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Transportation News Bulletins - LTL and TL

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Trucks Hauled 58 Percent of North American Freight in '08
Tuesday, 08 December 2009 00:00

Trucks carried 58 percent of the freight measured by value between the U.S., Canada and Mexico in 2008, accounting for $554 billion, beating out rail, maritime, pipeline and air, according to the U.S. Department of Transportation's Bureau of Transportation Statistics.

BTS, a part of the Research and Innovative Technology Administration, released the data Monday as part of the fifth annual update of the North American Transportation Statistics (NATS) online database.

According to the data, the number of trucks entering the U.S. in 2008 was 10.8 million, including 5.89 million from Canada and 4.87 million from Mexico.

In general, more than $964 billion worth of goods crossed the U.S. border in trade with Canada and Mexico last year, up 6.1 percent from 2007. U.S. merchandise trade with Canada and Mexico, its two largest trading partners, rose by more than $335 billion or by 53.2 percent in the five years between 2003 and 2008., 12/8/2009

Trucking Bankruptcies, Pricing Edge Up
Tuesday, 08 December 2009 00:00
Sequential increase in third quarter failures points to firmer pricing, Avondale Partners says

Trucking bankruptcies are beginning to climb again, putting upward pressure on rates just as shippers prepare contracts for bidding in the first quarter of 2010.

The number of motor carrier bankruptcies rose 8.6 percent from the second quarter to the third as 405 companies shut down, said investment banking firm Avondale Partners.

The number of trucks pulled out of service more than doubled from quarter to quarter, rising from 6,725 to 14,135, Avondale said. The average fleet size of the carriers that closed rose from 18 to 35 trucks.

That hardly put a dent in the glut of excess capacity, however, taking only 0.7 percent of the nation’s heavy truck capacity off the highways, the firm said.

But Avondale Managing Director Donald Broughton predicts the number of trucking failures will rise next year and truck pricing will move up. The firm’s spot market index, after falling to record lows, “has recently begun to rebound,” he said.

Trucking executives report tighter capacity, more shipments and firmer rates, as retailers replenish inventories cut to the bone over the past two years.

“I’m seeing pricing stabilize,” said Herb Schmidt, president of Con-way Truckload, Joplin, Mo. “There are fewer carriers competing for the same pot of freight.” As a result, "pricing traction has returned a little, tiny bit," he said. "The first quarter will tell a huge story."

It may be a tale of higher truck rates. Broughton expects carrier pricing to gain momentum and continue into 2011. “We advise shippers to lock in pricing as long as possible,” he said.

Journal of Commerce Online, 12/8/2009

DOE Boosts 2010 Diesel Price Forecast by 2ยข to $2.96 a Gallon
Tuesday, 08 December 2009 00:00

Retail diesel fuel will average $2.96 a gallon next year, 2 cents higher than a previous forecast, the Department of Energy said.

Diesel averaged $2.79 a gallon in November and will average $2.46 a gallon for 2009, DOE said in its monthly short-term energy outlook released Tuesday.

DOE had predicted last month that trucking’s main fuel would average $2.48 in 2009 and $2.94 in 2010— 2 cents, respectively, above and below the new forecast.

Crude oil will rise to $78.67 a barrel next year—a 0.7% uptick from last month’s forecast of $78.13 and 27% higher than DOE’s $61.87 per-barrel forecast for 2009.

World oil consumption will rise in 2010 to 85.22 million barrels a day—up from an 85.4 million bbd prediction last month and a 1.3% increase from this year’s estimated 84.12 bbd, DOE said.

Regular gasoline will average $2.65 a gallon this month, unchanged from November but almost $1 higher than last December. Gas will average $2.83 next year, 48 cents higher than this year.

In its latest weekly survey of filling stations released Monday, DOE said diesel fell 0.3 cent in the past week to $2.772 a gallon—the fifth straight decline—while gas rose for the second time in five weeks, gaining 0.5 cent to $2.634 a gallon.

Transport Topics, 12/8/2009

HOS Work Under Way, FMCSA Official Says
Tuesday, 08 December 2009 00:00

WASHINGTON—A top regulator within the Federal Motor Carrier Safety Administration said the agency has begun its review of the truck driver hours-of-service rule and that it intends to complete its review by next July.

