Trends in Food Shippers of America – Crete on the Dave Nemo Show

Live from the American gulf coast is the Dave
Nemo Show. Always great to visit with great friends;
we’ve got a great friend joining us on the program right now. Tim Aschoff, he’s the
President of Shaffer Trucking and Chief Operating Officer at Crete Carrier Corporation. Well
you know Homer Hog just left Nashville at the TMC conference up in Indianapolis for
the work truck show, and Tim is fresh back from Palm Desert, California; just attended
the 61st annual Food Shippers of America Conference. You know there is a lot to talk about coming
out of that event, and we’ll get into quite a bit of areas… technology, economy, regulations,
the whole nine yards. We will kind of put our Shaffer hat on this morning, and Tim Aschoff
joins us in just a moment. Really looking forward to an intuitive and
incisive conversation with our good friend Tim Aschoff; COO of Crete Carrier Corporation.
Today we will put on the Shaffer hat because Tim, of course, is also President of Shaffer
Trucking. Tim, you know Shaffer has been around since the late 1930’s, and around here we
kind of tend to skip over details sometimes. We always feel like everybody knows everything,
but we really haven’t talked about Shaffer very much and I know you don’t want to spend
a lot of time doing this but give us a little bit of history there about Shaffer and what
you guys are up to today. Sure. It’s great to be on the show again.
As you mentioned, Shaffer has been around since 1937. Started out in candy country out
in eastern Pennsylvania, and that has always been a core part of our service. We serve
a lot of the confectionary companies across the country and some of the international
companies as well. And… You guys deliver more candy than anybody right? Well yeah, you name the chocolate company
in particular and we’ve generally hauled a lot of their freight. That’s something
we’ve consistently done over the years and yes continue to do that and certainly we’re
in Easter season right now so that’s a busy season not only for chocolate but peeps and
other things out there… Hahaha I was thinking about peeps! So… it’s been a great history here. Also,
as part of the overall Crete Carrier umbrella we acquired the Sunflower carrier. That was
a temp control meat hauler out of Nebraska. Obviously a company that was around for a
long time as well, and in the early 2000’s we merged Sunflower with Shaffer Trucking
and operate all of our temperature controlled division under the Shaffer Trucking umbrella
so have combined the confectionary with meat and many other products now and have operate
in all 48 states. We continue to grow; had a great year of growth last year growing our
temperature controlled division by almost 20% in seated trucks. Great time to be here
at Shaffer. Certainly as we’ll talk food is a great business; everyone needs to eat
everyday. That’s one of our constants out there in the freight world. My brother is in the food business. Based
on the not theory but fact that hey everybody’s got to eat. That being said Tim, and thanks
for that, that being said you just came back from California attending the 61st annual
Food Shippers of America conference. We’ve got a lot of things to talk about that; part
of a theme there the overall theme is the ever changing environment and boy you know
you can go a thousand different directions there. Tell us a little bit about your take
away from the convention or the conference overall. Well, overall at least from a high level,
yes we live in an ever-changing world. I think the overall discussions were how fast things
now change. You know with just, I’d say, freight in general you know we use to have
cycles in freight that were a little bit longer than they are today. Maybe at least one year,
maybe three to five year cycles as supply and demand would go up and down and go up
with the economy. Now, gosh it almost seems like we have quarterly if not monthly cycles
in the industry. That constant balance between you know having the right number of trucks
and the right available loads is really becoming a lot more dynamic. There was a lot of discussion
on how technology impacts that with respect to insuring we’re matching up capacity in
the right places where the shippers have demand, but also in streamlining the supply chain
system and how that has actually you know caused some of those quicker swings in doing
better forecasting on what product is needed and where. Having a much, I’d call it, tighter…
we’ve talked about a tighter time but now I’d even say a tighter inventory. Just with
that technology and the advancements that our customers are making, it’s almost hard
to keep up out there anymore. Tim it’s very interesting that you bring
that up. This isn’t necessarily parallel but I think it kind of fits in the same ballpark.
