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Transportation News Bulletins - LTL and TL

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Shaky Central States Pension Fund May Need Federal Bailout, Lawyer Says
Monday, 08 March 2010 00:00

Tampa, FL—The economic weakness of the Central States Pension Fund and other multi-employer plans may prompt a federal bailout because obligations to retirees are mounting and contributions are dwindling, a Washington pension attorney said.

Speaking to the Distribution & LTL Carriers Association meeting here, Herve Aitken said Central States will have difficulty surviving because of the income-outgo imbalance and recent losses.

Central States’ assets shrank from $26 billion to $17 billion in 2008, before recovering $2 billion of that decline last year, based on a trustees’ report issued last month. Central States, Chicago, will have to earn returns on its investments of at least 12% annually for the next 15 years to become fully funded, Aitken said.

“Many multi-employer plans are in very poor financial shape,” Aitken said, with four retirees drawing benefits for every working person contributing to the fund. “Their only lifeline now is return on investment.”

“There could well be legislative solutions,” he said, referring to bailouts from a labor-friendly Obama administration, he said.

Aitken said one reason why Central States’ future is questionable is its investment strategy, which is based nearly 70% on the stock market, raising the risk of losses during market fluctuation.

The status of pension funds is important to trucking because under federal law, companies that are still in business pay for benefits of workers from failed companies. Aitken said legislation to address the pension fund issue could focus on so-called “orphans,” the retirees from those companies, such as Consolidated Freightways, that have shut down. They represent as much as half of the current beneficiaries in Central States, he added.

Among the executives who have campaigned for legislative changes to lift the responsibilities for paying benefits to those “orphans” are YRC Worldwide Chief Executive Officer William Zollars and recently retired Arkansas Best Corp. CEO Robert Davidson.

Aitken estimated that a bailout of the multi-employer funds could cost at least $50 billion, about what the federal government paid General Motors to help the automaker survive.

To date, there is no bailout legislation pending, although Congress is considering legislation on multiemployer funding issues.

Legislation that would make it easier for the funds to meet targets, such as the percentage of assets they have relative to obligations, was introduced last year by Rep. Earl Pomeroy (D-N.D.) and Rep. Pat Tiberi (R-Ohio). It has not yet been taken up by the House Health, Employment and Labor and Pensions subcommittee Central States did not return requests for comment.

The fortunes of most multi-employer funds have been sinking since 1980, when there were four workers who were making contributions for every retiree. Five years later, the Central States managers began a process that tripled pensions to $3,000 a month by 1995.

Since 1980, employer contributions per worker have climbed from $32 a week to $312 a week, as the number of active participants in the fund dwindled to less than 73,000 in 2009, or 80% less than in 1980. “They increased benefits at a time when the number of active participants was declining,” Aitken noted.

Contributions from workers and employers shrank to $750 million in 2008, when payments to retirees topped $2.7 billion. Last year, contributions declined further after Central States agreed last year to a cessation of contributions by YRC at least through the end of 2010.

The payments cut was part of a sweeping series of YRC cost reductions that included pay cuts for all workers, renegotiated credit agreements and closing of hundreds of terminals as national less-thantruckload units were combined.

YRC halted contribution to all the multi-employer funds to which it contributed, but the majority of the company’s workers are in Central States.

One of the Teamster funds that is healthier is the Western Conference fund, which fell into difficulty when the economy sank but has now recovered to nearly full funding.

Transport Topics, 3/8/2010

Trucking jobs dip in February
Friday, 05 March 2010 00:00

The for-hire trucking industry lost 4,300 jobs in February, and the industry lost jobs in January rather than gained them, according to revised seasonally adjusted figures from the U.S. Department of Labor’s Bureau of Labor Statistics. Preliminary data released a month ago indicated that the industry had added 2,500 jobs in January. Instead, the latest figures show that jobs were almost flat from December at a 200- job decline. Payroll employment had dropped by 12,000 jobs in December.

Trucking employment in February was down nearly 81,000, or 6.2 percent, from February 2009. Preliminary data shows payroll employment of almost 1.23 million jobs—down 226,400, or 15.6 percent, from the trucking employment peak in January 2007. 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.

