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Transportation Industry News

Transportation Industry News

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Transportation Industry News

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    1. Transportation Industry News Prepared by: CPA International, Inc. February 2008

    2. ODFL to Increase Rates 5.6% LTL carrier Old Dominion Freight Line said it will increase its base rates by an average 5.6%, beginningMonday February 16th. The increases will be based on the length of a haul, Rick Keeler, senior vice president of pricing and strategic development at the Thomasville, N.C.-based carrier, said in a statement. The increase is necessary to offset higher costs as a result of new equipment, new service centers, state-of-the-art technology, insurance costs as well as wages and benefits, he said. ODFL is ranked No. 20 on the Transport Topics 100 listing of U.S. and Canadian for-hire carriers.

    3. Hub Groups Fourth-Quarter Profit Declines Intermodal firm Hub Group Inc.s fourth-quarter net income fell 20% to $14.2 million, or 38 cents a share, from $18 million, or 47 cents, a year ago. Revenue fell 3% to $430.5 million from $445.5 million, the company said. Hub Group also does third-party logistics and freight brokerage. Intermodal and truck brokerage volume has been lower than expected due to the rapid downturn in the economy, Hub Group said in a statement. For the full year, it earned $59.2 million, or $1.58 per share, compared with $59.8 million, or $1.53, in 2007. Revenue rose 12% to $1.86 billion. The company said in December it expected to earn $1.56 to $1.61 per share for 2008, down from its previous forecast of $1.65 to $1.70 per share. For 2009, Hub Group said it expects to earn $1.40 to $1.65 per share

    4. UPS to Deliver for L.L.Bean UPS has been selected as the primary package delivery carrier for L.L.Bean, the 97-year-old outdoor apparel and equipment company. The move, effective Feb. 23, follows a lengthy evaluation process. UPS will provide both ground and air service to deliver the orders of L.L.Bean customers shopping through the famed retailers catalogs as well as online. L.L.Bean has been a trusted source for quality apparel, reliable outdoor equipment and expert advice since 1912. The company is well known for its world-class customer service.

    5. Vitran Lost $3M Vitran lost $3.2 million in the fourth quarter as integration and operating costs mounted and shipments crumbled in the face of the recession. With an 8.7 percent decline in less-than-truckload shipments, total revenue fell 11.5 percent to $154.2 million. The LTL segment lost $4.7 million, which was partly offset by gains in the truckload and logistics segments. The company also announced in December a one-time non-cash, $900,000 write-off of previously capitalized syndication costs. In the comparable 2007 quarter, Vitran recorded net income of $1.7 million. Looking forward, Gaetz cited cost cutting measures including downsizing the labor force and selling some redundant facilities. But the logistics segment seems to be a positive influence and added a dedicated distribution facility in California this month.

    6. FedEx Freight Cutting 900 Jobs FedEx Freight, the less-than-truckload unit of FedEx Corp., will cut 900 jobs because of declining demand and aggressive pricing by competitors, Bloomberg reported. The cuts, about 2.6% of the LTL units 35,000 employees, are in addition to 540 jobs trimmed at FedEx Freight late last year and 650 at FedExs Office division. FedEx said in December that it would cut its executives and salaried employees pay, suspend its matching contributions for employees 401(k) retirement plans for a minimum of a year and cut expenses by $200 million this fiscal year and $600 million next year. FedEx Corp. is ranked No. 2 on the Transport Topics 100 listing of U.S. and Canadian for-hire carriers.

    7. Shipment Index Hits 18-year Low The closely watched Freight Index of domestic shipping fell at its sharpest rate ever in January, reaching its lowest point since the key measure was launched 18 years ago. The shipment index, down at a double-digit rate since last summer, dropped 24.6 percent in January, exceeding the 23.1 percent drop reported in December. The index fell 5.7 percent from December to January, adding new evidence the staggering American economy is getting worse in 2009. Shippers also cut back spending at a record pace, reducing freight expenditures 22.8 percent compared to the same month last year.

    8. Shipment Index Hits 18-year Low Shippers also cut back spending at a record pace, reducing freight expenditures 22.8 percent compared to the same month last year. The spending decline likely included some reduced costs from falling fuel prices. But the measure of expenditures also fell 12 percent from December to January, a signal that industrial production and manufacturing remain in steep decline.

    9. Postal Service to Hike Prices May 11 The Governors of the U.S. Postal Service approved new prices for mailing services, including a 2-cent increase in the price of a First-Class Mail stamp to 44 cents. Prices for mailing services are reviewed annually and adjusted each May. The new prices, which go into effect Monday, May 11, are available now at usps.com/prices. Rising operational costs made the price adjustments necessary, said the USPS, but the postal service must index its increases to the rate of inflation. "The Postal Service is not immune to rising costs which are affecting homes and businesses across America today," said Postmaster General John Potter. "Even with the increases, the Postal Service continues to offer some of the lowest postage prices in the world."

