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Transportation News Bulletins - LTL and TL

Our current transportation LTL and TL news bulletins are powered by SMC3

Trucking sees fewer job losses in November
Monday, 07 December 2009 00:00

Payroll employment among for-hire trucking companies in November dropped 0.2 percent on a seasonally adjusted basis from October levels. Employment is down 8.7 percent from November 2008, according to preliminary figures released Friday, Dec. 4, by the U.S. Department of Labor’s Bureau of Labor Statistics. The latest BLS report includes adjustments to previous figures showing slightly fewer job losses in recent months than previously reported.

With the estimated 2,400 jobs lost in November, the trucking industry has lost a little more than 89,000 jobs since the end of 2008—a decline of 6.7 percent. Job cuts since July 2008—just before the current decline—total 139,700. The BLS numbers reflect all payroll employment in for-hire trucking, but they don’t include trucking-related jobs in other industries, such as a truck driver for a private fleet.

Seasonally adjusted trucking employment peaked in January 2007 at more than 1.45 million, according to BLS figures. Since then, for-hire trucking companies have shed 203,100 jobs, or 14 percent.

The jobs report for the overall economy was very positive, relatively speaking, with a loss of only 11,000 jobs on a net basis.

Commercial Carrier Journal, 12/7/2009

DOT Must Work With Congress on Funding Plan, Report Says
Monday, 07 December 2009 00:00

The Department of Transportation’s inspector general said the federal agency needs to work with Congress to develop a plan to fund the nation’s surface transportation network.

The recommendation was one of several put forward in IG Calvin Scovel III’s annual report on the challenges facing DOT in the coming year.

“The current funding mechanism is unable to generate adequate cash receipts to meet current outlay levels. . . .” the report said. “Since the administration has opposed any increase in the gas tax given the economic environment, the department will have to work closely with Congress, states and other stakeholders to evaluate all options—including potential changes to the current funding mechanism, as well as the use of alternative funding mechanisms—to address the resulting funding gap.”

The IG’s report highlighted the department’s challenges in ensuring highway safety and distributing funds as part of the stimulus package. The report also chided DOT for not yet putting forward a plan for the now-expired highway authorization.

“While the department recognizes the need for an increase in federal spending in support of state highway programs, it has yet to propose spending levels for the next surface transportation reauthorization,” the report said.

Last month, Transportation Secretary Ray LaHood said DOT would launch a series of listening sessions around the country in preparation for drafting a reauthorization plan.

In a letter to the IG in response to the report, Christopher Bertram, DOT’s chief financial officer, said the existing approaches to financing the Highway Trust Fund are “not sustainable” and will need to be addressed during reauthorization.

“The department is working with Congress to identify the implications of alternative actions to address the long-term funding needs for its . . . surface transportation programs as part of the reauthorization process,” Bertram wrote.

The IG’s report also raised safety issues, stating that “improving transportation safety remains the department’s overarching goal.”

In particular, the report suggested DOT needs to do more to target unsafe motor carriers and drivers.

“The department must take stringent enforcement action against carriers that repeatedly violate safety regulations . . . and ensure that unsafe carriers are placed out of service and not re-issued authority under new identities,” the report said.

The report did acknowledge that the Federal Motor Carrier Safety Administration has begun to crack down on so-called reincarnated carriers and repeat offenders of federal regulations.

The IG also calls for paying more attention to FMCSA’s data quality and integrity.

“It is imperative that the department continue improving the quality of crash, inspection and census data,” the report said.

Another challenge the IG identified was the distribution of remaining stimulus funds, including the $1.5 billion set aside for discretionary grants.

The funds will be awarded to large projects throughout the country, DOT said. But the IG’s report warned that the large number of requirements for the grants as part of the stimulus law could make their distribution difficult.

Transport Topics, 12/7/2009

Trailer Registrations Fall 57.4%
Monday, 07 December 2009 00:00
October Orders Increase

Registrations of new trailers in the United States are running at less than half of last year’s pace, nearly ensuring that 2009 will be the worst 12 months for trailer sales since at least 1975.

While a report on October trailer orders showed a substantial increase, executives of trailer manufacturers said that could be a one-month blip rather than an omen for sustained recovery. These officials said that 2010 sales should be better than this year, but they all shied away from predicting robust growth.

U.S. businesses registered 15,340 new full-size and pup trailers during the third quarter and 49,812 through Sept. 30, which is 57.4% fewer than the 117,039 in the first nine months of 2008, according to R.L. Polk & Co. In the same quarter of 2008, there were 34,601 registrations.

