Bakeries run on fuel. From tunnel ovens to distribution trucks, this precious resource is responsible for an array of bakery functions. Unfortunately, this key element to bakeries' operations has become extremely costly. "Last year, gasoline was in the $1.70 range, and now we're in the $2.30 range," Robb MacKie, American Bakers Association's (ABA) vice president of government relations, says. MacKie keeps a close eye on shipping and distribution costs through his role on ABA's Fleet & Distribution Committee. This committee is composed of bakers that regularly meet to discuss distribution issues.
A $0.60 jump in gasoline prices in one year creates countless problems for bakeries, mainly how to pass on this cost. It is virtually impossible in today's market to pass costs to the price of the finished product. As a result, bakeries should explore all fuel related cost-cutting or cost-containing measures. "There are some basic strategies that sound very simple, but can save you 2% to 3% on miles per gallon," MacKie says.
Distribution truck maintenance
Common maintenance checks are an easy way to contain inflated fuel prices. These checks should ensure that tires are properly inflated, engines are tuned and air filters are regularly replaced. These simple and inexpensive maintenance checks can improve gas mileage by as much as 10%, according to www.fueleconomy.gov
Bakers also can improve MPG by training their distribution drivers to drive under control. The U.S. Department of Energy estimates that speeding, rapid acceleration and braking can lower gas mileage by 33% at highway speeds and by 5% during city driving.
These proven methods help bakers contain skyrocketing fuel costs, and should be employed at all bakeries that operate distribution fleets. Other methods, such as gasoline or diesel additives, should be more closely examined. "Bakers need to look at all options, but they need to be cautious because there is a lot of snake oil out there," MacKie says.
Before purchasing any type of pellet, liquid or system that boasts huge fuel savings, MacKie says bakers should ask for definitive data and testimonials. "I have yet to see anything that works consistently," MacKie says.
Fuel + electricity = savings
Hybrid engines that use a combination of electricity and fuel are making waves in the consumer market with cars such as the Toyota Prius. This technology also is making inroads into commercial distribution vehicles. Hybrid engine technology is being tested by many companies and industries. Both UPS and FedEx are testing hybrid engine technology in their fleets, and one engine manufacturer is testing hybrid engines for the utility industry.
"It's promising that in four to five years, there will probably be some hybrid engines readily available," MacKie says. Although years away, MacKie suggests that distribution and fleet managers pay attention to hybrid technology because of its potential to reduce fuel costs. These potential reductions, however, must carefully be compared to hybrid engines' expected maintenance issues and vehicle upcharges.
In the near future, MacKie says gasoline prices should start to fall and level off at about $2 a gallon. However, bakers should still be prepared for price fluctuations by employing common commodity buying strategies. "Bakers have become more sophisticated in purchasing fuel," MacKie says. "A lot of bakers are buying fuel through futures based on spot markets."
These measures help bakers stabilize fuel prices when the market is volatile. However, rising fuel prices, regardless of what measures are taken, negatively impact all bakeries.