Hy-Vee Fuel Efficiency

• Employee Owned Company• Founded in 1930• Corporate Office – West Des Moines• $7.2 Billion in Sales Last Year• 235 Stores• Over 60,000 Employees

Chariton

• Hy-Vee Distribution Centers– Chariton, Iowa – Cherokee, Iowa

• Subsidiary Distribution– Perishable Distributors of Iowa– Lomar Foods– Florist Distributing, Inc.

Hy-Vee Sales History

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Approximately 250,000 Square Mile Trade Territory

Hy-Vee - Transportation

Asset Allocation

Tractors Trailers

Chariton 144Cherokee 66PDI 95Total 305

Chariton 320Cherokee 75PDI 120Total 515

Total Acquisition Cost: $60,000,000

Miles Driven

Chariton 18,285,110

Cherokee 5,322,490

PDI 7,463,503

Total Company 31,071,103

Equivalent to 1,248 trips around the world every year.

Transportation - 2011

Chariton Cherokee PDI Total

Outbound Loads 45,608 12,641 22,891 81,140

Outbound Tons Hauled 723,122 317,053 280,000 1,320,175

Backhauls 21,662 4,642 11,765 38,069

Contract Backhauls 2,376 NA 2,004 4,380

% of Loads with Backhaul or Contract 53% 37% 60% 52%

Effect of Fuel Cost on Truck Expense

Effect of Fuel Cost on Truck Expense

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Fuel Price Per Gallon

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Fuel Cost Per Mile

Truck Expenses

Wages Fuel Depreciation Group Insurance Vehicle Repair Other

26.7 Million

18.2 Million

6.1 Million

3.1 Million

3.7 Million

9.2 Million

Fuel Economy

Projected SavingsFuel Economy over 6.4 mpg

GOAL: To improve transportation efficiencies without disrupting service to our stores.

Technology

• Tractor/Trailer Aerodynamics• Tires – Super Singles & Fuel Efficient Duals • Onboard Computers – People.net• Fuel – Biodiesel & Propane • Load Planning – Retalix Transportation

Optimization (RTO) • Dispatch Visibility – CAMS • Tractor Specification

Aerodynamics

Trailer Aerodynamics

SUPER SINGLE TIRES• Began in 2005 with 5 tractors & 5 trailers (40 tires);

expanded to additional units

• Test results with super singles on tractor & trailer showed 0.12 to 0.32 mpg improvement in fuel economy

• Fuel economy shown with super singles was wiped out by reduced tire wear & driver satisfaction

• Currently phasing out super single tires &have gone to a fuel-efficient dual tire

Fuel-Efficient Duals

PeopleNet Onboard Computers

PeopleNet Reports

• Records MPG– By Driver– By Tractor

• Records Idle Time

• Driver Speeds

• Driver Activity Reports

• Bread Crumb Trail

• Fuel Tax

Fuel – Soy Biodiesel• 18 month test

• 5% blend

• Adds lubricity to the engine to offset the

ultra-low sulfur diesel

• 183,000 gallons purchased

• No impact on fuel economy

• Cleaner fuel system

• Cost Prohibitive – Adding Soy Biodiesel

increased fuel cost by $0.09 per gallon

Benefits of Fuel – Propane Mixture

• Reducing fuel cost & increasing fuel economy

• Improved engine horsepower• Receive approximately 75 HP boost with

propane

• Extended service intervals– Use of propane reduces particulates caught in

the particulate trap– Oil soot samples have been reduced

• Reduced greenhouse gas emissions• Warranty is still valid

Propane Diesel Injection System

• A small amount of propane is mixed with the air intake prior to the introduction of the air to the engine (20% propane & 80% diesel).

Propane Diesel Injection SystemWhy it is so beneficial….The small amount of propane increases the combustion efficiency of the diesel burn producing more mpg and less emissions and enhanced performance.

Propane ComparisonPlain Diesel

Miles Gallons MPG Cost/Gallon Cost/Mile

Diesel 125,000 20,358 6.14 $3.64 $0.593

Total Cost/Mile $0.593

Diesel + Propane

Miles Gallons MPG Cost/Gallon Cost/Mile

Diesel 125,000 17,934 6.97 $3.64 $0.522

Propane 125,000 3,289 38.01 $1.31 $0.034

Total Cost/Mile $0.557

Difference $0.036 per mile savings

Estimate Annual Savings145 Tractors

18,000,000 miles driven annually

@ $0.02 per mile = $360,000

@ $0.03 per mile = $540,000

@ $0.04 per mile = $720,000

Estimated Cost to Purchase & Install Propane System

on Entire Fleet145 Tractors x $1,800 = $261,000

18,000 gallon tank and 2 pumps = $40,000

$301,000

AmeriGas Agreement

Will Install 18,000 gallon tank and 2 pumps - $40,000

145 units x $1,000 rebate -$145,000

-$185,000

Hy-Vee Investment $116,000

ROI of Approximately 4 months

• Routing Software was installed in 2010

• Interfaced with our Warehouse Management System & Electronic Dispatch

• Provides Dynamic Routing

Retalix Transportation Optimization - RTO

CAMS Dispatch Software• Allows visibility between Distribution Centers• Interfaces with our warehouse management

system, routing software, & onboard technology (PeopleNet)

• Streamline payroll• Dispatch loads to drivers• Reporting & analyzing equipment usage• Tracks backhauls• Manages drivers time off• Track average delivery weight & cube by store

New Tractor Technology

• 2011/2012 Volvo Tractor– 2010 EPA emission standards– Aerodynamic body style– I-Shift automatic transmission– Disk breaks reduce stopping distance– Have purchased 60 over the last two years– Averaging 6.8 mpg as a group– Most popular tractors we have purchased

Increase Freight Capacity

• Maximize Outbound Weight & Cube• 81,140 Loads

• Contract Freight• 4,380 Loads

• Backhaul Freight• 38,069 Backhauled

• Direct Store Deliveries• Included in backhaul freight

Contract Freight - Hormel

• Partnered with Hormel in 2004

• Hy-Vee’s private fleet delivers to Hy-Vee stores in a 7 state area• Hormel has several plants in this 7 state area• Currently pick-up 2,400

loads per year

• StoresPlants

Chariton & Cherokee DC’s

Backhauls• Backhaul over 50% of our loads• Reduce empty miles• Deliver to subsidiaries• Major Suppliers:

– Kraft– Premium Water– American Bottling– Kimberly Clark– Quaker– Hormel– General Mills– Unilever– Nestle

Direct Store Deliveries – DSD’s

• 8.4% of backhauls are DSD’s• Allows stores to make better deals with

vendors– Kraft– Premium Water– American Bottling– Kimberly Clark– Quaker– Hy-Vee Lawn & Garden

Questions?