GROWMARK FS Logistics Morgan Firestine Pennsylvania State - PowerPoint PPT Presentation

GROWMARK FS Logistics Morgan Firestine Pennsylvania State University Agronomy Intern

Project Overview • Determine the cost per mile for four trucks • Determine monthly and annual truck cost per mile • Make observations and recommend solutions

Why Project was completed • Does it pay to deliver all products or should some merchandise be transported by common carriers? • What is the cost per mile FS should be charging for deliveries? • When should FS let common carrier’s transport deliveries?

Leesport’s Logistics System Logistics Analysis from July 2006- June 2007 Leesport currently delivers: • Chemicals on a bi-weekly basis • Five New Jersey locations • Four Eastern Pennsylvania locations • Assists York and Emmaus in deliveries of seed to other GROWMARK locations.

Logistics System Leesport currently : • Delivers liquid fertilizer from Bordentown, Philadelphia, Baltimore, and Seaford to other locations and customers • Backhauls bagged fertilizer from East Liverpool to other GROWMARK locations

Trucks Analyzed • 12365 • 13340 • 14167 • 16009

Truck 12365 1994 Peterbuilt Truck Tractor

Truck 14167 1998 Freightliner Truck Tractor

Truck 13340 1996 Freightliner Truck Tractor

Truck 16009 2006 Freightliner Truck Tractor

Expenses • Depreciation • Tonnage Tax • Repairs and Maintenance • Truck Tolls • Fines and Taxes • Insurance • Fuel • Driver Costs

Depreciation 12365 1994 Peterbuilt 614.04 14167 1998 Freightliner 350.83 13340 1996 Freightliner 3500.04 16009 2006 Freightliner 17587.29 Columbia 120 Trailer 1963 Fruehauf 294.74 Tank Trailer Trailer 1975 Heil Tank 138.17 Trailer Trailer 1996 Fruehauf Van 890.36 Trailer Total Depreciation 23,829.86

Total Miles- Miles per Gallon Driver Cost for year $33,321.54 $186.15 Cost per day $651.54 Total Truck Miles and Fuel for 4 Trucks Truck Number Fuel in gallons Miles Miles/Gallon 12365 3300.80 22789 6.904 14167 8793.00 44847 5.100 13340 5449.50 31223 5.730 16009 7973.50 48023 6.023 Total 25,516.80 146,882 5.756

Fuel Expense Total Annual 97,157 Billed Miles Average Monthly $16,242.17 Fuel Cost Total Annual $178,663.92 Fuel Cost Average Fuel $2.83 Price/Gal

Driver Costs Annual Labor: 40,000/working days(262)= cost/day*days of driving= driver cost 3.5 Drivers Driver Approximately $40,000 Salary Benefits 21% of Salary $8400 Cost Per (40,000+8400)/262 $186.15 Day Driver 186.15* Total $33,321.54 Cost/Year Days(179)

Monthly Expenses- November Depreciation $3,007.75 Tonnage Tax $0 Over the Road Truck Repair $59.77 Tractor Trailers R & M $0 Truck Tolls $0 Fines and Penalties $0 Motor fuel, Excise Tax $1.33 Vehicle License & Permit $20.00 Auto & Truck Insurance $986.90 Casualty Insurance $648.83 Fuel $723.51 Labor including benefits $2,047.69 Total Expenses for month $6,399.85

Monthly Expenses- May Depreciation $3,007.75 Tonnage Tax $0 Over the Road Truck Repair $0 Tractor Trailers R & M $0 Truck Tolls $0 Fines and Penalties $0 Motor fuel, Excise Tax $0 Vehicle License & Permit $2,070.38 Auto & Truck Insurance $968.90 Casualty Insurance $648.83 Fuel $77,437.64 Labor including benefits $4,467.69 Total Expenses for month $87,517.32

Expenses for the Year $304,485.01 Depreciation $36,529.60 2,233.85 $1,107 Tonnage Tax $2,102.75 Over the Road Truck Repair $30,314 Tractor Trailers R & M $4,357.34 Truck Tolls $560.75 Fines and Penalties $178.58 Motor fuel, Excise Tax $14,647.77 Vehicle License & Permit $10,983.60 Auto & Truck Insurance $7,506.71 Casualty Insurance $178,663.92 Fuel $36,858.46 Labor including benefits $325,428.21 Total Expenses

Cost Per Mile - Billed Miles Total Billed Miles Truck Total July August Sept. October Nov. Dec. Jan. Feb. March April May June Number Miles 140 279 309 0 0 1,115 771 2,365 3,863 1,719 1,000 0 11,561 12365 319 861.9 1,199 1,416 1,144 2,827 620 2,505 5,207 6,190 6,609 3,393 32,291 14167 630 1,051 1,349 0 0 1,616 1,208 694 2,727 2,407 3,552 2,234 17,468 13340 1,709 522 1,770 1,402 724 1,694 2,362 4,143 5,408 6,624 8,445 1,034 35,837 16009 Total Miles 2,798 2,714 4,627 2,818 1,868 7,252 4,961 9,707 17,205 16,940 19,606 6,661 97,157 Per Month Estimated Cost Per $5.47 $5.53 $4.96 $2.23 $3.43 $2.41 $4.83 $2.37 $1.65 $2.33 $4.46 $3.93 $3.35 Mile Per Month

Cost Per Mile- Billed Miles Truck Number Total Miles 12365 11,561 14167 32,291 13340 17,468 16009 35,837 Miles 97,157 Cost Per Mile $3.35

Cost Per Mile Per Month Including Expenses and Billed Miles 90,000 $5.50 80,000 70,000 $4.50 60,000 Cost Per Mile $3.50 50,000 Miles $2.50 40,000 30,000 $1.50 20,000 $0.50 10,000 0 -$0.50 r y y r r r y e t h l y e e i s e e r l r r n a u c b a a p u b b b u r M J m u g m u a A o m J n u t r M e e c e b a A v t O c e J p o Miles e F e N D S Expenses (Cost) Months Cost Per Mile

Total Cost Per Mile Compared to Current Price Charged $4.00 $3.50 $3.00 Current Cost Cost Per Mile Per Mile $2.50 Charged $2.00 $1.50 Estimated Cost Per Mile $1.00 Per Month $0.50 $0.00 Comparison of Current Cost Per Mile and Estimated Cost Per Mile

Answers to Questions • Does it pay to deliver all products or should some merchandise be transported by common carriers? It is not cost effective to deliver all products with FS trucks. Some orders should be delivered by a common carrier. • What is the cost per mile FS should be charging for deliveries? Since the estimated cost per mile is $3.35 and the current cost per mile charged is $2.00, FS should increase the cost per mile to $3.35.

• When should FS let common carrier’s transport deliveries? Revenue $350,000.00 $300,000.00 $250,000.00 $200,000.00 $150,000.00 Dollars Mile $100,000.00 Revenue Profit or $50,000.00 Loss $0.00 $2.00 $2.25 $2.50 $2.75 $3.00 $3.35 $3.50 -$50,000.00 -$100,000.00 Profit -$150,000.00 Break-Even Point Charged Cost Per Mile

Conclusion- My Recommendations • Increase charged cost per mile • Transport some orders by common carriers • Possibly combine orders with other GROWMARK locations if they are making deliveries to the same area.

Other Projects Three Display Boards • Christmas Tree and Shade Tree Display • Precision Planters- Meter Max System Display • GROWMARK FS Display

Displays GROWMARK FS Christmas Tree and Display Shade Tree Display Precision Planters- Meter Max System

Thank you for allowing me to be a part of the GROWMARK internship program

And a special thank you to the GROWMARK FS