A brief (48+ years) history of dairy transportation and logistics
Don Wilson, who wrote the Beyond the Filler for Dairy Foods, looks back on his career.
It began in June of 1964 with an incredible month. I graduated from Texas Tech with an economics major and a bachelor's in international trade. There was a wedding 48-plus years ago to my lovely Diann and reporting to work as a sales/marketing management trainee for Foremost Dairies in Ft. Worth, Texas.
I was very fortunate to be in that particular location. This was a “complete facility” with fluid processing and filling, but also a full-line cultured and cottage cheese production plant, and a full-line ice cream and frozen novelty plant. Plus, the facility was blessed with exceptional management and leadership.
I spent several months working on a rotation through all of the plants. Then, I moved into the sales and marketing side by helping on and then running both wholesale milk and ice cream delivery routes; all before becoming a territory sales rep. The bottom line is that I had a very good grounding in the dairy and ice cream business.
In reflection, it’s interesting now to see that sales, customer service and their related fleet equipment limitations and short comings began to impact my thinking almost from the beginning.
In 1964 the standard cold plate milk route truck at Foremost Ft. Worth had a 14-foot body with a rear return case compartment and a single curb side door. After completion of their route, wholesale drivers loaded their own trucks through the single side door; one case at a time from a single case chain conveyor. Our ice cream trucks were mostly 5- and 6-door cold plate reach-in bodies with a few later model 16-foot walk in cold plate ice cream bodies.
In 1964 Ft. Worth was also shocked to see the future of ice cream route delivery. It was the arrival of the first 18-foot ice cream “cart body” route trucks with the Arctic Traveler over-the-road refrigeration units with electric plug for overnight operation.
By the next year I am the Houston wholesale sales manager for the newly combined milk and ice cream operations and we are operating single-axle tractors pulling 24-foot single-axle trailers with side lift gates. These are large-volume supermarket routes with substantially reduced cost per gallons delivered. However, the 14-foot milk body without the case compartment was still the Foremost Corp. standard. We were trying to add more tractor/trailer milk routes.
Corporate purchasing in San Francisco was still buying 14-foot straight trucks, as we soon discovered with the arrival of new 14-foot milk route trucks. This kind of corporate purchasing decision-making ignorance and waste also made a life-time impact on my future equipment specification, design and purchasing ideas and decisions. We also held a ground breaking for a new Foremost milk and ice cream plant to be built in a new Houston industrial district.
But out of the blue, a few months later in 1967, the Oak Farms dairy division of the Southland Corp., Dallas, acquired all Foremost Dairy operations in Texas. I choose to go with the growing purchaser rather than the shrinking seller. The Oak Farms fleet was already operating 18-foot wholesale milk route trucks with gasoline-powered over-the-road refrigeration with an electric standby option for overnight hold over product inventory refrigeration and conventional rear-lift gates as their milk route truck fleet standard.
I was soon on my way to an assignment as the Oak Farms Division 7-Eleven merchandising manager in Dallas. In late 1968 I was asked to join the staff of the Southland dairy division VP & GM as the first distribution analyst.
Over the next couple of years I spent weeks (sometimes months) at a dairy location, manually reconstructing from route sales tickets, delivery route volumes, numbers of deliveries made, cases per delivery, miles driven, fuel gallons used, drivers costs, hours, etc.
Over time this “route & customer profitability analysis” method and format began to produce new and confirmable, acceptable standardized steps and procedure which could be equally applied in all of our regional brand name divisions (milk and ice cream). We were now learning how to apply standardized delivery profitability assessment techniques for individual routes, individual customers and even operating locations.
The distribution profitability and productivity analysis process was still manual, tedious, slow and based on history. But, it was showing what our delivered costs and profitability was: by route and delivered customers on a daily, monthly and annual basis. We were beginning to understand how it could be improved and where our costs and losses were, along with an understanding of how certain product mix affected those individual customer profitability numbers as well.
