Huffman Trucking Transportation Analysis
ISCOM/374 – INTEGRATED LOGISTICS MANAGEMENT
Huffman Trucking Transportation Analysis
In conducting my research I found out that there are three logistics / marketing strategies that I would like to champion to the company’s strategic planning in order to increase your company’s return on investment (ROI) and market share; this is include ensuring quality and implementing cost containment. In my opinion, there are two options you can use at your disposal; you would need to decrease the size of the fleet and dissolve certain pieces of equipment before it depreciates to a certain extent where you would lose your return on investment (this would include cutting labor costs by laying off roughly 1450 workers you currently employ); or improve revenue by pursing different avenues in order to grow the business entity; this in turn might cause the business entity to purchase more assets. If this happens you can save money by buying the tractor trailers with around 20,000 miles already on the trailers instead of purchasing them brand new.
Firstly, since the initial growth of the company was a direct result of WWII, have a national account manager solicit more business from the U.S. government. There is already a strategic alliance between both forces due to strong relationships built back in 1941, so increase sales through carrier services used to haul anything produced in factories for the war in Iraq. Next, you are currently doing business with Automotive Part Suppliers, but at what cost and how much business have you lost from the economy in this sector? Renegotiate prices to be the cheapest price with Automotive Part Suppliers and pick up all the business with all the Automobile Part Suppliers and knock out your competitors to make up for the lost business due to upheaval of the automobile industry. For instance, Enterprise rent-a-car has over 50% of the market tied down out of several major and minor competitors, because they can afford to do it for less. They are the only large competitor in the industry still privately owned and they are making a fortune even in this weak economy.
My analysis from the projection of current market trends is that due to the recession, the closing of automobile plants and certain makes and models of automobiles becoming now non-existent the making of parts will slow down and in some categories completely quit or be moved to one supplier in a whole different part of the country instead of in the past where suppliers were being located everywhere in the U.S. A national account manager needs to research where all the parts for every brand of car is being shipped out of and negotiate a deal the Automobile Part Suppliers can’t refuse. The automobile industry is struggling and for a good deal they will risk an old friendship with a current vendor to switch over to Huffman Trucking.
This same approach taken with the automotive sector should be utilized with all computer manufacturers and suppliers as well. Regardless of the economy electronics and technology are growing. Offer them the cheapest price in the business and see how many competitors’ throats you can cut and tack on even more market share, almost monopolizing the industry with a price no one can beat.
Lastly, open up small preventative maintenance locations in other Huffman facilities (Los Angeles, CA; St. Louis, MO; Bayonne, NJ) for the rolling equipment. Every time the “roll on/roll off” units reach around 25,000 miles you are hauling them all the way back to where your parent company is located in Cleveland, OH; think of how much fuel is being wasted and miles put on vehicles getting them back to OH when they could be closer to one of your other facilities. Having optional locations all over the U.S. to route rollers to in accordance to 3 where they are already located will limit the cost associated with the preventative maintenance. Another cost saving method is to consider buying fuel in bulk.
Additionally, Huffman Trucking needs to assess how technology may impact future transportation strategies and considerations. “C.J. Driscoll & Associates has released a comprehensive new study on the U.S. market for automatic vehicle location (AVL) systems for fleet vehicles. This study assesses the size of the fleet market, current AVL penetration levels and prospects for growth. The report analyzes the potential impact of broadband wireless data networks, GPS-equipped phones and Homeland Security initiatives on the U.S. fleet AVL market. Prospects for emerging markets, such as trailer monitoring and asset tracking, are closely examined. Detailed information is provided on over 80 U.S. and Canadian suppliers of fleet vehicle location systems and services, including current installed base and system pricing” (Driscoll 2008). In the future, the increased use of GPS-equipped cellular phones will reduce opportunities for AVL equipment sales, while increasing the need for fleet monitoring and reporting services.
At some point the government will more than likely mandate a tracking and monitoring system as protocol due to potential terrorist attacks. This will cost Huffman money to install a wireless tracking device on the carriers; however due to all the competition in the market prices are currently cheap, so if you are going to buy now is the time. My prediction is as a result of so many competitors we will start seeing an array of mergers and acquisitions in order to squeeze everyone out, but the big players, which will ultimately increase pricing from the companies left in the market if purchased later.
Furthermore, Huffman Trucking is considering expanding into the international market by 4 offering carrier services in Mexico; there are various policies and procedures that must be followed to enter Mexico they are as follows: Huffman Trucking will have to open a service center in Mexico; a U.S. freight forwarder will facilitate the border-crossing process; this person performs various tasks such as delivering the export documents to Mexican customs broker and arranging the carrier to then move the shipment through Customs; after U.S. Customs clears the required documentation the carrier then proceeds to Mexican Customs; the Mexican broker meets the carrier at the border crossing and clears the trailer through Mexican Customs; once cleared the carrier will then deliver the freight to Huffman’s newly occupied service center.
U.S. Customs will inspect for cargo compliance ensuring that all cargo entering or leaving the U.S. complies with Customs law and other federal laws. Customs examines cargo on a random basis, or for cause. If, after inspection, there is no problem, the cargo can be released. If Customs determines there is a problem, the cargo can be seized and/or a fine may be added to the duty. A shipment can be seized for several reasons, including if the cargo does not match the entry documentation or if the cargo is contaminated (Combs 2001). Primary inspections are always conducted at the border crossing. A primary inspection includes quick reviews of personal identification and citizenship, cargo documentation, and vehicle inspection. Secondary inspections are conducted at border crossing lots. Secondary inspections include more detailed reviews of cargo documentation, cargo, and drivers.
The USDOT regulates the motor carrier industry through the enforcement of the Federal Motor Carrier Safety Regulations Act (FMCSR). Standards set by the FMCSR cover driver qualification, safe and proper operation of vehicles, inspection and maintenance of the vehicles, and hazardous materials transportation (Combs 2001).
The question that Huffman Trucking needs to evaluate before making their final decision is 5 will the income generated from the international transactions outweigh the expense associated with the new venture. First, how much is it going to cost during each trip across the border? What type of financial costs will the company bare in insurance coverage put in place on customer’s goods as well as carrier service / trucker’s insurance for the actual tractor and trailer; what if there is a claim how much on average will the insurance increase at the company’s expense? Is Huffman Trucking going to cover against loss or damage to the customer’s shipment when it is being delivered in Mexico? Once at the service center how many days will it take the goods to be delivered in Mexico? How much will it cost to lease or buy property, plus construct a service center? Will you have a miscellaneous fund set aside incase cargo / goods are seized at the border for inaccurate paperwork? Will you hire additional help just to ensure all the paperwork is orderly and proper for the execution of crossing the border without any timely delays or seizures?
In closing, please take my advisements under review, because my goal is to see that Huffman Trucking’s mission and vision are carried on to the next generation and still generating enough profit to stay a private entity. My recommendations will entice stockholders, benefit employees, customers and all stakeholders by continuing Huffman Trucking’s success in being a profitable, growing, sustainable, thriving conglomerate in an extremely competitive logistical services business.
C.J. Driscoll. “U.S. Fleet AVL Market Study” (Summer) 2008.
Susan Combs. “Window on State Government.” State Functions at the Texas- Mexico Border and Cross-Border Transportation. (January) 2001.