    10. DOE Holds 09 Diesel Forecast at $2.28 a Gallon The Energy Department held its projection for diesel prices from a previous forecast, saying truckings main fuel would average $2.28 per gallon this year and $2.55 in 2010. Last months forecast was just a penny lower the current monthly short-term energy outlook, which DOE released Tuesday. Truckings main fuel averaged $3.79 at the pump last year, and the national average price in DOEs weekly survey released Monday was $2.219 a 2.7-cent decline from last week and down more than $2.54 from the record $4.764 set last July. Regular gasoline will average $1.95 this year and $2.19 in 2010, DOE saidup from last months $1.87 and $2.18 forecasts, respectively.

    11. DOE Holds 09 Diesel Forecast at $2.28 a Gallon DOEs weekly gasoline survey released Monday put the price at $1.926 up 3.4 cents from last week but down almost $2.20 from the $4.114 record set in July. Having fallen from record highs about $145 last year to below $40 per barrel, crude oil which averaged $100 a barrel in 2008 will average $43 a barrel this and $55 in 2010, down slightly from the $43.25 $54.50 respective forecasts of last month.

    12. States Look Toward More Toll Roads For Revenue More and more, states are making toll roads a permanent part of the nations highway system and eyeing toll dollars as a way to plug gaping budget deficits. This is a growing concern that has been top-of-mind the last few years for NASSTRAC shippers and carriers as they look for ways to keep their transportation costs down. This concern is underscored when you consider increasing toll road development. In fact, between 1992 and 2006, new toll road development increased to 75 miles a year from 50 miles, and over the next decade is likely to reach more than 180 miles annually, according to a report from the Federal Highway Administration. The state of Texas leads the country in developing toll roads, with 78 projects either completed or in development, according to the report. California follows Texas, and Florida is third. According to the report, although toll revenues are currently a relatively small part of overall highway revenues ($8 billion out of $165 nationally), tolls are an essential source of income for some states.

    13. States Look Toward More Toll Roads For Revenue Some toll projects focus on entirely new highways. According to the report, most of the new toll development is happening in states with new, fast-growing urban centers, such as Colorado, and in states that have had toll roads for decades, such as Illinois and Pennsylvania. Other projects consist of such features as high-occupancy toll lanes added to existing highways in congested urban areas, such as Northern Virginia, around Washington, D.C. The report also found that, while most of the new toll facilities are developed by public agencies, more than 20% of them now involve public-private partnerships. As tolls on existing roads are rising, states also are exploring opportunities to add tolls to free interstates.

    14. Southern California Ports - Clean Truck Fee Collection Begins Feb. 18th Effective February 18, 2009, marine container terminals will begin electronic gate access at the Ports of Los Angeles and Long Beach. Electronic gate access will determine whether a truck entering the marine container terminal is operating under a valid port concession and allowed entry or if the truck is prohibited by the Clean Trucks Programs progressive truck ban. Trucks without a Radio Frequency Identification (RFID) tag, which identifies the vehicle as working under a valid port concessionaire, will not be allowed entry into the ports container terminals.

    15. Southern California Ports - Clean Truck Fee Collection Begins Feb. 18th Also beginning February 18, 2009, the Ports of Long Beach and Los Angeles will require that marine container terminal operators collect the Clean Trucks Fee (CTF).The $35/20 FOOT AND $70/40 FOOT fee will be assessed on every loaded container move performed by trucks that are not fully or partially exempt from the CTF. In order to enter the ports marine container terminals on and after February 18th, all trucks operating for a Licensed Motor Carrier (LMC) with a valid port concession are required to be registered in the Drayage Truck Registry (DTR), have paid the $100/truck DTR registration fee, and have obtained and mounted a working RFID tag. Trucks that do not meet these requirements will not be permitted into the ports marine container terminals. The Licensed Motor Carrier is responsible for assuring that the information on each truck is correct in the DTR. If you have recently replaced a defective RFID tag please make sure that the new RFID number is recorded in the DTR.

