Jack in the Box, living up to its name, is moving more of its freight via 53-foot containers on intermodal trains.
The fast-food hamburger chain saved hundreds of thousands of dollars in the last year by placing more goods, particularly temperature-controlled cargo, on BNSF Railway trains. An 8.5 percent spike in over-the-road trucking costs between 2011 and 2012 reinforces the prudence of Jack in the Box’s intermodal conversion strategy.
Jeff Brady, senior manager of transportation, sees the gains as just the beginning and envisions doubling the share of the company’s inbound intermodal freight to 12 percent in fiscal 2013. “We’re not crawling and we’re certainly not running. We are walking briskly,” he said.
His ultimate goal is to establish an intermodal framework that the company’s strategic distributor partner can expand upon as the undisclosed third-party provider finalizes the takeover of Jack in the Box’s distribution system. The San Diego-based company, which has approximately 2,200 restaurants in 21 states, is one of the few major U.S. fast food chains to have historically handled its own distribution.
Of the inbound moves controlled by Jack in the Box, intermodal usage increased 57 percent year-over-year between fiscal 2011 and 2012 and now represents 6 percent of all transportation moves. The share of temperature-controlled goods moving via intermodal jumped from 6 percent to 42 percent in the same period, a major improvement considering the company didn’t move any chilled intermodal shipments in fiscal 2011 and less than 5 percent of its intermodal loads were frozen. More than 10 percent of intermodal shipments now are chilled.
The shift at Jack in the Box reflects the broader growth of temperature-controlled intermodal. Reefer intermodal volume at BNSF, for example, has increased 33 percent since 2005, with some 150,000 units moved in 2011, railroad spokeswoman Krista York-Woolley said. Shippers’ increased focus on cutting transportation costs and growing confidence in the timeliness and safety of temperature-controlled intermodal is driving the growth. Railroads’ willingness to analyze shippers’ intermodal potential for free is also key.
“BNSF modeled our options,” Brady said. “They will tell you where there is a fit (for intermodal) even when it’s with another railroad. I find that level of transparency amazing.”
But it also takes willingness on the shipper side to consider intermodal. Brady, who helped dramatically boost Petco’s intermodal transport, said Jack in the Box used intermodal for only 3.8 percent of the inbound moves it controlled when he joined the company in mid-2011. Brady quickly saw an opportunity for increased intermodal usage, particularly for temperature-controlled goods, but he also realized the limitations. Refrigerated goods such as eggs and milk weren’t a good fit because they were fragile and time-sensitive.
It didn’t make sense to place produce sourced from the Central Valley, Calif., onto trains because the harvest season lasted only seven months before shifting to Arizona.
But moving more frozen goods via the rails made sense, and so did increasing the share of dry goods transported. Before he could proceed, Brady had to ensure the protection of Jack in the Box’s food-safety-first culture.
Brady was able to show his partners that not only had rail service become far more reliable but also that temperature-controlled intermodal containers maintain temperatures just like reefer trucks do. There haven’t been any intermodal freight damage claims specific to the transition from over the road since Jack in the Box boosted its share via rail, Brady said.
The shift toward intermodal has rippled through everything from purchasing and vendor selection to the network itself. The company increased its shipper pickup sites from 15 dry facilities and five frozen locations in fiscal 2011 to 21 dry facilities, 21 frozen-capable sites and five locations able to handle chilled goods. Between fiscal 2011 and 2012, the company more than doubled the intermodal lanes it used to 72. Brady said he has targeted another 70 intermodal lanes for dry product hauling if the vendor base remains unchanged. He also plans to add 40 lanes for temperature-controlled freight, which have the capacity to handle about 500 loads annually.
“The fact is that intermodal – as a feasible mode of transport – is now becoming an institutionalized part of the thought process and the procurement and distribution strategy,” Brady said. “The foundation is set to continue to drive improvements as opportunities present themselves. It is very exciting to be on the leading edge and thinking outside of the box.”