Redline Trucking Company Case Summary
Redline Trucking company has 50 years of experience in the trucking industry whose main revenue is from line-haul cargo. The company owns large number of tractors and trailers and grow into a sizable company in the recent years. The company grow by reinvesting the profit and incurred debt occasionally due to old truck replacement. Recently, Redline’s largest customer, Pilot chemicals, submitted a proposal to add new delivery routes in a view to expand Pilots supply chain. Redline now running at full capacity is contemplating about how to handle additional routes. On the top of that, a new mandate was also in place regarding implementing Electronic Logging (ELD) device by the Federal Motor Carrier Safety Administration (FMCSA) which is about …show more content…
But the challenges are also high which would drag the company into more debt and ruin the reputation if right decisions were not taken. Conversely, if Redline doesn’t accept the proposal a competitor would help can build loyalty with Pilot Chemical company. Redline’s operations head started to think about the pro and cons of the proposal. This offer might require addition trucks which would add more to the fixed cost expenses of Redline like Truck loan payments, Insurance premium, License fee, permit cost, cell phone payments etc. The downturn in the economy and the slim profit margin could spell disaster if more debts are incurred with truck, trailer purchase. Another option is to utilize independent contract truck drivers. They own their own truck but sometimes they are difficult to deal with due to several reasons like unwillingness to adhering to certain company’s policy or to keep up with the safety standard of the company. Providing a great service is essential with utilization of independent drivers otherwise it would damage the relation with Pilot company. Another possibility to think about is to squeeze more capacity within the current fleet which is already fully utilized. Redline normally assigns one driver for one tractor. As per the law a driver requires 10 hours of work after 11 to 14 hours of work. Federal
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