The timing of this emergence and new awareness of route and customer profitability proved incredibly fortunate. On Oct.17, 1973 OPEC, without warning or notice, imposed an immediate oil embargo on the United States. Long gas lines sprang up throughout the country. Wholesale customers who received direct fuel truck or transport tank trailer fuel delivery to their own storage tanks and pumps were no longer guaranteed delivery. Many companies and retail stations were intermittently out of fuel. Initially there was a state of shock and chaos.
I spent the winter of 1973/’74 working with our fuel suppliers, MIF (the Milk Industry Foundation), IAICM (The International Ice Cream Association) and The Private Truck Council of America (where I was a director representing MIF and IAICM). During those months I also testified before committees of Congress and worked with the newly emerging federal organizations being created to regulate and manage this national oil and refined petroleum products emergency. This was the period when I learned the value and power of “leverage.” (It’s a tool or technique that has proved invaluable throughout my career.) The combined fleet size and national economic impact of MIF, IAICM and PTCA had far greater clout than the Southland Dairy Group could ever have.
In the first days of the embargo, as I talked with our fuel suppliers and our senior management and operating managers across the country, I was also researching how fuel rationing had been handled in the United States during World War II. “Refrigerated & Frozen” transportation of perishable food products was given certain priority status as to ration amounts made available to such private fleets (food processors and manufacturers) and for hire carriers. In one example, the ICC (Interstate Commerce Commission) mandated that out-bound private refrigerated and frozen carriers of food products manufactured from perishable agricultural products could trip lease loads from regulated for hire carriers on their “return home” trips. Thus avoiding the otherwise “empty trailer waste of fuel” on the return trip.
As the new Federal Energy Administration (FEA) began to function, I was named to its Food Industry Advisory Committee, giving the organizations I represented even more “clout” as the fuel allocation and pricing regulations were finalized and implemented. Indeed, refrigerated and frozen dairy products were given priority classifications and the industry was able to function in a reasonably normal basis from that point.
By March of ’74 the Nixon Administration had negotiated a conclusion of the embargo. However, the era of cheap oil and fuel prices in the Unites States was over. Only one year, later the price of oil in the United States was almost $11 dollars a barrel; or some 387% higher than the pre-embargo prices of the year before, and retail gasoline was up about 50 cents per gallon.
As the fuel supply pressures eased and prices rose, the United States was falling into a deep recession. I was searching for ways to reduce our rates of fuel consumption. In those pre E.P.A. days (before automotive engine regulations), the widely accepted “rule of thumb” was that a “mid-range diesel engine would use about 50% less fuel per mile than a medium-duty gasoline engine doing the same job. The “chicken-and-egg” problem was that there were no mid-range automotive diesel engines in the United States. With cheap gasoline, there had been no market for them. Thus, no market = no engines.
So, I began to meet with the major United States automotive diesel engine builders. Caterpillar, Cummings Engine Co. and Detroit Diesel were the primary builders in the truck market. My purpose was to explain and educate them to the potential size and needs of this brand new mid-range diesel delivery fleet market.
I will never forget the rather arrogant and condescending lecture I was given early on by a Cummins V.P. He informed me that the kind of engine I was talking about was built in large quantities, on high-volume assembly lines similar to gasoline engines. He went on to say Cummins built only large block diesel engines that were assembled by hand. Furthermore, he said, the people who assembled their engines were artisans and they were not about to mass-produce smaller diesels.
I went on to Caterpillar and Detroit Diesel. Caterpillar did have one engine on the market that could be used to replace our large block V-8 gasoline engines then used in single-axle tractors pulling large-route delivery trailers. However, that engine was too large and too expensive for an 18-foot milk route truck currently using 350- and 360-cubic-inch gasoline V-8s.