Yesterday on the program, I ran through a report coming out of Mercedes Benz, over in
Germany making automobiles not the trucks. They, like every other auto manufacturer,
use robots on the line. Guess what robots are being replaced with now? People. The reason
for that is because of the ever-changing environment in the automotive world they need to come
out with different models quicker. They need to come out with different accessories and
convenience packages quicker. People can do it quick, but you can’t train a robot over
night and people are starting to replace robots in some of these factories. One of the things
that you guys talked about out there at the conference was were people fit in to this
changing environment and I would imagine you can have all the technology in the world but
if you don’t have the right people controlling that technology and even in a sense responding
to that technology… the technology alone is not going to do it. It still comes down
to good old fashioned people, right? Absolutely. I guess it is a good parallel
that story you mentioned because you know some of the discussion was about people and
the different generations in the industry and of course that’s true in all industries
where we have to cycle back and assure the people that are coming into our industry do
understand well for lack of a better word the basics because just as you mentioned technology
is changing us so fast and in so many different ways that if we become too reliant on the
technology and not have the whole understanding of how our industry works. We can loose out
and that change can actually become that technological change can become a hindrance because we rely
too much on it. That sounds a little bit like that’s exactly what Mercedes is facing,
so not unique to us in the transportation industry but people are so important and that’s
something that I’ve been proud of here at Crete Carrier and Shaffer Trucking being a
privately owned, family owned company that is something that we’ve had focus on for
many many years and that has certainly been a big part of our success. I’m glad there
is that focus back in our industry and others on the importance of having the right people,
treating them well, and knowing that yes technology is important but technology is a tool. It
still takes the people to make the right decisions and know when to adapt and help with the speed
of adaptation. Indeed, indeed. Some of the things were discussed
out there are how quickly supply and demand is changing for shipping capacity. And also
a lot of discussion I would imagine both formally and informally in panel discussions and presentations,
you have all of that stuff going on but then you have the hallway water cooler talk and
things like that. The current state of the industry certainly comes up quite a bit. Is
there a consensus among the attendees out there at the conference in terms of how the
state of the industry looks right now? I think for the most part right now it’s
a little uncertain and there seems to be more trucks right now than there is demand. I think
the consensus is that’s kind of a first half of this year feeling. There is some inventory
out there that needs to be worked down and it’s on its way down, so that’s a positive
sign. They don’t think the inventory levels will get to where they were below 2014. I
think everyone saw the impact of when you have a big sudden increase in demand for trucks
what that can have and a lot of folks ran short of inventory. So we’re probably not
going to get to those levels before that. Right now I’d say the consensus is it’s
still a little, a long with the rest of the economy of course, a little bit softer out
there but this is hopefully a first half of the year phenomenon and by… we get through
spring here and we start seeing some pick-up there that the second half of the year you
know I think everyone is a lot more optimistic. I’d say overall there’s some customers
out there that are growing maybe 2-3%, so not very much and then there’s others that
are just trying to maintain. Didn’t hear too many that say hey we’re going full bore
and really having a great first start to the year so…. I think it’s probably what a
lot of drivers are out there feeling. You normally have that January and February slowdown
so we have that… on top of that we have a little bit with the economy being slower
but the good thing I took away from it is there’s optimism about the second half of
the year. Let me ask you this too. I think that’s
what we’ve been getting here to in terms of the year although I think you’d admit
that most of if we have pundits in this industry I don’t know if we do or not but most of
the talk at the end of last year was how good the first half of this year was going to be
and that pretty much went away pretty fast. I mean we’re just starting March here now.
My question here is, and there may be a sense maybe not Tim, trucking is seasonal. Demand
is seasonal especially in the food industry. You’ve got all kinds of stuff going on there
and weather and all of that and what not trends and everything else. So you have this up and
down ebb and flow in terms of demand capacity. Are those ups and downs going from a nice
smooth hilly rise to an up and down up and down up and down to where you’re kind of
just bouncing around… in other words are these trends kind of hitting the industry
as opposed to easing into the industry if that makes any kind of sense? It does absolutely. I think you’re exactly
right. I think as we talked a little bit earlier, things are changing much quicker today and
we see that you know certainly being the size we are between Crete and Shaffer we can see
even daily and weekly demand. As I mentioned it use to have a little bit more gradual slopes
and you would kind of know towards the end of the month you might have a little bit stronger
push as some companies got some freight out towards the end of the month for some sales
quotas or otherwise. It’s certainly the same at the end of the quarter. Now it’s
a lot harder to predict that. You can have a spike week the second week of the month
and then the end of the month could be softer and it could just change that quick. You know
again I think that’s what I took from the conference is that is really people not as
much trying to look towards how do I meet… It use to be in the past maybe you use to
try and meet a sales number at the end of a period. Now it’s more of ok how to I insure
throughout the entire time cycle I have… I have inventory that meets the current demand
of the customer. So whatever that weekly demand is, which is maybe influenced by weather and
other things that you mentioned, so it is much more up and down then it use to be. More
of that smooth rolling hills of like western Nebraska of rolling sand hills; we’re more
in the rockies, up and down now. Yeah, yeah wow and there are other things
too that play from within and without the industry, things that are causing changes
to supply and demand. The ELD rule that’s in place now, I don’t know if we really
need to hash through that I think that’s pretty much what it is. There is a suit out
there of course so we won’t get into that aspect of it. But that will have an effect
that will definitely have an effect, is there anything that we don’t know that came out
of the conference, Tim, about ELD’s that you feel worthy of mentioning here? Well I think probably the only thing I could
add is you know what you’re hearing from the shippers out there about it is that was
a topic for them. I think there’s a few different approaches being taken. There’s
sort of that well lets take a wait and see approach; lets see what happens with the lawsuits
does the regulation come into play. What will the actual fallout be and we will deal with
it when it happens? There’s the others that are wanting to play a little bit the safer
and know exactly what’s going on along the way and are following closely, but still maybe
not doing anything different. Then there are those on the other extreme. They know it’s
going to have an impact so they are starting today to insure that they are going to have
the trucks that they need when the either the trucks either exit the industry or probably
more appropriately the drivers exit the industry or the productivity is impacted because of
the ELD and know there will be more demand for the drivers and filled trucks that are
there that are being proactive and getting those trucks today. I guess the only thing
I’d add is that there is a spectrum of response out there from shippers as much as there is
as I know amongst your listeners and the drivers out there saying hey what’s actually going
to happen and I guess you know as they say we won’t know until it actually happens.
