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OM in the News: Productivity Increases Are Driving the Trucking Industry

March 24, 2013
Average distance travelled by trucks is declining because of increased productivity

Average distance travelled by trucks is declining because of increased productivity

The road ahead for the nation’s 18-wheelers is shrinking, reports The Wall Street Journal (March 21, 2013), as rising fuel, driver and equipment costs have led shippers to devise ways to operate more efficiently. Truckers are driving fewer miles, allowing operators to squeeze more years out of vehicles already on the road and lessening the need to buy new trucks or expand fleets. While railroads have taken some freight from long-distance truckers, greater productivity is having a bigger impact. Lighter weight and smaller packages, better routing and fewer empty trucks on the road have affected productivity. Last year, the average distance traveled by tractor-trailers in the U.S. fell to 110,614 miles, a 12% decline from the late 1990s.

“We’ve been working through a period of super-productivity gains in trucking,” says the president of ACT Research. “Everybody has been trying to take costs out of transportation. If your productivity is strong enough, you don’t need a lot of new trucks.”

Hillyard Inc., for example, a Missouri cleaning products manufacturer, clocked 2.8 million miles of driving last year with its 21 trucks. But less than 10% of those miles were with empty trailers, compared with 25% four years ago. Increased use of smart phones has improved Hillyard’s ability to locate drivers on the road and dispatch them on the fly to pickup and delivery sites. “Nobody makes money sitting still,” says the firm’s transportation manager. “We’re doing more work with the same amount of trucks.”

This leaves truck makers pinning their hopes on more fuel-efficient vehicles to stimulate replacement demand. A loaded tractor-trailer typically uses a gallon of fuel every 5-6.5 miles. Getting just 1 mpg more saves thousands of dollars a year on the fuel cost for a single truck. Cummins and Peterbilt are developing a new model getting 10 mpg, using a high-efficiency engine and a more aerodynamic trailer and cab that reduce wind drag.

Discussion questions:

1. Using Equations (1-1) and (1-2) in Chapter 1, what are the productivity factors (inputs and outputs) in this story?

2. Why is productivity in trucking such an important OM issue?

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