“We're going to do everything we can to pull it all together and meet the dates in the settlement agreement,” Larry Minor, FMCSA, associate administrator of the policy and program development division, told Transport Topics Tuesday. “So, we fully expect that we will have a proposal to OMB by the date in that settlement.”

Minor spoke to TT during a meeting of FMCSA’s Motor Carrier Safety Advisory Committee. The committee was meeting to begin outlining suggestions for what FMCSA should review as it reconsiders the hours rule.

Minor said the input of the committee, along with information solicited from a Federal Register notice slated to be published later this month and three public listening sessions planned for January, would all be used to formulate FMCSA’s new hours proposal.

In October, FMCSA reached an agreement with a Public Citizen-led coalition of interest groups to review and revise its hours rule. Under the agreement, the agency must send a new proposal to the White House by July and publish a new final rule in 2011.

Transport Topics, 12/8/2009

Avondale report indicates trucking capacity still not where it needs to be
Monday, 07 December 2009 00:00
Numbers look better on a year-over-year basis, but firm predicts more trucking bankruptcies coming in Q1 2010

Following the second quarter in which Avondale Partners LLC estimated less than 0.4 percent of the nation's over the road heavy duty truck capacity were pulled from the road, the firm reported last week that less than 0.7 percent the overall capacity exited in the third quarter.

This 0.7 percent, according to Avondale, is comprised of 405 companies with an average fleet size of 35 trucks, which represents roughly 14,135 trucks. In the second quarter 370 companies with an average fleet size of 18 trucks representing 6,725 trucks-or less than 0.4 percent-exited the market. And on a year-over-year basis, Avondale said 785 companies with an average fleet size of 50, representing 39,030 trucks, were parked.

While the number of companies cited in the report as pulling trucks from the road only rose from 370 to 405 from the second quarter to the third quarter, the number of trucks-6,725 in the second quarter and 14,135 in the third quarter-more than doubled sequentially, with the average fleet size nearly doubling from 18 to 35. While these figures were described as "promising," in the report, Avondale noted it is still not enough to cure the current imbalance between capacity and demand.

Avondale Managing Partner and author of the report Donald Broughton wrote that "while this quarter's failure rate is not enough to completely fix the capacity/demand imbalance, it is enough to suggest that the weakness in pricing may soon be over." He added that Avondale expects a large number of bankruptcies in the first quarter, as the cash demands of deferred maintenance, re-licensing, and reinsuring costs come due.

While capacity is being removed from the trucking sector, Broughton explained that not enough is being removed to offset the amount of lower demand.

"Demand has quit getting worse and many large industry participants have idled less than 10 percent of their own fleet, but unfortunately we estimate that 3-5% of the remaining capacity must be removed before pricing for trucking services will permanently stabilize," wrote Broughton.

According to Lana Batts, a partner at Transport Capital Partners the trucking industry still has too much capacity and rates would be higher than they presently are had more capacity already been removed. She said that when tonnage is down along with the supply and demand drop in rates, many carriers are forced to go out of business.

And Batts said even though—as Broughton's report indicates—many carriers have left the business, it is not as many as it could have been, due to carriers' lenders being lenient for non-payment of trucks and the price of used equipment dropping so dramatically to the point that lenders are willing to have truckers make every other payment, as long as they don't get too far behind.

Even with lax credit practices occurring, Batts estimates that the trucking industry lost about seven percent of capacity through normal bankruptcies, and another seven percent from trucks being parked. But the market could withstand another seven percent removed, but the price of used trucks has dropped dramatically, leading to continued excess capacity.

With excess capacity giving shippers the upper-hand in terms of pricing power, a trucking executive told LM, that big shippers are clearly in favor of the current situation as it gives them more options.

"It is not a secret that when capacity shrinks, carriers will raise rates," said the executive. "There is enough capacity out there right now for existing carriers to pick up any slack should more carriers— including YRC Worldwide—were to exit the market."

Logistics Management, 12/7/2009

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