Nittany Products: Backhaul, Essay Example

Trucking in America has always been one of the central forces behind the economy, it moves more than 70% of all the freight tonnage in America. It is also one of the highly employed careers with approximately one in thirteen working in trucking related private sector in jobs including retail, public utilities, service transportation, agriculture sectors, mining, and manufacturing. As one of the leading driving forces of the United States economy, major companies rely heavily on the trucking industry to deliver their goods, and the government receives over 30 billion annually in state and federal highway taxes. Nittany Products relies on their private fleet in order to not only deliver products but also service commercial and noncommercial customers set up their grills. The value that the private fleet services brings to the company is measured in customer retention and customer loyalty. The use of developing backhaul traffic for hire business will not only benefit the company but the economy as well.

Private trucking is an expensive industry with rising fuel costs, higher wages, and a multitude of other challenges that include costs that impact the business. Nittany Products run their own private fleet services have to balance the costs of private trucking and eliminating the empty backhaul problem. Backhauling can pose a major problem for companies that truck their products. Backhauling, “is the return movement of a truck from its original destination to its original point of origin, especially when carrying goods back over all or part of the same route.” (ShipNorthAmerica) The costs of backhauling costs just about the same in time and fuel to drive fully loaded or empty. Due to regulations now require fleets to document and record all times and costs, this can be eliminated by trip leasing which sets up an agreement with the fleet and another fir that benefits the company. Another option used is transportation of exempt commodities that can be hauled without ICC authority and other regulations, which save from extra costs and fees.

The purpose of having private fleets are that it provides valuable services and lowers ransportation costs. (Novak, Bardi 445) One of the options that Nittany Products can take in order to curb the costs of private fleets and eliminate the backhauling traffic problem is to turn the private fleet into a profit center. The establishment of a profit center will eliminate the need for the private fleets to having to make a profit at any costs. Deregulation has permitted trucking companies to operate as for-hire carriers for hauling and easing constraints, and operating as a separate business entity. The profit center can, “solicit business from other shippers, thereby increasing the fleet utilization, eliminating the empty backhaul, and possible generating a profit for the parent company.” (Novak, Bardi 446)

In conclusion, Nittany Products can continue to provide private fleet service and eliminate their backhaul traffic problem by implementing their options of turning their private fleet into a profit center. Due to deregulation of the industry it has set up a provision that will permit the profit center to become a separate business entity therefore allowing for solicitation of other shippers and acting as for-hire service. This move will not only benefit the private fleet operations, but eliminate the problem, and increase the revenue for Nittany Products. Other options include trip leasing to other companies and transportation of exempt commodities that can go around regulations and the ICC. All these options help with empty back haul traffic and keep the private fleet provision in service to benefit Nittany Products.

Works Cited

ATA. American Trucking Associations. 2013. Web. 9 Aug. 2013. http://www.truckline.com/article.aspx?uid=41434598-4c60-444d-bc83-38f06ded539d

“Backhaul.” ShipNorthAmerica Transportation. 2007. Web. 9 Aug. 2013. http://www.shipnorthamerica.com/htmfiles/gloss_shipterms_back.htm

Novack, Robertm Gibson, Bardi. Transportation: A Supply Chain Perspective: A Supply Chain Perspective. Cengage Learning. 2011. Book