As one of the largest butter and cheese producers in the United States, Arden Hills, Minnesota-based Land O’ Lakes is a shipper with a supply chain that can be viewed as more complex than most of its peers.
That said, when coupling its core product dairy-based offerings with its animal nutrition and crop protection, divisions, it hardly comes as a surprise that it moves billions of dollars of goods throughout the United States, as well as on a global basis.
But like any shipper, regardless of size or bottom line, securing truckload capacity over the last 15 months or, even longer, has proven to be a challenge for myriad factors, including rising demand, an improving economy, the ongoing impact of ELD since December 2017, and, the driver shortage, among other things, too.
Securing capacity on certain routes was something that was challenging for Land O’ Lakes, too, according to Yone Dewberry, the company’s chief supply chain officer.
And it was enough of a challenge for the company to take a turn from more traditional ways of securing capacity such as through the spot market, leveraging its own assets, private, fleets, and dedicated contract carriers, towards something more technology-driven and intuitive.
“We started focusing on this around 18 months ago,” he said. “It really came at a time when we recognized as an organization that capacity was getting tight, because of things like the ELD impact and the economic outlook getting better. In some ways, it was like a ‘perfect storm’ of a bunch of things happening to reduce capacity all at one time.”
This predicament led Land O’ Lakes to realize it needed to find new and innovative ways to secure capacity.
“We traditionally did it the way almost every other shipper I know our size would do it, and that is lining up some contract carriers on a longer-term basis but not knowing exactly what your demand is going to be on any given lane on any given day,” he said. “We also used the spot market to secure capacity as needed from brokers, which is commonly viewed as the traditional model. But what we realized was that as capacity got tighter, there would be more and more organizations going after that same type of capacity through the spot market.”
That is what initially influenced Land O’ Lakes to start considering alternative options to see what new and different approaches were out there, while it was endeavoring to be more of a technology-focused company.
One alternative option for Land O’ Lakes came from the ubiquitous ride-sharing service Uber, whom has been making inroads through its Uber Freight app, which matches trucking companies with loads to haul, with Uber explaining that it takes the guesswork out of finding and booking freight, which is often the most stressful part of a driver’s day.
“Our logistics group found Uber Freight,” Dewberry said. “It was working in the same exact space on the opposite end, of course, in that was how they would provide capacity to a market that needs it.”
This partnership subsequently led to Land O’ Lakes and Uber Freight’s initial collaboration. But the question was in what geographic market?
“In any type of organizational pilot test, you try to find the ‘win-win’ for both organizations,” explained Dewberry. “In this case, we looked for markets where Uber Freight had already gathered capacity, as I would describe it, where at the same time we had enough density to make it work on our end. That was how we fundamentally started by saying ‘which markets are you already gathering capacity where we have density and need capacity?’ That is how we came up with the Texas area. That is the area where we both have enough to make this work.”
The specific Texas area Dewberry was citing is a lane between Nacogdoches and Ft. Worth, Texas. And fast-forward several months later, now 100% of Land O’ Lakes’ loads on this lane are handled for the company via Uber Freight.
Dewberry declined to disclose the financial savings Land O’ Lakes has accrued, but he did note that for this time of partnership, the financial side works itself out over time.
“It really is the service side that is most important,” he said. “If you think about why we started heading down this road, it was because of capacity and capacity is about service. And in a normal process you call a broker or tender a broker electronically, but then things would have to wait to determine whether or not they can find you a carrier. It could take ten minutes or an hour to find you a carrier. The variability of not knowing is one of the issues.”
But he observed that was not really an issue with Uber Freight, as a shipper can know almost instantaneously whether or not it has access to a carrier to move a load.
Dewberry stressed that this, in no way, was meant as a criticism of brokers. Putting things into comparative terms, he noted a broker is working with a specific set of carriers that are giving a shipper the first carrier they find as a general rule.
“But you don’t know whether you got the good price or not, but you got the capacity you wanted, which is what they doing exactly what you asked them to do,” he said. “With Uber Freight, because they are constantly surveying the market, you are probably getting a better price…..that is the way I would describe it.”
When asked for a specific number of loads Land O’ Lakes moves on its Nacogdoches and Ft. Worth, Texas lane via Uber Freight, Dewberry would not provide a specific number but he did say that it is a lower amount of freight than it moves on other loads via contract carriers, or dedicated or private fleets. He said that is to be expected, as Land O’ Lakes is still in the early stages of its relationship with Uber Freight.
“We are really just starting this relationship with them, and it is important to understand that as we talk about what we hope is the start of a long-term partnership. We expect that number to continue to expand as time goes on.
One example of how securing capacity through Uber Freight has been a positive change for Land O’ Lakes, Dewberry said, occurred when a carrier dropped a shipment on a Saturday, which would typically create a difficult situation and make things very difficult for a shipper to go about re-booking a new carrier using more traditional methods.
But through the Uber Freight app it was able re-post the load, which was then grabbed by a new carrier in a matter of minutes, something Dewberry observed was previously not an option.
“Try calling a broker on a weekend, you know what that is like,” he said.
Using technology to avoid these types of situations in the future was a key driver, said Nick Najjar, senior transportation manager for Land O’ Lakes.
Along with that, he pointed out that Land O’ Lakes has a “very heavy footprint” in Texas, Oklahoma, and Louisiana, which he said is a network in intra-facility volume, where the company has scale, as well as being a region where Uber had drivers and small carriers on its platform.
“It made all the sense in the world to start there,” said Najjar. “This gives us better utilization of overall capacity, or leveraging technology, to better utilize overall capacity. Instead of having a bunch of different account managers making decisions for us at the detriment of the overall capacity pool, we now use a better solution that better utilizes the overall capacity pool—using technology to better manage that macro capacity pool. It is also about that macro transparency pool and to better market that execution transparency. There are a number of other aspects of this that also provide advantages like driver feedback, ranking carriers and other ancillary benefits. This is the most optimal usage of technology to best use the overall capacity pool.”
Looking ahead, Dewberry and Najjar stated they are looking to increase the onus for Land O’ Lakes to get more of its freight moving through the Uber Freight platform, adding they have done similar runs in Florida, as well as ad hoc loads in other areas, too.
“The way a good partnership works is when it is best for both parties,” said Dewberry. “We are always trying to find a place where they have good coverage and we have good coverage so Texas was a good place as is Florida. It is about finding those places where it makes sense as they build their network out as we start to deal with the usage. That is the whole idea. Over the long term they will continue to build it out and build density and we will continue to work on this together.”