Running Head: Peregrine Trucking Co
Peregrine Trucking Co
MGT 325 Transportation Management
Organizations are constantly being challenged to identify ways to reduce operating cost, increase equipment capacity and utilization. There are many variables in why we see continued increases. One of the major effects is raising fuel cost. Companies are constantly battling this variable. This is not the only issue facing companies today. But it is certainly a concerning one to companies who rely on fuel for their company to thrive. These challenges are aligned with rising material costs as well. The economics of transportation affects the lives of all U.S. citizens and citizens of other nations. The environmental and socially conscious groups are concerned with the impact pollution and carbon is having on the environment (Hardisty, P, Sivapalan, M, & Brooks. P, 2011). The demand for transportation is very critical and a pervasive element in our society, it also impacts every person directly or indirectly (Coyle, J. J, Novack, R. A, Gibson, B. J, & Bardi, E. J. (2011). If an organization is to survive in the today’s environment, it must create a business model that will address the pressures which continue to surface.
The growing concern over the impact transportation is having on the environment is shifting beyond the idea of the greenhouse effect (Hardisty, P, Sivapalan, M, & Brooks. P, 2011). It has become such a major concern that the term green supply chain is being used all over the place (Coyle, J. J, Novack, R. A, Gibson, B. J, & Bardi, E. J. (2011). The Peregrine Trucking Company is no different than any other business facing this dilemma. Trying to find efficient and socially acceptable replacements that will yield cost reductions can be a major task. Transportation is such a vital part of the overall supply chain process that in order to remain competitive organizations must finds way to reduce operating costs. There are many options available to a business when searching for ways to reduce fuel and increase equipment efficiency. The challenge is to minimize the upfront cost by analyzing the options prior to making any decisions to insure that the return is well worth the investment and risk.
Wal-Mart, for example, was faced with the increase in fuel cost that affected 7,200 semi-tractor-trailers. The goal for Wal-Mart was to cut truck fuel use by twenty five percent, which would result in an annual savings in carbon dioxide (green house gases) equal to taking 67,744 cars off the road. Wal-Mart was able to reduce the cost by incorporating a fuel additive mix, more fuel-efficient tires and small diesel generators which are known as alternate power units to the tractors that would provide power to other elements within the cab. This allows the big engine to conserve fuel and turn off rather than idle when the truck is parked.
The concern of heavy duty vehicles impacting the environment is growing at an alarming rate. Government regulations and socially concerned groups are placing major pressure on organizations that are not acting responsibly. These heavy duty vehicles rely on diesel fuel as a major source of energy. The argument is the associated problems with the pollution it creates. In order to reduce the pollution effect and minimize the cost increase Peregrine Trucking Company can choose to convert to an alternate fuel source. Ultra low sulfur diesel, biodiesel, ethanol and oxygenate to e-diesel, fischer-tropsch diesel, and compressed natural gas are a few options available in the industry for transportation companies to consider (Meyer, P, Green, E, Corbett, J, Mas, C, & Winebrake, J. (2011).
The Peregrine Trucking Company may have to bear the cost of converting their fleet over to the new fuel or begin to purchase new tractors. The concern is that either option can be a very large financial impact to the business. In order for the alternative...
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