The transport industry, especially the trucking sector, has experienced and would continue to experience changes given the current economic climate. Economic uncertainty has brought about waves of speculation that have ultimately led to the drastic rise in fuel prices. The trucking industry has felt the direct effects of the ever-changing fuel market much more than any other industry in the United States (EPA, 2014). The rising fuel price has led to key industry players to devise ways of combating the problem. In coming up with ways of cutting the operational costs, the environment should also be put into consideration. The transport sector has been found to contribute heavily to carbon emissions that have led to climate change. Hence cutting down fuel costs would not only be reducing operational costs but also bolstering environmental conservation.
At Peregrine Trucking Company, there is the potential of reducing fuel costs through the use of efficient trucking equipment and the coming up of better rules and processes. Saving fuel costs can be realized through the following strategies:
- Getting good equipment i.e. tires, efficient engines, chassis etc.
- New rigs i.e. trailer or tractor
- Fleet operating rules
- Driver training and hiring skilled drivers
- A proper fleet management system
The lacks of usage of these five proposed strategies are some of reasons as to why many trucking companies are incurring high fuel costs. Trucking companies have been performing poorly as a result of high fuel prices that have had a negative effect on their profit margins. With the employment of new technologies, acquisition of better equipment and improving the trucking processes, trucking companies would realize a significant drop in their fuel costs. This paper would attempt to discuss in detail the proposed five strategies that would significantly reduce fuel costs and the carbon footprint of Peregrine Trucking Company.
The purchasing of better equipment and their proper usage would lead to a substantial reduction in fuel costs. Faulty and inefficient equipment including tires and wheels, engine and chassis among others lead to an increase in the fuel consumption. The engine, cooling system, fuel system, exhaust system, electronic system, braking system and all the other parts of the truck should work in harmony in order for a truck to spend more time on the road than in the garage. In order to save on money and get its value, it is imperative that original parts are bought and of good quality to be specific.
Low resistance dual tires or wheels and single wide tyres should be purchased. Single wide tires and wheels are lighter than the two standard tires and wheels. These tires and wheels would lead to weight savings that would ultimately lead to a reduction in fuel consumption and increase the cargo capacity of the trucks (EPA, 2014). Wide tires also have a lower resistance. It should be noted that tire rolling resistance accounts for close to 13% of the truck energy use. Another benefit of single wide tires is that they need fewer replacements. It is estimated that the use of single wide tires and low resistance tires would cut $ 1900 in fuel costs and significantly reduce carbon emissions (EPA, 2014). Proper tyre inflation has a very big effect on fuel consumption. If the tyres are well inflated, the truck won’t experience hardship while on the road and will therefore save fuel enormously. Automatic tire inflation systems (ATIS) should also be installed. With these systems in place, tires would be properly inflated leading to a reduction in fuel consumption (EPA, 2014).
The engine should be well serviced to help with the durability and the strength. A good chassis should be able to support the engine and the vehicle as a whole. A twisted chassis can cost the company a lot because the efficiency of the truck is compromised and there is a high chance of losing the goods/merchandise on board. The most efficient engine should be environmental friendly (Logistics, 2014). The exhaust system should be made in a way that reduces the amount of carbon that goes to the environment. With the advent of technology, there are various brands that have an exhaust system which does not release the waste carbon as it is to the environment. Filters should be installed to manage fuel wastage by engines. The less fuel an engine consumes the better. This has been achieved by most manufacturers building engines that can recycle the energy used so that none goes to waste at all. The fuel combustion systems have also been made to use very little fuel to produce lots of energy. This kind of structure in a truck is recommendable and acceptable if the company means to maximise its returns (Logistics, 2014). Up to 50% can be saved on fuel once trucks that come with such engines are procured.
The purchasing of new tractors and trailers fitted with equipment that reduces fuel consumption and carbon emissions. A good example of tractors and trailer with such equipment are the US-EPA designated tractors and trailers that are outfitted with such equipment at point of sale. Smart way tractors and trailers have been found to be the cleanest and most fuel efficient equipment available. H.O Wolding Trucking Company located in Wisconsin found out that the new US-EPA designated tractors and trailers they purchased saved them $12500 annually (EPA, 2014). The purchase of these new rigs would also result in fuel costs saving and carbon emission reductions by Peregrine Trucking Company with similar margins.