“Trailers are doing worse than trucks,” said Polk’s Gary Meteer Sr., account director for commercial vehicles.

As for orders, ACT Research Co. said Dec. 1 that net orders for new North American trailers hit 9,700, an 80% improvement over September and a 124% improvement over October 2008.

“October was a very good order month,” said Kenny Vieth, an ACT partner and senior analyst. “But is it replicable? We’ll have to see.” Vieth added that October was the year’s second best month for orders, behind 11,300 in April.

“I’m not positive where those orders came from. I think they might be just a few large national accounts, rather than from broadly across the market,” said Glenn Harney, chief operating officer of Hyundai Translead in San Diego.

Harney said the market is at such a low level now that just a few coincidental orders from large private fleets or truckload carriers could lead to a one-time eruption.

Vieth agreed, saying that so far he has seen just one good month for orders, not an argument for strong growth.

Earlier this year, analysts predicted 2009 trailer sales would total 70,000 units, making it the worst year since 1975. However, reaching that goal would take a fourth-quarter surge of 20,000 registrations, or the strongest performance of the year.

The nine-month performance this year would account for just one quarter’s worth of registrations as recently as 2007, according to Polk data. Vieth said ACT’s records go back only as far as 1990, but the company keeps old U.S. Census data that he said indicates the current trailer market is on a par with 1963.

“We’ve come off the bottom and demand has stopped falling,” said Craig Bennett, senior vice president of sales and marketing for Utility Trailer Manufacturing Co. The company had the market-share lead for dry and refrigerated vans registrations during the third quarter.

Bennett described 2008 sales as “horrible, but this year is even worse.” He said he anticipates a 5% to 10% improvement in 2010, adding that federal spending could play a strong role in the timing and strength of recovery in the trailer market.

“Will there be an infrastructure plan? There wasn’t much this year,” Bennett said.

At Great Dane Trailers, the refrigerated sector continues to show more strength than dry vans, said Chris Hammond, the company’s vice president of dealer sales. He attributed the refrigerated market’s relative health to the stability of the food-service industry and tightening regulations on reefer unit emissions by the California Air Resources Board.

“The worst of it [falling trailer sales] was earlier this year, but now reefer sales are leading the way out. Next year will still be very difficult,” Hammond said.

The market for used trailers is also “depressed,” he said.

“We track the housing and automobile industries, especially, and we need to see an appreciable change in direction from them,” Hammond said in explaining what he thinks would be a desirable sign for future trailer sales.

Wabash National Corp. did not provide a comment for this story, but it is the only publicly traded trailer manufacturer. In its Nov. 4 quarterly report, Wabash said that while its year-over-year sales volume declined, it has seen sequential improvement during this year.

Hyundai Translead’s Harney said he has been attending economic presentations at industry trade shows and said the consensus is that economic expansion will be very slow at least through June and maybe well into the third quarter of 2010. And while second-half growth might be better, even then, “it will probably not be a robust rebound,” he said.

The omen Harney is looking for, he said, is a widespread improvement in profits by publicly traded trucking companies. “The No. 1 thing to watch for,” he called it.

Until that happens, Harney said, his company has benefitted from keeping its debt low and diversifying into specialty containers. Utility’s Bennett said his company has focused on the production of lighter trailers so as to boost market share among companies wishing to increase payload size.

Transport Topics, 12/7/2009

Heavy Truck Equipment Demand Likely to Fall
Monday, 07 December 2009 00:00

Heavy truck demand for 2010 is likely to slow after EPA 2007 engine inventory is exhausted, reports FTR Associates. FTR recently increased its 2009 Class 8 forecast due to a surge in orders in October. However, those orders are likely to reduce early 2010 freight-induced demand, as the order activity in October was driven by truck operators lining up for the last of pre-2010 emissions engines.

“2009 will end with modest freight growth, and we expect 2010 growth to be in the 2.8% range,” predicts Eric Starks, president of FTR. “However, given the huge decline in freight over the last few years, the increase in freight in 2010 will not be enough to entice fleets in large numbers to buy new, more expensive technology when such equipment is first made available. Many have usable miles on older equipment to get them through the initial up-tick in freight demand without taking the risk of adding unfamiliar engine technology to their fleet.”

Logistics Today, 12/7/2009

Border Program That Helps Truckers Also Attracts Mexican Drug Smugglers
Monday, 07 December 2009 00:00

LAREDO, Texas—A U.S. program that offers trusted trucking companies speedy passage across American borders has begun attracting just the sort of customers who place a premium on avoiding inspections: Mexican drug smugglers.

Most trucks enrolled in the program pause at the border for just 20 seconds before entering the United States. And nine out of 10 of them do so without anyone looking at their cargo.

