Case Study Hardee Transportation

Deregulation made it possible for motor carriers to possess laissez-faire. In other words, they are free to charge rates to generate income. Additionally, motor carriers are free to operate anywhere geographically (Coyle, et. al. 2011, p. 99). As a transport service provider, Hardee Transportation find themselves moving into a new market area. Furthermore, this new move, while increasing volume for Hardee's also requires specialty services. While it is important for Hardee's to know their cost, they have found it difficult to know how to set prices and remain profitable.

Most transport service providers acknowledge knowing their cost, even so most find themselves not knowing how to price as is the case with Hardee (Coyle, et. al. 2011, p. 128). Many factors affect pricing decisions. While Hardee's wants to make sure that this move is profitable, any pricing system should be easy to understand, and maximize the monetary resources of the seller (Coyle, p. 127). Since transport providers use different means to quote prices, two more common methods are price per hundredweight (cwt) and price per revenue, or loaded mile (Coyle, p. 153).

For Hardee Transportation, this new venture has an approximate cost of $7.26 (seven dollars and twenty-six cents) per cwt or $2.07 (two dollars and seven cents) per revenue mile. These prices recover cost for this new venture without added profit.

Transportation carriers have not had much experience in setting prices (Coyle, et. al. 2011, p. 134). There are several mistakes that are common in the transportation industry while price setting. One common mistake to be avoided is making prices to dependent on cost (Coyle, p. 134). Hardee Transportation needs to forego the traditional mentality that remains for some carriers by utilizing the new freedom and flexibility to change prices since pricing can be a tactical advantage if handled within the framework of ones business plan (Coyle, p. 134-135). Other common mistakes are not revising prices regularly enough as well as price setting outside of the marketing mix otherwise known as the "4Ps" (Coyle, p. 134).

Knowledge of the market structure/cost structure is necessary to develop carrier pricing. Hardee's should consider the area of contract price setting and/or specialty rates. Many different rate/service figures are found in the motor carriers contract rates and call for all types of movement and/or services (Coyle, et. al. p. 125). By utilizing contract rates and/or specialty rates, Hardee Transportation can specifically mold contract services to create incentives and consequences for each (Coyle, p. 126).

It is important to remember that price setting in the transportation industry is affected by customers, competition and actions of government and if managed properly can give a company like Hardee's a tactical advantage (Coyle, et. al. 2011, p. 135). However, there are times