Nationwide, the economy lost 36,000 jobs in February, and the labor force is down 3.3 million, or 2.5 percent, since February 2009.

Commercial Carrier Journal, 3/5/2010

LTL Industry Shrinks 24.4 Percent
Thursday, 04 March 2010 00:00
Total U.S. LTL revenue down to $25.2 billion in 2009, study shows

The less-than-truckload industry shrank 24.4 percent in 2009, as total U.S. LTL revenue plunged from $33.3 billion to $25.2 billion, according to an industry study.

The recession triggered by the 2008 global financial crisis spurred the worst decline in freight revenue in several years, the study by SJ Consulting Group revealed.

The LTL industry contracted less than 1 percent in 2008 and was basically flat in 2007 compared with 2006, despite a freight downturn in those years, according to the study.

Over the past three years, the LTL industry lost a quarter of the $33.7 billion revenue it had in 2006, the study shows, with most of that loss occurring in 2009.

The SJ Consulting survey ranks the top 25 LTL trucking companies by revenue. All the companies saw revenue drop by double-digit percentages, ranging from 10 to 47 percent.

At most companies, the study only measured revenue from LTL operations, though in some cases revenue from truckload and other services were included.

The best year-over-year result came from New England Motor Freight, where LTL revenue dropped 10.1 percent from the previous year.

Waco, Texas-based Central Freight Lines fared worst, with a 47.3 percent drop in revenue. The carrier lost a major account and consolidated its network, SJ Consulting Group said.

The study reported YRC Worldwide’s national and regional operations separately.

LTL revenue at YRC National, the former Yellow and Roadway operations that were integrated last March, fell 44.3 percent, according to SJ Consulting. Revenue at YRC Regional, which includes New Penn, Holland and Reddaway, declined 32.4 percent.

YRC Worldwide’s combined LTL revenue shrank 41.4 percent, the study said.

FedEx Freight’s LTL revenue fell 20.8 percent and Con-way Freight’s sales were down 14.6 percent, year-over-year, SJ Consulting found.

Journal of Commerce Online, 3/4/2010

LaHood Promises Comprehensive Transportation Bill
Thursday, 04 March 2010 00:00
DOT Secretary says administration opposes gas tax increase

Transportation Secretary Ray LaHood said Wednesday that the administration wants to move forward with a “comprehensive, robust transportation bill,” but opposes increasing the gas tax while unemployment remains at around 10 percent.

“I know it’s easy for people who are not elected to talk about raise the gas tax, because those people don’t have to face the voters,” LaHood told members of the American Association of State Highway and Transportation Officials. He urged Congress to find a bipartisan agreement on funding a new bill.

LaHood told reporters that the administration will present its principles for a new six-year surface transportation bill within 90 days. He praised a comprehensive transportation bill presented last July by Rep. James L. Oberstar, chairman of the House Transportation and Infrastructure Committee.

“We like a lot of things that are in Jim Oberstar’s bill,” LaHood said. But he said the $450 billion price tag was too high right now. “That kind of money doesn’t currently exist.”

LaHood noted that the 2011 DOT budget includes an infrastructure fund to finance national transportation projects. Not everyone in Congress likes the idea, but the budget proposal gives lawmakers the opportunity to debate its merits, he said.

Journal of Commerce Online, 3/4/2010

Bill Introduced to Kill NAFTA
Thursday, 04 March 2010 00:00
Legislation would withdraw U.S. from trade pact within six months

A bill that would end the North American Free Trade Agreement was introduced Thursday in the U.S. House of Representatives.

The bill would require President Obama to withdraw the U.S. from NAFTA within six months.

“I voted against this legislation in 1993 because I knew that this trade agreement would lead to a decline in jobs and our industrial manufacturing base,” said Rep. Gene Taylor, D-Miss., one of 27 co-sponsors of the bill.

The bill was sponsored by 24 Democrats and three Republicans, including former presidential hopeful Ron Paul, R-Texas. Taylor said withdrawing from NAFTA would help keep jobs in the U.S. and reduce unemployment.

James P. Hoffa, general president of the Teamsters union, backed the bill. “We were sold a bill of goods about NAFTA,” he said.

Journal of Commerce Online, 3/4/2010

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