It will be interesting and I guess the good thing is the shippers are talking about it
and know it is out there and we may have to have some changes in how we do things in the
future. One of the things that really deserves mention
here that we frankly I know we should have and we did not on this program get into before
is the FSMA folks don’t know what that is and they don’t but it’s the food safety
modernization act. The FDA is saying this is the biggest sweeping change in food safety
in 70 years. I think it was signed late last year by the President or very very early this
year. In fact is was early this year, wasn’t it? Early part of January that the President
signed the Food Safety Modernization Act. Was that a big buzz throughout the convention
this year? It was and it has been amongst our food shippers
as this is coming down the pipe. You know one thing I think we have to try to remember
you know a lot of times we get in our own little world but for the food industry this
is a very sweeping change not only just for the transportation piece of it but along their
whole supply chain on accountability for food safety. Of course transportation is a very
important part of that, and you know people want to insure we have a very safe food supply.
The FDA as you mentioned and the USDA are a big part of that and regulations that they
bring out provide some guidelines out there for that and certainly some laws that even
must be followed. Food manufacturers have their own QA programs and of course they’re
very robust because they want to have good quality product and protect their brand. So
this is another level now that is being put on top of that, that they are very concerned
about. Not only to protect their brand but to insure compliance with the law. A big part
of this is going to be information. In our technology age it’s going to be information
and information right now. Where is kind of overlaps with us is sort of insuring we have
a full, I’ll call it, chain of custody from an information stand point knowing exactly
where all that product is, when, has it been secured, what temperature is it at, who’s
had access to it… anything you can imagine about data on that product. We have to be
able to provide it our shippers right now. As a carrier that is something that we need
to be looking at and say how do we comply with our shippers needs and then of course
their needs to meet their regulations of the food safety modernization act. For Shaffer
Trucking for example we’ve invested in untethered trailer tracking that we are putting in all
of our trailers which will provide that electronic real time monitoring of obviously performance
of our refrigeration units but then air temperature and another thing that’s on there is door
monitors so again security, integrity of that cargo is very important so has the door been
open and closed in route or otherwise. That’s the type of information that our customers
are going to need to be able to comply with those food safety modernization act. Are those things mandated in the act or is
that something like you guys are doing? Well the particular method of how you gather
the data is not mandated in the act, but what data you need is. You need to be able to provide
for what now we would call you know a download of the refrigeration unit. The time period
as to what was the temperature of the intake air the air going out into the trailer and
what was the ambient air temperature in there along the whole trip and right now most refrigeration
units you can do that but you have to do that by taking it into a dealer that is either
a carrier or thermoking dealer or whatever your refrigeration unit may be and they have
to manually hook up a laptop or otherwise and download that information. The speed at
which that information is going to be required to deliver it’s almost not practical to
do that anymore. So that’s why we’ve made the decision to put on the trailer tracking
that can provide that information instantaneously over the cellular data network out there.
While that’s not mandated in the act itself certainly the ease of compliance will require
that carriers like us invest in that type of technology. And our customers will also
require that because they want to have that information quickly. Well let me ask you this, and this may be
a loaded question I’m not sure, Tim. The ELD, a lot of companies went with the ELD’s
a lot of people say you know what most of trucking was going to do that anyway. You
didn’t need a regulation. You didn’t need a mandate. Do you see the technology, the
door monitors and things like that that you guys have or are installing now, do you see
that technology or any particular technology becoming mandated or do you think it will
be left alone and everybody will choose their own methods? Well, as we’ve talked about in the past
personally I think less regulation is always better, but certainly understand the need
for safety and I do think that the industry and us working with our customers can come
up with the best ways to do that. I think what you are alluding to is unfortunately
sometimes as we find the best ways to do that the regulatory agencies grab onto that and
say well everybody needs to do that… Yeah, yeah.. yeah that’s exactly what I
was getting at… Yeah, which does create in some ways a level
playing field out there but in some ways also maybe inhibits the advancement of that technology
because you always want to find the better thing too. To insure we have compliance and
certainly do it at a cost effective manner so… You know I think in the food safety
area I don’t see that right now in at least what I’ve seen and read about what the agencies
are looking to do, but certainly three or five years down the road as there coming in
looking at ok in situation a when we dealt with this situation of…. Never say never, right? Hahaha Right, right! You’ve never had that technology,
it’s good maybe everyone should have it. Tim Thank you so much it has great to have

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