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CASE STUDY

NationaLease Helps PIC USA Slash Transportation Costs By Maximizing Fleet Efficiencies

Better flexibility, knowledge of livestock transportation needs enables PIC USA to focus on business specialty

PIC USA, Hendersonville, Tenn., achieved its status as the leading supplier of pork breeding stock in the United States by excelling in the basics of its business. In the late 1990s, the company recognized that the process of transporting its stock, though a necessary element of the business, could probably be better handled by a dedicated logistics firm.

“Our core competency is swine genetics,” said Ole Torgesen, PIC USA Transport Logistics Manager. “We used to have our own fleet and drivers, but we realized that transportation was not our specialty and it would probably be better for us to outsource it to someone else.”

While the first company that PIC USA worked with helped the supplier to improve efficiencies and cut transportation expenses, the logistics firm had a set way of conducting business that didn’t allow for flexibility and the need to embrace change.

Torgesen felt strongly that suppliers must be able to evolve as their customer’s business changes. Since the 90s, the pork industry has undergone significant consolidation resulting in fewer but larger pork producers.  PIC had to reconfigure its source farms to stay in step with producer needs. The result was fewer but larger source farms located geographically closer to producer systems.

Additionally, pork producers were changing the way in which they introduced genetic improvement into their farms.  Widespread use of artificial insemination (AI) as well as a shift from purchasing parent gilt (young female swine) replacements to purchasing grand-parent replacements resulted in a significant shift in the product mix PIC was delivering to customers. PIC transportation needed to move from a centralized system hauling large volumes of lower priced animals to a decentralized system hauling relatively low numbers of high priced animals such as AI boars and grand-parent females.

A Flexible Partnership

The logistics firm handling PIC USA’s transportation at the time wasn’t willing to adjust the business relationship, Torgesen says. “Our main production areas had changed, but the logistics company didn’t want to accommodate that by decentralizing and right-sizing the fleet; they were all about growing. NationaLease embraced the idea.”

NationaLease is the largest full-service truck leasing organization in North America, with more than 700 facilities throughout the U.S. and Canada. The company’s stated mission is to provide customers with a flexible, quick response to their transportation needs which appealed to PIC USA senior management.

Through its partnership with AmeriQuest Transportation Services (Cherry Hill, NJ), NationaLease offers a menu-driven approach to transportation solutions that goes beyond full service leasing to include contract maintenance, integrated logistics, asset services, vehicle financing, and leading-edge technology.

PIC USA had earlier conversations with Michael Oetjen, Vice President of Integrated Logistics for NationaLease, who was more than happy to make the accommodations PIC USA needed to continue to reduce transportation costs and improve its bottom line.

A Specialized Expertise

NationaLease turned to West Brother’s Transportation Services (Raleigh-Durham, N.C.), to hire the drivers and provide all fleet needs, including leasing, customized maintenance, finance leasing, asset services, distribution routing and analysis technology, business management, and fuel and fleet support.

NationaLease and West Brother’s also had experience providing logistics for the transport of live animals. This specialized expertise is quite different from transporting other products and requires careful handling to ensure the animals aren’t injured during transport. It is also imperative to maintain vehicle cleanliness and bio-security procedures to help prevent the pigs from picking up diseases enroute.

While West Brother’s has a very successful business of its own, growing at a rate of 16 percent per year, the partnership with NationaLease provided the national buying power, computer modeling, and other resources PIC USA needed now and into the future, according to Doug Ostanek, Executive Vice President of Sales and Marketing for West Brother’s.

The initial three-year contract called for NationaLease to provide 22 trailers and 14 power units. The company was also charged with helping PIC USA maximize transportation efficiencies. They meet this expectation by working with the company to help eliminate “empty miles” (miles driven without any supply), and by improving routings and developing customized state-of-the-art reporting systems to assist the drivers with stringent delivery protocol. NationaLease also worked with PIC USA to educate customers about delivery schedules to optimize their service and rates.

Quantifiable Results

These solutions enabled NationaLease to further streamline PIC USA’s transportation program, efficiently meeting PIC USA’s goals — and adjusting the contract accordingly — with a reduced fleet of 18 trailers and 11 power units.

“NationaLease has been very flexible, changing as our needs have changed,” Torgesen said. And those changes have led to significant improvements in the firm’s transportation costs.

Miles per pig delivered has been cut 11 percent, from nine miles to eight, resulting in an annual savings of $80,000. The reduction in trailers and power units has saved PIC USA another $50,000 annually, according to Torgesen. With the previous logistics firm, PIC USA was able to recover 47 percent of the transportation costs. With NationaLease, PIC is recovering 87 percent of the transportation costs and Torgesen expects further efficiency improvements to eventually lead to 100 percent recovery of all transportation costs. “They’ve done a lot of work on their side to make these improvements possible.”

Biosecurity will be an additional feature of the PIC USA-NationaLease contract later this year. Corcentric, a wholly-owned subsidiary of AmeriQuest, is customizing a proprietary automated biosecurity system that will help PIC USA ensure the health and welfare of the animals from source farm to customer farm by carefully tracking the pigs and vehicles throughout the delivery process.