Hardee Transportation Case Study 5-1

Hardee Transportation Case Study 5-1

Situation

Owner of Hardee Transportation, Jim O' Brien has developed his freight lanes, dispatch center, bobtail patterns, service customer trailer pools and pickup and delivery operations around the previous hours-of-service rule of 10 hours of maximum drive time for their drivers. The new hours-of-service rule calls for a total 14 hour-on-duty time. Jim's stance is that customers must reduce loading and unloading times in order to maintain current operating tempo. His sales team and customers do not agree with him and feel the new rules may actually reduce operating costs.

Major Concerns

Hardee Transportation's larger costumers have longer PUD times and may even increase them under the new rule, thus reducing the driver's actual drive time. Some customers require drivers to bobtail to their location. This is a non revenue producing leg that will now count against the drivers total duty time. Jim O' Brien is faced with increasing detention charges, or dropping customers, both have the potential for revenue loss and blemishes on the company's reputation.

Possible Solutions

Solution one would be to ask customers to reduce loading and unloading times, or face the possibility of increased detention charges and any additional charges for any non-driving times incurred at their PUD location during the driver's 14-hours of duty. This option takes the financial burden off Hardee Transportation; however it causes more fees or charges for Hardees customers and ultimately leads to disgruntle customers and could lead to a loss in business as customers find a new transportation company that does not require these types of charges and fees.

Solution two is to reorganize peddle runs around the customers PUD operating areas that require Jims drivers to bobtail. In doing this Hardees would be able to utilize the bobtails to haul other cargo, servicing more and even potentially new customers which would increase their overall revenues. Down falls here would be the initial costs and times required to establish these new freight lanes and peddle run routes.

Another possible solution would be to hire more drivers and establish a new dispatch facility. Strategically placing the dispatch facilities and new drivers closer to Jim's larger customers allows Hardees to give specific attention to his largest customers. This would increase his ability to service those customers and at the same time free up the other assets to his remaining customers. More drivers' means more possible cargo moved, which increases Jim's revenues.

Best Solution and Conclusion

The best option for Jim and Hardees Transportation is a combination of options one and two. Jim and his sales team should