How Shearer's Foods Achieved ROI in 12 Weeks on Fuel Recovery

In 2018, Shearer’s Foods adopted a strategy to cut transportation costs and position the organization to make ongoing efficiency improvements to its supply chain.

By implementing Breakthrough’s Fuel Recovery program, Shearer’s saw a 19% gross cost reduction—resulting in $913,073.61 in fuel savings—in the first year of their program. They realized ROI in less than 12 weeks, all of which was made possible by ditching their prior US Department of Energy (DOE) index-based fuel surcharge program.

Read more about the distortions associated with this outdated pricing mechanism here.

Making Million Dollar Savings a Reality

Shearer's Foods' primary objectives throughout their Fuel Recovery implementation were to keep their fuel spend reductions from shifting into carrier linehaul rate increases, and to ensure that their carrier partners were onboarded smoothly.

Prior to go-live, 70% of Shearer’s loads were already hauled by carriers in the Fuel Recovery system serving other Breakthrough clients. The Breakthrough team facilitated a seamless transition for Shearer's by educating all of their carriers about the Fuel Recovery program, its calculation, and data exchange process.

Once all parties had a better understanding of the program, Shearer’s and their carriers could be confident that they were being made whole on fuel costs. As a result, linehaul rates remained unchanged.

“I was expecting higher rates when transitioning to Fuel Recovery, but that didn’t happen,” said Nicole Marcum, Director of Transportation at Shearer's Foods. “It was great to see that our carriers were actually very honest and straightforward with where we wanted to go because they were experiencing the same prices and market changes.”

Read more about the implementation process here.

Every Detail Counts in a Volatile Market

With over 33,000 shipments executed per year, Marcum says, “We knew we were leaving a lot of money on the table with our previous program. The DOE index is extremely inflated not only from a retail perspective but with a lag in time when the market drops.”

Marcum and her team recognized how a market-based approach would eliminate distortions that left money on the table that allowed them to create a more data-driven strategy to evolve with the market.

“With market-based fuel reimbursements you get an immediate capture as the fuel market changes, and your team can react better to opportunities or risks.”

Their previous process cost them in other ways as well. According to the U.S. Environmental Protection Agency (EPA)’s SmartWay program results, for every ten percent decrease in truck weight, fuel consumption is reduced between 5 and 10%. As snack distributors, the low weight of their shipments meant Shearer’s carriers achieved a higher MPG than is typical of similar moves with heavier cargo—ultimately consuming less fuel—which should result in less paid out in fuel reimbursements.

Ongoing Strategic Alignment

“Breakthrough has become a strategic partner. Not only from the work they have done in the past, but also the ideas they bring for the future. They have a very strategic plan with Shearer’s to move us beyond the year-one new normal,” says Marcum.

In addition to accurate and transparent fuel reimbursements, Breakthrough’s fuel forecasting capabilities have enabled Shearer’s to predict how market changes will affect their network in the future, providing an indicator for how the strategic choices made now may affect future budgeting practices.

“Breakthrough is always asking, ‘How can we go above and beyond to get you more savings than you anticipated and continue to improve year after year?’” Marcum says.

With over one billion gallons managed in North America, Shearer’s is among some of the industry’s leading shippers in transportation innovation.

Ready to ditch the DOE and start saving? Contact us to learn how you can bring accuracy and transparency to your transportation strategies.