Late Delivery Fines Raise the Stakes, Boost the Value of Tolling and Greater Mobility for Commercial Truckers

Two of America’s biggest grocery retailers, under pressure from upstart competitors like Amazon, are raising the stakes and shifting the cost calculations on commercial truckers’ access to safe, reliable mobility.

Kroger and Wal-Mart have begun fining their suppliers for late deliveries, in a bid to “keep customers satisfied and better compete with online retailers,” according to a Wall Street Journal article  “Produce or Else: Wal-Mart and Kroger Get Tough with Food Suppliers on Delays” this week [subs required]. “Kroger Co. is fining suppliers $500 for every order that is more than two days late to any of its 42 warehouses, and Wal-Mart Stores Inc. is charging suppliers monthly fines of 3% for deliveries that don’t arrive exactly on time, according to the retailers. They began issuing most fines in August.”

Massive Competitive Pressure

The news is telling, but not terribly surprising, given Amazon’s moves in recent years to massively expand its business footprint and compete head to head with bricks-and-mortar retail. Wholesale distributors have been up against Amazon and at least one other online distributor for years, trying with some success to offer customer service and customization to counter a business model based on high volume and low price.

So as Amazon moves its retail presence into new product lines, it makes sense that traditional retailers are looking over their shoulders. Particularly when demanding consumers—that’s all of us—might well abandon a retailer that doesn’t stock the items we need or want.

“An out-of-stock on an important product can lead to thousands of lost consumers in a given day,” J.P. Morgan food analyst Ken Goldman told the Journal. That observation adds urgency to the reality that only about 75% of orders from large suppliers reach their destinations on time and complete.

Truckers Bear the Brunt

Understandable though it may be, the trend is not at all helpful for suppliers that will now pay a financial penalty for factors like weather, road quality, and congestion. Exactly how long does anyone think it will be before wholesalers pass the penalties and the stress on to their freight transport providers?

“Retailers used to give suppliers more leeway, since any number of factors—bad weather, a surge in demand, technology malfunctions—can foil deliveries,” the Journal states. “But sales of some $75 billion a year are lost because products are out of stock or unsaleable for other reasons, according to the Food Marketing Institute, a trade organization. That is about 10% of annual grocery sales industry-wide at a time when margins are squeezed, and sales growth is hard to come by.”

Add competition from Amazon to the mix, and it’s no surprise that retailers would focus in on that $75 billion and try to capture as much of it as they can.

Tolling as Secret Weapon

What if there were a simple, obvious solution, in plain sight, to this growing conundrum?

How much would it be worth to truckers if they had access to a smart, technology-enabled mobility option that improved their on-time delivery statistics, while boosting the efficiency of their own operations? After all, time is money.

If only there were an existing network of roads, with 5,932 miles of infrastructure spanning 35 U.S. states and territories, a proven performance record, and a genuine passion for helping truckers and other customers reach their destinations, safely and on time?

You can see where we’re going with this.

Tolling can only indirectly address the problem of incomplete orders—while it helps manufacturers bring in raw materials and get their products to distributors more reliably, it can’t solve production bottlenecks that are unrelated to transportation.

But for truckers who miss their delivery slots from distribution to retail because traffic was backed up, or because the bridge they needed to cross was subject to shut down or subject to weight limits…if the cargo is destined for Kroger, Wal-Mart, or any other customer that might soon follow their lead, the cost of the solution just became that much more attractive compared to the penalty for late delivery.

Get the latest and share your own knowledge on today’s tech-enabled toll roads. Mark your calendar for IBTTA’s Managed Lanes, AET & Technology Summit, April 22-24, 2018 in Charlotte, NC.