    16. Manufacturers Push Infrastructure Agenda The National Association of Manufacturers warns that deteriorating roads and rails pose a "serious threat" to the competitiveness of the U.S. economy and manufacturing. That warning was stressed within NAM's "Legislative Agenda for Economic Recovery and Job Creation" for the 111th Congress. NAM said several issues will likely influence the highway bill reauthorization, which expires Sept. 30. Among them are a proposed federal bonding program to infuse states with additional funds for infrastructure projects, the use of public-private partnerships, and a federal effort to reduce transportation bottlenecks. NAM also recommends Congress and the Obama Administration create a federal capital budget modeled after corporate and state budgets to improve planning and financing of infrastructure projects.

    17. Senate Takes Aim at Cross border Trucking Senate Democrats once again are trying to kill the Department of Transportation's cross border trucking pilot project with Mexico. Language in the 2009 Omnibus Appropriations Act released Feb. 23 would eliminate the controversial program, which since 2007 has allowed a small number of Mexican trucking companies to operate in the United States beyond the 20-mile border commercial zone. The project came under fire by labor and consumer safety groups when it was introduced in 2007, in particular from the Teamsters union, the Owner-Operator Independent Drivers Association and Public Citizen, which sued the DOT in federal court.

    18. Senate Takes Aim at Cross border Trucking The cross border program was slated to end last September, but the DOT extended it for two years to collect more data. In December 2007, Congress passed a spending bill that prohibited the DOT from spending money "to establish a cross border motor carrier demonstration program." The language in the latest Senate bill is "clear, strong, and leaves absolutely no wiggle room," said Sen. Byron Dorgan, D-N.D., who introduced the measure. The DOT funding measure states that no money may be used "directly or indirectly" to "establish, implement, continue, promote or in any way permit," a cross border trucking program that gives Mexican truckers access to the U.S. interior.

    19. Schneider National Freezes Pay Truckload carrier and third-party logistics company Schneider National said it is freezing its employees pay this year, the Associated Press reported Tuesday. The Green Bay, Wis., company said the pay freeze is in response to one of the most difficult freight markets in decades. Schneider, which employs 21,400 people, will also defer funding for retirement plans and 401(k) matches, AP said. Schneider, which also has intermodal operations, is ranked No. 9 on the Transport Topics 100 listing of U.S. and Canadian for-hire carriers.

    20. P.A.M. Reports Loss for 4Q, Year Truckload carrier P.A.M. Transportation Services reported a fourth-quarter loss of $11.4 million, or $1.19 per share, compared with a loss of $840,000, or 8 cents, a year ago. Operating revenue fell 17.8% to $84 million, P.A.M. said late Friday. The loss included non-cash charges triggered by the current equity market, P.A.M. said in a statement. For the full year, the company lost $18.8 million, or $1.94 per share, compared with a profit of $2.7 million, or 26 cents, in 2007. P.A.M. is ranked No. 62 on the Transport Topics 100 listing of U.S. and Canadian for-hire carriers.

    21. Deteriorating environment taking a toll on pricing. Historically there has been a strong correlation between our TL Freight Index and TL pricing, which implies that TL rates should come under pressure. Many carriers have argued that several years of sustained weakness in freight markets, thin operating margins, and shipper concerns about carrier viability and capacity should help limit price discounting going forward. However, even with large capacity reductions, these factors havent prevented significant pricing pressure in the current downturn. Struggling carriers continue to discount in a fight for survival, and we think shippers no longer have the luxury of not worrying about carrier viability in their effort to cut costs.

    22. ATAS Outlook Freight volume hauled by the nations largest in December fell to its lowest point in 15 years, confirming that the country is in the thick of a recession according to The American Trucking Associations. The 11.1% drop in the ATAs for-hire truck index was the largest month-to-month decrease since April 1994 in the midst of a nationwide LTL strike. The index declined 14.1% compared to December 2007, the biggest year-over-year decrease since February 1996. Tonnage was down 6% compared to the same period a year earlier.

    23. ATAS Outlook we expect freight demand to continue to decline sequentially, likely resulting in the worst truck load environment that truck load carriers have experienced since the industrys inception in the 1980s. Freight demand is falling so fast that carriers are not likely to reap the benefits of plummeting fuel prices, and we still have concerns about negative pricing trends in 2009.

    24. ATAS Outlook Until freight volumes demonstrate some stability and or we signs of an acceleration in capacity tightening, we remain cautious on the near term involvement of our carriers. Those who take full advantage of decreasing rates should be leery that those carriers will be there for them in the not so distant future. Weak fleets have survived longer than expected as lower fuel prices have reduced receivables as reduced the need for borrowing, but due to rate decreases and supply, it will be only a matter of time before supply declines rapidly. This will require shippers to walk a fine line between reduced cost and stability of their carriers.

    25. Transportation Industry News For specific questions regarding these topics, please contact CPA International toll free at 888-684-4288 or via Email cpa.intl@snet.net for details.