facilitate.
Thank you to those of you who posted questions. I am going to start with the questions that were typed in. Once we get through those, we will open the phone lines.
Feel free to continue typing in questions as we go. The first question is, what proportion of industry users VICS, and what does it cost to subscribe which I think you've covered that.
This is Tony, by the way. If the question was specific to empty miles, our subscription fees, which are listed here as VICS member fees of 1600 and 1854 non- VICS members. That is just to enjoy the service.
We would love to have you think about becoming members of the VICS Association as well. With that, you will get the opportunity to work in and among our committee efforts, which helped to drive many other deficiencies in the industry.
Okay. Let's see. The next question is, is a similar concept used for shipping containers?
I can take that question. I think that the answer is the similar concept can be used for shipping containers.
I am not exactly sure of the context, but sometimes we have our domestic containers that move intermodal league, so they tend to stay away and locked.
The initial intent of this is that it wasn't necessarily to be used for containers that go on a train, but there is no reason why somewhere in the future that that capability could be leveraged for that.
There is nothing that would preclude that. However, if some players on the market place keep the containers and actually run them behind trucks, and in that particular configuration,
there would not be any reason why folks couldn't use that. If the question is tied to domestic containers, that is how I would see the empty miles of service plate.
Okay. The next question is, can you clarify in what fashion smartly endorses VICS? Smartly endorses empty miles and verifies a certain things, but does not endorse products and services.
Are you a smart way affiliate partner?
I can take that. This is Tony. We are affiliated with a smart way transport component of smartly -- smartly. I think what we actually sat on a slide is that VICS is a proud supporter of the smart way.
They have taken a look at our program and think that it offers a very foundational and yet unique opportunity for companies to save both dollars and more significantly reduce the impact on the environment.
Let me chime in here. If you are interested, whoever asks the question, I think you will want to get in touch with body politic. He is with smart way. I spoke at a conference in Dallas a couple years ago, at body and the team were there.
I talked about empty miles as well as a couple other initiatives. There was immediate interest in the opportunity that was being presented by empty miles. We have been working with body and the smart way team for some time now.
I would really invite you to give K. for a call. He would be happy to talk to you and tell you why they see this as an opportunity and why they see empty miles as importance to their membership.
Can be [ indiscernible ] portion of Intermodal be addressed?
I can take that one. I just want to articulate that the nature of the solution was originally intended to be around private fleet optimization captive capacity within a shipper or carrier dedicated type of operation,
which is when they put their trucks against a specific set of freight on behalf of the customer. The reason we did that is because we wanted to make sure that the capacity was actually there in those markets on a regular basis.
In other words, when you look at how freight moves in this marketplace, it can have a random -- you know,
the service providers can have a random network configuration where their trucks are not always in the same markets every single day during the same thing.
I ensure that -- I share that with you because this is a very interesting component in that it is not thought of as being dedicated capacity, but it typically spends all of its time going from ramp to customer, maybe another customer,
back to ramp.
So, there would be no reason why the opportunity to try to find back hall for that configuration wouldn't be something that could be advantageous. Of course, in the model of empty miles,
what it would mean the -- you would find a shipper that would have a return call and take you from somewhere close to your original company back to your ramp. It is the degree that you couldn't do that to find those within empty miles,
that would be a very successful win-win type situation.
Okay. Next question is, based on the Schneider experience, has this program found success in traditional backhaul ways?
Yeah. It absolutely has. I am not exactly sure if I understand traditional backhaul, but if I just share a little bit more of the story from Schneider's perspective.
I am a carrier. I am almost responding more about carriers in general. We do some business with dedicated capacity. In the solution with Macy's,
it was another customer dedicated capacity that had the empty lame that Macy's had a set of loads that were perfect for.
I think what is helpful about understanding this for some is that I run that lane empty five days a week.
Macy's had loads on three of those days.
That doesn't make a perfect fit, but it was a lot better than what I was doing. It was for someone that wasn't in the apparel business. They are a different vertical market in the industry, but we were able to layer that in their.
Continue to meet the original customers dedicated needs and be able to drive the costs. From my definition of what a traditional Lane would be, I would call that a traditional backhaul. Very much so, it has been able to help.
Could you explain how a three-way benefit occurs for the people that are involved in that particular situation?
Picture I answer it correctly, Joe.
What would be the benefit to Schneider's, Macy's, and a third party?
