Case Stud Powell Logistics
Assignment #3: Powell Logistics Case Study A. Defining the issue
The immediate issue is to make a decision on the future of the family company.
B. Analyzing the Case Data * The truck transportation industry is a vital part of the Canadian economy with $43 billion in sales annually and employing 400,000 people * The for-hire sector accounts for 40% of the transportation industry in Canada * The for-hire sector has 2 service offerings: TL – Truck load, only full load between 2 locations and LTL – Less than load, pick up from various locations reorganize then deliver to end customer. Traditionally LTL charge more. * Trucking industry experiencing 3 major issues * Cost of fuel, increased operating costs forced to implement fuel surcharge * Canadian dollar value increase over US dollar, affected cost advantage of Canadian manufactured goods, decreasing transfer of goods between Canada and US * Shortage of qualified truckers with aging workforce, increasing wages * Strong competition in trucking: * Traveller’s Transportation Services, long standing same market as Powell, service offering included small customer orders using vans which Powell did not offer * Yellow Transportation, global competitor, publicly traded with large financial resources, high technology using online tools reducing costs * Powell in operation since 1979, with steady growth, with a fleet of straight trucks, tractor trailers and brokerage services. * License to carry general freight throughout Canada and the US. * Midsized company showing significant profitability, focusing on LTL services for higher margins even though more effort and expertise was required to manage the loads * Advanced technology including dispatch and satellite tracking in place as well as extensive trucking experience * Family business with eldest son acting as Vice President of Operations with many years of experience and no formal business
The immediate issue is to make a decision on the future of the family company.
B. Analyzing the Case Data * The truck transportation industry is a vital part of the Canadian economy with $43 billion in sales annually and employing 400,000 people * The for-hire sector accounts for 40% of the transportation industry in Canada * The for-hire sector has 2 service offerings: TL – Truck load, only full load between 2 locations and LTL – Less than load, pick up from various locations reorganize then deliver to end customer. Traditionally LTL charge more. * Trucking industry experiencing 3 major issues * Cost of fuel, increased operating costs forced to implement fuel surcharge * Canadian dollar value increase over US dollar, affected cost advantage of Canadian manufactured goods, decreasing transfer of goods between Canada and US * Shortage of qualified truckers with aging workforce, increasing wages * Strong competition in trucking: * Traveller’s Transportation Services, long standing same market as Powell, service offering included small customer orders using vans which Powell did not offer * Yellow Transportation, global competitor, publicly traded with large financial resources, high technology using online tools reducing costs * Powell in operation since 1979, with steady growth, with a fleet of straight trucks, tractor trailers and brokerage services. * License to carry general freight throughout Canada and the US. * Midsized company showing significant profitability, focusing on LTL services for higher margins even though more effort and expertise was required to manage the loads * Advanced technology including dispatch and satellite tracking in place as well as extensive trucking experience * Family business with eldest son acting as Vice President of Operations with many years of experience and no formal business