Among the small fraction of trucks that are inspected, authorities have found multiple loads of contraband, including nearly 13 tons of marijuana seized in a three-week period last spring.

Some experts now question whether the program makes sense in an environment where drug traffickers are willing to do almost anything to smuggle their shipments into the United States.

The trusted-shipper system “just tells the bad guys who to target,” said Dave McIntyre, former director of the Integrative Center for Homeland Security at Texas A&M University.

The program works like this: Participating companies agree to adopt certain security measures in exchange for fast entry into the United States. They are required to put their employees through background checks, fence in their facilities and track their trucks. They also must work with subcontractors who have been certified under the program, which is run by the U.S. Customs and Border Protection agency.

The government keeps the list of participants’ secret, citing national security and trade secrets. However, some of the 9,500 companies that are part of the system advertise their membership to drum up business, making them targets for smugglers, who can then threaten drivers or offer them bribes.

More than half of all U.S. imports now come from companies in the program, called the Customs-Trade Partnership Against Terrorism, or C-TPAT. Mexican trucking companies make up only 6% of global membership in the system, but they account for half of its 71 security violations during the past two years.

Mexican trucking companies face higher scrutiny than others. They get a full customs inspection every year, instead of every three years like other participating companies.

The most common contraband is marijuana, officials said.

In March, a driver from Tijuana, Mexico, offered inspectors at the U.S. border paperwork showing his truck was filled with toilet paper. But a drug-sniffing dog alerted authorities to five tons of marijuana in a hidden compartment.

A week later, customs officers found three tons of marijuana in trucks carrying auto parts and racks. Five days after that, agents in El Paso, Texas, found more than four tons of marijuana in a tractor-trailer hauling another load of auto parts.

Stephen Flynn, senior fellow for Counterterrorism and National Security Studies at the Council on Foreign Relations, said truckers do not feel safe rejecting bribes, no matter what agreements their companies have made with the U.S. government.

“The basic vulnerability for a truck driver remains the ‘plata-or-plomo’ dilemma,” Flynn said, using Spanish shorthand for taking a bribe or a bullet.

John Chaffiri, a trade lawyer near San Diego, said he had worked with one Mexican trucking company that wanted to join the program but then pulled out. He suspects participating companies feel pressure from drug gangs to help them smuggle drugs into the United States.

“Some Mexican truckers have figured out, ‘I don’t want someone thinking I’m a better target than someone else’, “ Chaffin said.

Mexican authorities suspect a man who owned a participating trucking company in Aguascalientes, Mexico, was killed by drug gangs in July 2008. The slaying of Gerardo Medrano Ibarra is unsolved.

In Laredo, the border’s busiest crossing, nearly 700 trucks a day pass through the lane at the World Trade Bridge reserved for trucks that are certified by the trusted-carrier program, each one pausing only for a matter of seconds.

Trucking companies have to electronically submit a list of each vehicle’s cargo to customs officials at least 30 minutes before arriving at the bridge. Customs agents review them for risk factors that could trigger an inspection. Customs will not reveal those factors, but people familiar with the program say potential risks are judged based on the factory that is sending the goods, its location, the truck’s route and other matters.

Required cable locks on the trailer doors are also checked, but smugglers have been known to cut them and carefully glue them back together or take the trailer doors off at the hinges without disturbing the locks.

Mexican trucking company owner Leonardo Varela Resendez joined the program because he did not want to lose clients.

At first glance, Autotransportes Varela D├ívila, a family trucking business with 54 tractor-trailers in Reynosa, Mexico, seemed the sort of low-tech operation smugglers would target. Then Varela pointed out the security cameras surrounding the yard, the guard at the front gate who took down a visitor’s license plate number and the woman who tracks his trucks’ whereabouts by computer.

“I have learned good things from the U.S. like this, and we understand it benefits companies and the U.S., too,” Varela said. Nearby,Varela is building a new yard for his trucks. It is larger, modern and will include 128 mounted security cameras, as well as an infirmary for giving drug tests to drivers.

Varela, the local delegate for the national trucking advocacy group, said he does not fear being targeted by drug smugglers.

“They dedicate themselves to their thing, and we do ours,” he said.

Daniel Hastings Jr., owner of a customs house with offices at five ports of entry on the Texas-Mexico border, thinks the customs program works. He cited cases where a Mexican trucking company tracking a truck noticed an unscheduled stop en route to the bridge and phone to alert U.S. customs.

“I think they’re doing as good as they can with what they have to work with,” he said.

Transport Topics, 12/7/2009

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