Indeed, Detroit Diesel did not currently have a suitable size engine in production in the United States. But a long-time Detroit Diesel engineer and friend remembered a formerly U.S.-built four-cylinder engine whose production Detroit had moved to Brazil because of small sales in the United States The specifications suggested it could probably do the job we needed done. But it was no longer “certified” for U.S. on the road operation, and the Detroit financial people would not let sales spend the money for a new certification process without a minimum order for at least 20 engines.
I went to the General Motors Michigan proving grounds and drove a truck with the DD 453 n engine coupled to an Allison Automatic Transmission. It was soon clear to me that it could do the job we needed. I made a handshake deal to buy 10 18-foot chassis with the DD 453 n engine and Allison transmission. The Miami newspaper made a similar 10-engine commitment and we were on our way.
Within the next two years, we were well on our way to a totally diesel fleet and were already operating several hundred 453’s and beginning to switch to a 453 T (turbocharged) engine for more power and larger payloads. We were also replacing all our single-axle route delivery tractors with the Caterpillar 3208 engine as well. (It was also married to an Allison Transmission as well. Actually, we had standardized on Allison Automatics for all our new route delivery truck and tractor purchases before the embargo.)
We were hitting our 50% reduction in fuel gallons consumed pretty much across the board and our return on investment was also very good. However, the great surprise was that even knowing how bad our gasoline mileage was on our biggest routes, we had not realized the impact on route hours operated. Within just days, our largest trailer delivery routes (single-axle tractor & 35-foot tandem lift-gate trailers) were finishing routes an hour or two earlier each day. The new equipment had the power and torque to accelerate between stops and move in the normal traffic flow. We had been eating those hours for years and did not understand what was happening.
By the late 1970’s the United States had converted a large and growing percentage of its local distribution fleets to mid-range diesel power. The days of the large 450 – 534-cubic-inch gasoline V-8s was over; just as was cheap gasoline.
By the early 1980s The Southland Corp. had participated in the leveraged breakup of Occidental Petroleum Co. Southland purchased Citgo Petroleum, the downstream refining, marketing and transportation operations of the City Services Co.
After being “borrowed” from the dairy group, for about six months I did some post-acquisition distribution and operations analysis and then make certain operating and organization recommendations to the newly installed Citgo president.
After delivery of my recommendations I was asked to become the general manager of what would become the new corporate Citgo Surface Transportation Group. In addition to all Citgo pipeline terminals and wholesale loading racks, it included the inventory and delivery management for all U.S. 7-Eleven stores and a number of other areas of the wholesale motor fuels marketing operations in the United States
I could hardly decline implementing the recommendations that I had made while expecting someone else to do it. So, in 1983 I believed my “corporate dairy years" had come to an end.
In the late ‘80s Southland agreed to sell 50% of Citgo to the Venezuelan government. For personal reasons I then accepted an offer to return to The Southland Corp. to put together a new corporate transportation group for the manufacturing and distribution operations of the company.
What none of us knew at that moment was that the founding Thompson Family was going to put together a leveraged buy-out just one year later. In what I still hope was my greatest mistake, I joined with part of the dairy group staff in our own LBO to purchase the dairy group assets then being spun off by the Thompsons.
We created a highly leveraged Morningstar Foods, which about a year later went “sour,” if you will excuse the pun. It was a painful financial lesson learned and I was, by then, totally fed up and burned out with the corporate world.
I created TWG - The Wilson Group as a marketing logistics management group which offered the experience, skills and knowledge I had developed over the previous 20 to 25 years to a wide range of business and government agencies such as USDA’s Foreign Agricultural Service and the State Department’s USAID.
After agreeing to take over IDFA’s annual “Dairy Distribution Conference,’’ I also formed TWG Productions for the sole purpose of producing the annual DDC. I will always regret that we finally had to shut the DDC down after (I believe) our 10th year.
As I write this, it has been an incredible 48-plus years. What I’ve done, who I’ve met, where I’ve been and the friends I have made are both amazing and humbling. While it’s about wound down business wise, who knows what’s just around the corner. Thanks so much to those who may read this and remember.