What would happen is the other third-party -- and I will give you examples. There is just a lot of different ways to do this. The other third-party might be on some type of revenue share on the empty. They may sign a deal that says,
if you are able to fill that lane, we get 30% and you get 70 percent of it. In that case, you would have the original shipper who is in essence paying for the entire dedicated route. They have something in there that says,
if we can fill that, he gets to reduce its costs. I get a kicker because I am covering some of my additional costs. Macy's gets the benefit of the fact that it will all U2 maybe possibly price more effectively in the marketplace.
They get a reduced cost for their freight on the capacity that is already on the lane. That would be an example where three people win by solving one empty lame issue.
This is Joe. In my view, that is how unique this opportunity is. With creative opportunities and creative minds, you've got a three-way win, which is really difficult to achieve in today's business world. Once you put it in place,
it is something -- Steve, I would ask you to comment on this. Once it's put in place, you don't really see the type of operational problems that you might expect safe or a bad winter storm. In terms of the loading windows
or unloading windows or the amount of labor and such that goes into it, if you could just comment on that a little bit.
To me Joe used the word magic early on or around the magic of the system. To me the magic comes where the operational aspects of this are upfront, dealt with, and committed to by the parties who want to engage in this.
If the value that can be derived is significant enough so that folks go, here is what I am going to do to make this voting window work.
For those of you that may not be as close to some of this, if you have a truck that is coming into a market that is available at 11 but the shipper is saying that my freight is going to be available at 2:00. Theoretically,
my shipper has to sit for three hours. That is wasted time. He is on the clock.
He may not have enough hours to run that load. That load might traditionally look like, I cannot solve the problem. However, if the shipper is willing to move the window up to 11:00 if they can adjust something,
then they get the benefit of loading my driver right on top of his hours. We can move him without sitting him. All of a sudden, I can have a better solution and more cost effective solution for that particular configuration.
That is what everybody wants. The idea behind this thing, and I used the word to rubble. Everyone is committing to make that happen and make their end of the transaction work. So,
you don't have any breakdowns in which people make that commitment.
Then this thing can kind of work in an [ inaudible ] fashion in the marketplace.
Again, going back to part of the magic here. The opportunities to save money are substantial.
We encourage companies to take the steps to get that truck loaded to make sure they don't create a situation where it is not advantageous for the transportation companies, for example.
And being involved in another industry in the past where we've attempted many times to make backhaul work, it never really did what it should have done because there was always issues around operating guidelines,
rocked the transportation that was being made in what have you. In effect, it never really did do what it should've been able to do. This is a totally different and unique opportunity.
What obstacles did you run into in implementing the program?
I guess that is directed at me.
I guess what is interesting about this is probably the most significant obstacles were historical perspective was the number one obstacle. A lot of what we ran into was people involved in the transaction
or involved in trying to solve the [ inaudible ]. It always sounds good but it never works. They don't say -- to stay committed to solving the problem. Because this is not a problem that just popped up in recent times,
because it has been around -- for folks who have been in transportation, it has probably been around since you've started. You get a lot of folks that go, been there, done that. Try to solve this. There's nothing magical about this.
They try to equate it to something else they would typically know. They just go, that is just the same thing that XYZ did or somebody else did or we try to do this 10 years ago.
But the obstacle was more about getting people through maybe what I would call the emotional side of the leaving this can solve the problem.
Once we got through that, the obstacles that you might expect to run into a technical issues or contractual issues or operational issues from our experience, especially as it relates to Macy's, where less significant than just getting
and moving it.
That is what I was alluding to.
That is what I was alluding to .
If I could just hitchhike on base all of it. This has a lot to do with two broad areas. One is change management and the other is collaboration.
What we have seen in practically every new initiative is that -- new initiative that has been brought up by the VICS organization is the resistance to change.
Companies really need to understand that change is probably one of the most prevalent barriers that they've got to manage. Therefore, what we are now introducing is another way to manage transportation. In many cases,
you find that companies have approved it a way of managing transportation begin to exist -- resist it. The other is collaboration.
There are not many companies today that are going to be successful ultimately because they are operating in a silo. That can be looked at in a number of different ways. In this empty mild initiative, it really is bringing together two
or more entities that work together in a collaborative way that would enjoy substantial benefits. That is what we have to make sure that companies understand.
This isn't just about the technology. You've got to be able to drop in and understand that you have to change what you are doing. As one of our subscribers has made it very clear to us, that is it his all ought about sweat equity.
The information may be there, but you've got to reach out to the opportunity that exists to flush it out and be able to move forward to make it happen. That is what kind of organization companies have. Is it one that is amenable to change?
Or is it a company that has a particular way of doing business and takes a different approach.