The purchase of tractors and trailers with improved aerodynamics would also significantly reduce fuel consumption (Stanton, 2013). Improvements in tractor aerodynamics can be through the use of side fairings, cab extenders and aerodynamic bumpers. Improved trailer aerodynamics includes minimized distance between tractor and trailer, side skirts and rear fairings. Improved aerodynamics would see the company saving over $3500 in fuel costs (EPA, 2014).
If a trailer is in a bad condition, it is going to cause a lot of expenses on the fuel consumption. The load will always seem heavier than it actually is. For the company to save on fuel there needs to be a constant check on the condition of the trailers and the trucks that tow them. The tires on the trailers should be in good condition. Less time spent on the road translates to a big save on the fuelling costs (Technique, 2014).
Every truck should come with the most compatible trailer depending on the work that is to be done. The fittings differ greatly from trailer to trailer depending on the merchandise to be transported.
Fleet Operating Rules
The coming up with rules proper and efficient rules to govern the fleet operations would greatly reduce fuel costs. Fleet rules would cover all the freight logistics from more efficient routes and delivery schedules and load matching to improved shipping and receiving practices. The company is supposed to come up with official routes to different destinations. This can be done through the employment of low-cost triangular routing that would greatly reduce the distance covered and fuel consumption. Such a system will be very helpful in saving the fuelling costs and subliminally, time. Triangular routing will ensure that the trucks follow the shortest route to their destinations. The routes selected should be safe and the roads in good condition (Technology, 2014). A road in bad condition may lead to an increase in fuel consumption because the vehicle goes slower and strains more.
A standard speed should be set for the driving of the trucks. Trucks should be driven at a slower speed as a higher speed results to an increase in fuel usage. Fuel is directly proportional to the speed at which the truck is being driven. Driving at high speeds not only increase fuel consumption but also put the driver’s life at risk. Slowing of speed is one of the ways drivers can improve fuel efficiency of the trucks. Idle reduction should also be enforced to cut on fuel usage. Idle time uses a lot of gas. It is estimate that an idle truck burns close to one gallon of diesel fuel per hour. Reduction in idling time can see trucks saving over $3000 in fuel costs. Fleet rules that Peregrine Trucking Company adopts should be enforced and ensure that all drivers abide by them. It is estimated that with the compliance with the fleet operating rules, the company would save $3000 in fuel costs and also cut the carbon emissions by 24 metric tonnes (EPA, 2014).
Driver Training and Hiring Skilled Drivers
Drivers play an integral part in trucking companies. Driver training would be one of the best methods of cutting fuel costs (Great Britain, 2008). Even the most experienced drivers need to be trained on the methods of reducing the fuel costs. Among the techniques and topics that the drivers need to be trained on include idle reduction, speed reduction, progressive shifting and engine speed optimization among many other topics. Training would equip the drivers with the knowledge on the need to cut fuel costs and skills necessary to achieve a reduction in those costs (Stanton, 2013). With drivers having been trained on fuel cost-cutting strategies, the company would achieve a substantial reduction in its operating costs.
The hiring of skilled drivers has proven to be a great challenge to most freight companies. Fuel costs are no longer as problematic as finding the right driver for the different types of trucks there may be. Peregrine can opt for hiring agencies that provide competent and skilled drivers. These hiring agencies over the years have proven to be very helpful with the hiring process. Truck drivers from these agencies possess valid licenses most preferably a Commercial Driving License (CDL). The drivers are also able to handle the trucks in the company. Such drivers can be easily found in local regional and international agencies (Business.com, 2014).Through these hiring agencies, the company would be assured of skilled drivers that would contribute to fuel costs reduction.
With a skilled driver in the company, a lot of savings are made. Accidents and careless mistakes that may cost the company a great deal are averted. Peregrine needs drivers who will be keen on the roads and go at required speeds. Through training and hiring of drivers with the skills on fuel costs reduction, the company will save close to $1200 in fuel costs and cut close to 8% metric tonnes of carbon dioxide. This would represent a 5% gain in the fuel company. Some trucking companies have reported a 20% gain in their fuel economies.
Fleet Management System
Fleet management is very important in the trucking industry. There has to be a set code for the operation of a fleet of vehicles. A fleet management team has to be set up with the proper equipment to ensure that the work is efficiently done (Zeimpekis, 2007). The fleet managers need to have the proper skills that will enable the transport company to improve efficiency, accountability and overall profitability. The fleet operations generate a lot of capital and also incur significant expenses. The fleet management team has to ensure that the operational costs that include fuel costs are well managed and the profits increased. Issues to be addressed in relation to fleet management include:
- Driver efficiency and performance is monitored to improve the performance
Fleet management is done with certified software that monitor how many trips are made and the movement of goods as per the set rules. Time of departure and time of arrival is recorded and in case there was a part where the driver made a stopover, it is easy to tell. The vehicle is wired to the system and this is a big motivation for the drivers to improve on their delivery speeds and also fuel consumption.
