Peregrine Trucking Co. Essays Example
Fuel cost in trucking industry plays an important role in the expense column of the accounting statements. The revenues of trucking companies are high susceptible to variation in fuel prices. Peregrine Trucking Co. is paying around 50% of surcharge in a normal TL freight bill. Upon taking the chair of presidency, President Obama put the requirement of meeting pollution standards on all vehicles including heavy duty buses and trucks. There was no policy regarding fuel economy of such vehicles including carbon pollution caused by increased usage of fuel in the low fuel efficiency vehicles .
Peregrine Trucking Co. is a company operating in eastern states of United States. The company has contracts with another trucking company that operates in southern states in order to deliver shipments to western states of US. The company has presently around 150 trucks in operation and has a website to take online orders. The company has head office in New York City and various branches major cities of each of the eastern states of US. The company have more than 500 employees that include around 300 drivers of its trucks. The company has well trained drivers who are competent to drive in any area under any condition; however, they are not skilled at saving on fuel through driving vehicles at optimum level of fuel efficiency.
Peregrine Trucking Co. has been incurring substantial expenditures in terms of fuel consumption of its trucks. The company may save lots of money resulting in increased level of revenue through adopting various fuel saving measures. The measures include improving or adopting five major processes in the company. The company must also devise procedure of monitoring progress of the proposed improvements in the existing processes. The effectiveness of suggested processes would determine further implementation of these processes in the company.
Peregrine Trucking Co. can make use of five major process improvements in the present setup of the company resulting in reducing fuel cost. These five processes to improve fuel efficiency are as following: -
Improving procurement process
Procuring right equipment is an important area in the company in order to ensure high efficiency of the trucks. The main focus should be on buying the required capacity trucks as per the shipment handling of the company. The company needs to procure the right size of trucks while looking at previous trends and the forecasts of the company. Procurement does not end after buying trucks but it continues till a company lasts. It includes procuring the right type of tires for the trucks according to their area of operation. The tires used in desert areas would be quite different from tires used in hilly areas. It appropriate type of tires are chosen then the company would greatly reduce it fuel cost through improving fuel efficiency. Improvement in procurement also means buying good quality fuel and other lubricants .
The fuel cost saving would be substantial through enhancing fuel efficiency which would result in increased revenue to the company. The result of this improvement in the process would bring positive results towards a healthy and less pollution through lower consumption of fuel. The fuel saving would also be useful in terms of recovering the cost of purchased equipment and vehicles. The company may also get into contract with suppliers through signing contract pertaining to fuel efficient products at lower prices. The company can monitor procurement of fuel efficient equipment through comparing the procured equipment or vehicles with the forecast. The company can also get an idea regarding fuel efficiency improvement through measuring and comparing the fuel efficiency of the vehicles before and after installing newly purchased equipment for the vehicles.
Choosing the right settings
When the trucks are tuned on regular basis it is important to make right settings in the components of the trucks. In order to improve the fuel efficiency, there exist various custom settings that enable a truck to cut down on its fuel consumption. Making appropriate settings includes the suspension settings of the trucks which plays great role in load handling and consequently affects fuel efficiency. The air pressure in tires play vital role in affecting fuel efficiency. Fuel efficiency can be increased through keeping appropriate level of air pressure in tires. Time pressure of more or less than required certainly results in reducing fuel efficiency of the vehicle. There are several other settings or factors that are of similar nature in a truck upon which fuel efficiency depends .
Fuel efficiency enhancement through applying appropriate settings and other features of trucks would greatly reduce consumption of fuel. The fuel efficiency of trucks heavily relies on the settings mentioned in previous paragraph. Suspension as well as tire pressure are required to be setup according to the load that is on the trucks. Engine tuning and other oil levels are required to be kept at appropriate levels which greatly affect fuel efficiency. The company can devise a procedure that constantly measure the fuel efficiency of each vehicle on regular basis and suggest relevant change in setting accordingly. The company may also need to measure fuel efficiency before and after changing and setting of vehicle’s components that are related to consumption of fuel or load handling. The company may also save a substantial amount of money from saving on equipment that would wear lesser due to running at the optimum settings.
Drivers are always trained to drive safely and not on the basis of saving fuel. A training session would be planned for all the drivers of the company in which they will be taught about the techniques of improving fuel efficiency. These techniques would include choosing appropriate gear in various landscapes and at various speeds. The right settings as mentioned in the previous process. Training is perhaps the most critical part in reducing fuel cost. Staff carrying out servicing and maintenance of vehicles are also to be regularly trained on various techniques to carry out such maintenance that results in enhancing the overall fuel efficiency of the vehicle .
Training of personnel would not reflect directly on the efficiency of fuel through direct measuring methods. The benefits of this process can be seen through the skills level assessment of the staff prior to and after conclusion of the training courses. Staff may also be asked to give suggestions regarding improvement in training and addition of new courses for better training and improvement of skills.
Disposing of obsolete trucks
It is important to have more trucks in the company but utilizing old trucks comes with an increased fuel cost. The company needs to understand the importance of disposing of / salvaging of old trucks based on their performance. In this regard the performance of trucks older than 20 years is required to be monitored especially in terms of their fuel efficiency. The company should work out the price difference of new and old truck and calculate the fuel efficiency of both while load handling is also under consideration. This will give the time to recover the price difference of new truck through efficient usage of fuel.
There are two major benefits that the company would be having as a result of disposing of obsolete or old trucks. First benefit is the direct money acquired from auctioning or selling of the old trucks that would help in buying new ones. Second benefit is regarding fuel and other spare parts savings that would have been continuously incurring in case of old or obsolete trucks. The company can calculate the measureable effects of buying new trucks on the fuel efficiency and cost through analyzing the fuel economy of each new truck and comparing it with the already disposed of truck. A simple system that could be implemented is to assign and renew the forecasted age of each truck presently held at the company on regular basis. The company may also get into contract with another company that is interested into buying old trucks. Such an arrangement would definitely reduce time and efforts in selling or auctioning old trucks.
Choosing the right fuel
A suitable type of fuel according to the vehicle makes big difference in it efficiency. It does not limit on choosing the right type but also choosing the right brand. The company needs to carry out thorough study on the fuel quality of various companies offering fuel of various types. The study should conclude upon defining companies for each type of fuel. The company needs to implement strict policies regarding filling up tanks from only defined companies. The best way to do so is through signing contract with the fuel companies. Such contracts not only offer discounted prices to the trucking companies but they also play important role in ceiling the price for certain time period in future as well .
Choosing the right fuel would greatly reduce fuel cost through efficient usage of the fuel. Another major benefit to choosing the right fuel is that the engine life of vehicles are improved since it greatly depends on fuel quality. The fuel efficiency can be easily measure for two different fuels and then compared for arriving to the conclusion about choosing the right one. The company should get into the contract with the company that offers the best fuel quality; however, the fuel price must also be regulated in order to ensure saving money on the fuel cost. The reason to ensure fuel price is that improving fuel quality and other areas and processes within the company would not be beneficial if fuel prices go up as offered by the company with which Peregrine Trucking Co. gets into contract.
Peregrine Trucking Co. needs to implement the abovementioned five processes with true letter and spirit in order to improve fuel efficiency of its fleet. These measures would also be beneficial in reducing fuel consumption which would result in lower pollution. The company needs to take strict initiatives in order to ensure that the abovementioned processes are not only understood by all concerned by taken seriously by them.
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