This is Tony. I will just mention something that comes to mind for me.
Those subscribers that sign on and said, well, I put in a couple lane plebs and the phone number never rang. One of our subscribers from JCPenney's said it best. This requires what activity. It really requires working the system,
digging deeper than what you just might see on the surface. Steve talked about this earlier. You will get an opportunity, boy, this is off by two hours and it won't work.
Steve also talked about making some compromises that ultimately resulted in the lane working. Empty miles is a low cost investment, but it does require a commitment.
Those companies that have put in that sweat equity have been the ones who realize the benefits from it.
Is very similar concept for shipping ocean containers internationally?
If not, are there any plans to do this in the future?
I think you just asked that question earlier.
We were dealing with the container thing. Maybe just to close on that, I think what you're talking about here is international. This is the container that originates in Hong Kong or Shanghai and is destined for Chicago.
I would say that -- and a jolt you can take over here. But I would say that the design of the system isn't necessarily intended to address that issue.
I would also tell you that kind of one of the things that somewhat is in the background here is that the system is looking for -- it is trying to balance demand and capacity. So, your trucks in the freight.
The international freight problem is still a pretty significantly in balanced,-- depending on where you are. Well, the imports -- the exports are far superior. There is a lot of containers. That is probably the reason for the question.
There are a lot of containers that go empty, but if there is no free to put on them, empty miles is not necessarily going to find it. There is a concept about balancing that is really critical. Whether
or not you would think of being able to do something in that area in the future is something that could be looked at.
In audible by the VICS membership. As the VICS membership moves down, it will boost the benefits of empty miles.
Then they begin to look at the opportunity to do a better job with managing ocean freight. We have an affiliate in Beijing Asia-Pacific that is deeply [ inaudible ]
and 10,000 companies that are members that Schneider realizes that low-cost labor is no longer competitive advantage.
They are very interested in working with us and with the VICS organization to do a much better job of managing [ indiscernible ].
That is part of what we are seeing here is this opportunity to demonstrate that something like empty miles works. From that, we can go into other areas that become apparent to the subject matter experts which are all were VICS members.
Okay. Next was a news, you touched on legal concerns. You've seen participants in the program and input perceived on the subject. Do you provide template agreements or does each partner resolve this in their own way?
I will try this and Tony you can jump in Steve also. Think what we have is a template that companies can refer to. I certainly wouldn't put myself I'll -- put myself out to be able to represent the legal entities for each of the companies.
They might have a totally different view. We can give you a start, and from there you can take it to your own legal department to be able to identify these.
Steve, would you like to comment?
I think it is a great question.
The reason why we put together one -- one of the reasons why we put together a legal template, a contractual template to help the process, is that in this industry if you are a carrier
and there is a shipper that wants to create a relationship, the idea of contracting for that relationship is very common. It happens all the time, the shipper with the carrier.
The carrier understands the nuances.
What kind of insurance they want to have, what kind of indemnification.
What we found is that this solution can work from shipper to shipper.
If you are a shipper with a privately, you may want to work directly with another shipper and try to solve your empty miles issue shipper to shipper. Well, the shippers have not necessarily [ indiscernible ] with each other.
They are contracting with a carrier.
So, there were some issues we were running into early We did that to facilitate that process all a bit more effectively. I would agree with what Joe said. When it comes right down to it,
you have to be -- you still have to be put -- willing to put a contract in place. We want this to be durable.
You have to put a contract in place.
That is where people look at the various terms and conditions on a solution by solution basis to make sure it is right.
And I would say liability is probably at the top of the list.
Liability is another one, lane -- liability is another one, yep.
I think you hit the nail on the head. It was always our intention to provide a starting. , not the actual documents that would carry the parties through the process.
Okay. Next question is -- and I guess this question is really for Steve. Does Snyder use dedicated for Macy's West?
I think I may have touched on that, but I will just quickly go -- our dedicated solution is not dedicated for Macy's. I was using a different customers dedicated solution. Macy's did benefit,
because the benefit that they get is that their freight moves on what used to be an empty mile leg that I had. The reason they can get the benefit is because I can actually provide them a solution at a more effective market rate.
Because I already have capacity running on a lane. That is how they benefited. That was a three party type benefit.
Okay. And which area of the country do you think has benefited most from the program so far, such as less traffic than before?
In all, from our perspective -- I don't know if Joe or Tony can talk to a broader perspective, but from our perspective it is somewhat dispersed. I wouldn't say there has been a tremendous geographic concentration.