- The number of deliveries made need to be increased while cutting costs
The management is tasked with ensuring that the drivers make as many trips as possible within the reasonable time. The shifts are arranged in such a way that the truck is always on the road making deliveries. Employing a number of drivers may cost more but the more the deliveries, the more the profit. A round the clock system is always very efficient because the customers will always get their products regardless of the time.
- Manage wear and tear of vehicles
Trucks are always going to wear out due to constant use. The fleet management team can always make deals with a servicing company to have the trucks serviced without making the driver handle the cash directly. An expense card could be given and the service is billed directly to the truck company. This way it is easy to know what exactly was changed in the trucks and why. The management of wear and tear would greatly reduce fuel costs as trucks in bad condition tend to consume more fuel.
- Monitor movement to curb unauthorised vehicle use
The trucks are fitted with tracking devices to monitor the movement of the truck in case the driver gets lost or goes off course. It is easy to save on time and fuel if a way out of a wrong course is figured out immediately by the management team. Carrying of unauthorised goods and passengers can be checked by how much weight has been added to the truck. The more the weight on the truck, the more the fuel it consumes hence the need to monitor their movements. The whole truck is wired to the system and any type of change can be easily noticed.
- Manage fuelling
Fuelling of trucks in some instances has led to wastage of fuel by many truck drivers. The lack of a proper management system to monitor how and when to fuel these trucks has led to an increase in fuel costs. There is an urgent need for the company to partner with oil companies in the fuelling of the trucks through the use of fuel cards. These cards are made in such a way that the billing is directly done to the company. Some of these cards have limited number of times they can be used depending on how the company sees it fit. Fuelling companies give discounts to truck companies because of the massive purchases made. This saves the costs directly and also reduces the mismanagement of cash. Proper records can be filed for future reference. Proper statistics from the records are good for prediction of the future profits in relation with the records accumulated over a period of time.
Through a proper fleet management system, Peregrine Trucking Company would be able to save more than $4200 annually on fuel costs and reduce carbon emissions by close to 20 metric tonnes.
The employment of these five strategies would result in saving a huge chunk of money that previously went to fuel expenses. The savings gained from these strategies can be channelled towards motivation of the drivers, driver trainings and customer care. Drivers need constant motivation for them to perform effectively. Motivation can be in terms of salary increases, awards or team building retreats. Through motivation of staff, Peregrine Trucking Company would realize improved profit margins as a result of the extra effort put in by the workers. Alternatively, the savings gained can be invested in trainings that would lead to improved logistics, safety enhancement and reduced operational costs. Since the customer is the core of the business, money saved could also be invested in systems that would ensure customer satisfaction like having a contact centre. Issues to be tackled could include prompt deliveries and dispute resolutions. An improvement of services would ultimately lead to higher profit margins for the company.
GPS systems should be purchased by Peregrine Trucking Company to monitor their delivery patterns. GPS assisted routing can provide real time traffic updates and at the same time provide historic data regarding the same. Through GPS systems, the company would be able to know where there are problems with regards to delivery of goods to customers and act accordingly. The use of logistics software would come in handy in the monitoring of the fuel consumption by the trucks. Current technologies have allowed the invention of software that can provide information on level of fuel, fuel usage and fuel usage efficiency by trucks.
Fuel equates for about 30% of the total operating costs in trucking business (Great Britain, 2008). The less fuel usage would make good business sense and also help in environmental conservation by the reduction of carbon emissions to the atmosphere. It is conclusive that for proper fuel management, an all rounded measure needs to be effected. All the aspects in the welfare of the trucks and the efficiency of the personnel operating it should be well taken care of. To this effect a lot will be saved in terms of the liabilities the Peregrine has to shoulder. The main focus is to save majorly on fuel consumption because it is the biggest expenditure due to the increasing fuel prices.
Fleet Management - Cost Savings Calculator (Technology, 2014) (Logistics, 2014)
1 Total Monthly Minutes = 8 Hours a Day x 5 Days a Week x 4.3 Weeks in a Month x 60 Minutes in an Hour = 10,320 Minutes2 Working Days per Year = 5 Days a Week x 50 Weeks a Year = 250 Days
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