Quite honestly, it has been more opportunistic. There has been some stuff in the [ indiscernible ] area. There has been some stuff in the [ inaudible ].
It has been probably a little more spread out than just a concentrated particular area.
The reference to congestion is an absolute potential benefit to the program because of the fact that you are using capacity that is already on the road. You don't have to put another truck out there to move the fray.
You use the one already running the miles, so congestion is a big deal.
I would say probably east of the Mississippi is where the concentration has taken place.
I would agree.
So, it is rather broad, but that is what we have seen so far based on the number of companies that have subscribed in where we are seeing the activity. Anywhere from Dallas to Ohio of two Chicago and down through Florida, North Carolina.
Of course, the Northeast we are seeing a particular amount of volume.
Okay. Well, I think we have covered everything that has been typed in. Joe, Tony, and Steve, are there any questions that might have been sent directly to you that I might have missed?
Not to me.
No, I don't have anything.
Let me just look here. If they came in as private would that be --
There was one that was around -- could you address the concern that this individual has heard that this service is only really beneficial for an organization that has their own fleet. Hopefully,
what I did buy some of the other conversations is maybe got after that. Again, I will try to summarize. A shipper can benefit whether they have a fleet or not.
What they are really looking for is to find ways to get their freight moved through capacity that is already on a LAN or market. It is almost indifferent to whether or not you have a fleet or not. Although,
this has been launched with the -- kind of targeted for the private fleet and a dedicated type benefits. Well, where the freight comes from from the shipping perspective,
they don't have to have a private fleet in order to get benefits from the service. Hopefully, that was clear over some of the other questions are answered.
I think it is immaterial whether you have a [ indiscernible ] fleet or a contracted fleet.
The opportunities are good for both. It might as well be my equipment. It doesn't make a difference if I am paying for it. If I can make better utilization of it, I am going to benefit. So, I think it is pretty broad-based.
In fact, the vast majority of our subscribers do not have their own fleets.
The contract their product.
Okay. Well, I don't believe we have anything else typed in. We have a few minutes left. We will go ahead and see if anybody has any questions over the phone. If the operator could give instructions on how to ask questions on the phone.
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If you have any questions --
Yes, this is Linda with JCP logistics.
It is more of comment. I know there was a lengthy talk on the success that Snyder -- Schneider had. I just want to make a comment. In a statement, I am not the one that says it takes what equity but it does.
I am not the initial person at JCPenney that was part of the big sign on, but it can be a very successful program. We do not have our private fleet. It is a dedicated fleet. For those that are listening,
it seemed like some of the things I have experienced, but it does take a lot of work for all three parties involved. It can be a very successful program for all three parties involved. I just want to emphasize that.
But there is work involved. It is not something that can be done within a week.
It may even take a month or so to set it up. I mixed greens in that now,
but just wanted to reiterate kind of what Stephen Joe had said because there was a lot of conversation based on that successful program that Schneider had with Macy's.
Thank you. We appreciate your feedback.
Thank you very much. We are just about to release the JCPenney case study. It just tells a phenomenal story all over again, actually, on top of what we saw with Macy's and Schneider.
Like I said, I am not the initial one that was involved. I am getting more involved . I didn't hear that the -- I didn't hear the JCPenney's quote until the webinar. I've got an idea who said it --
I bet you do.
But this was a very good webinar.
I mean, it's helped me, and I am involved in this.
Just be very careful, because they will rope you in.
Okay. Thank you very much.
Thank you very much.
Do we have any --
A reminder, you can ask a question by pressing star one.
Do we have any other questions?
I show no further questions at this time.
Okay. Well, then we are going to go ahead and close all for today.
I want to thank all prayed -- thank all three presenters and thank everyone who posted questions. The recorded version of today's seminar will be available online within the next few weeks as well as the presentations
and a transcript from today's seminar.
As a reminder, if you are an AICPA member and will be applying for certification maintenance credits for today's seminar, please make sure you are either signed in with your full name, or if you are not, type your name into the chat box.
Please also download the evaluation form and email it to me after you've completed it. Likewise, if you are not applying for credit but want to fill out the evaluation form, I encourage you to do so as well.
The next seminar will be held on March 17th and will be about clean air about port facilities. This is not yet open for registration but will be up tomorrow. If you go to the talking freight website, I will bring up the information of an.
I also encourage you to join the listserv if you have not done so.
One other thing I will mention is starting next month, we are going to be offering the audio over the computer. We've heard from a lot of people that they would like to hear over the computer instead of over the phone.