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Transportation News Bulletins - LTL and TL

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Truckload Rates Still Sliding
Friday, 04 September 2009 00:00

Spot pricing at times below intermodal, analyst says, from “desperate” rate policies

Freight rates in the truckload market, competing in many cases with rail-truck intermodal traffic, are steadily declining “without solid evidence of bottoming,” said transport stocks analyst John Larkin of Stifel Nicolaus.

Larkin said his group had held meetings in the past week with executives of “various publicly traded and privately held truckload and intermodal providers,” and spot pricing for truckload freight “remains under pressure.”

Some truckload rates have “come in below intermodal rates and below what many carriers believe to be truckload variable costs,” he told clients. “We believe this level of spot pricing is unsustainable for the smaller, less-capitalized carriers that seem to have adopted what we consider desperate pricing policies.”

Larkin said some “non-sustainable trucking operations” that offer the low pricing are staying in business because they are getting help from creditors and equipment lessors, who hope those carriers can stay afloat until their equipment returns to book value.

“Many industry players believe that this stance taken by many financiers only delays inevitable truck company failures, and won't reduce (and might increase) the size of losses ultimately realized by the lenders, lessors and finance arms of major truck manufacturers,” he said. “In the meantime, the lenient policies preserve too much capacity in the trucking marketplace.”

Journal of Commerce Online, 9/04/2009

 
Transportation Stimulus Supporting 76,000 Direct Jobs
Wednesday, 02 September 2009 00:00

House panel says many more jobs are generated by ripple effects to supply materials

Federal stimulus funds to states for such needs as highway, bridge and transit repairs were supporting at least 76,000 direct jobs as of July 31, says the House Transportation and Infrastructure Committee.

The panel said that’s how many on-project jobs were either saved or created from $35.5 billion in infrastructure projects announced by that time for programs under its jurisdiction.

That amounted to 10,542 projects at that point in the summer, of which 6,831 were for highways and transit systems.

But the job impact goes further, as “these projects have further resulted in tens of thousands of indirect and induced jobs, including those at companies that produce construction materials and equipment,” the committee report said.

Besides roads and transit projects, officials at state agencies and the Department of Transportation have said the stimulus money is also paying for some freight rail and inland river port construction, plus runway and structural repairs at airports.

In addition, a Coast Guard program at the Department of Homeland Security is funding railroad bridge improvements over navigable waterways, and the Environmental Protection Agency is issuing grants to help ports, truckers and some rail operations retrofit or replace old diesel engines.

And more recent weekly spending reports under the Recovery Act show that project approvals have gained steadily and actual disbursements more than doubled in the past month.

The T&I Committee report, another in a monthly series for spending that it oversees, said as of July 31 about $20 billion in highway and transit projects had been put out to bid, and nearly $11 billion worth were under construction at that time.

Journal of Commerce Online, 9/02/2009

 
NAFTA Surface Trade Plunges 31.5% in June
Monday, 31 August 2009 00:00

Surface transportation trade among the United States, Canada and Mexico plunged 31.5% in June from a year earlier, though rose from May, the Department of Transportation said Monday.

The downturn was the sixth straight year-over-year monthly decline of at least 27% among the North American Free Trade Agreement partners.

Trade rose 6% in June from May, DOT’s Bureau of Trade Statistics said in its monthly report.

Total truck imports to the United States fell 26.8% to $17.9 billion, while exports fell 23.9% to $18.9 billion.

Rail imports plunged 47.2% to $4.3 billion, while exports fell 40.1% to $2.7 billion. Pipeline imports fell 50.5% to $3.7 billion, while exports declined 50.6% to $219 million.

U.S.-Canada trade fell 36.6% to $31 billion. The value of truck imports to the U.S. fell 34.8% and the value of truck exports fell 28.8%.

U.S.-Mexico trade fell 21.8% to $19.7 billion. The value of truck imports fell 18% and the value of truck exports fell 14.3%.

Surface transportation consists largely of freight movements by truck, rail and pipeline. About 90% of U.S. trade among NAFTA partners moves by land.

Transport Topics, 8/31/2009

 
Cargo Thieves Seek Basic Items More Often
Monday, 31 August 2009 00:00

Tighten Focus on Certain Products in Fleets.

Cargo thefts have increased against over-the-road trucking firms during the recession, with criminals turning to “basics” such as food and paper products, as well as the traditional high-value loads, though no hard figures exist, American Trucking Associations said.

“We know that in this particular economy, some fleets have seen an increase in cargo theft and that criminals seem to be targeting over-the-road fleets, because they’re on the road longer and tend to have full loads,” Susan Chandler, executive director of ATA’s Supply Chain Security & Loss Prevention Council, told Transport Topics.

Less-than-truckload carriers say they have seen no increase, she added.

“In past theft, criminals focused on high-value goods,” Chandler said. “In this very hurting economy, they are taking essentials as well, such as food products, paper products and pharmaceuticals.”

An insurance executive agreed.

“As far as our company is concerned, cargo theft dropped sharply after 9/11 and slowed down to the point where it practically disappeared,” Jack de la Cova, chief executive officer of Insurance Network Specialties Inc., Jacksonville, Fla., told TT.

De la Cova said that his company insures about 1,200 trucking firms that have more than 5,000 tractors, offering cargo insurance, as well as liability insurance.

“For about five years, we had minimal incidents, but starting midway through 2008 and continuing throughout 2009 so far, we saw a curve up in cargo thefts, which more or less coincided with the recession,” de la Cova said. “We saw probably about a 20% increase over that period.”

ATA’s Chandler said that no reliable national statistics existed. A spokesman for the Federal Bureau of Investigation agreed.

“The FBI definitely has jurisdiction over the type of crime that can be classified as cargo theft,” FBI spokesman Bill Carter told TT. He said the FBI did not track cargo thefts as part of any national database of crime.

“However, since 9/11, the bureau has had to devote its resources to more immediate threats, and cargo theft is not a priority topic at this time. We do not have any major investigation task forces into it going on,” Carter said.

ATA’s Chandler said that the new wave of cargo theft was associated mostly with the southern tier of the country.

“Though thefts occur nationwide, the increase appears of late to be focused on the southern corridor, anywhere from California to Florida and points in between, including Texas, Tennessee and Georgia, to name a few,” Chandler said.

“Why the southern corridor? We can speculate that the southern roadways are expansive and wellconnected, with a great deal of truck traffic,” Chandler said.

“The southern states have also been hit by the economy hard, with double-digit unemployment,” she added. “Southern states tend to be large producers of essentials, such as agriculture and food products, wood and paper products, and other sites that manufacture, warehouse and distribute our country’s most basic needs, such [as] clothes, cleaning products, medications; and they are close to the border.” 

Sgt. Tommy Bibb, spokesman for Sheriff Ed Bean of Marion County, Fla., co-chairman of the National Commercial Vehicle and Cargo Theft Prevention Task Force, explained one reason why southern highways represented attractive targets.

“Mario County is only a four- or five-hour drive from the port of Miami,” Bibb told TT. “Back before we even knew what cargo theft was, the crooks used to hijack cargo in our county, and it would be sitting in warehouses in Miami waiting to get shipped overseas before we even knew it was stolen.”

Groups of local police forces set up the task force in 2006, in conjunction with some fleets, to coordinate the battle against cargo theft.

Bibb said that the practice of cargo theft rings to leave one police jurisdiction quickly was one main reason the task force was set up. The task force also announced on Aug. 5 that it had set up a national Web site—https://www.nationalcargothefttaskforce.org/—that would allow any fleet suffering a cargo loss to contact the law enforcement agency nearest the site of the crime.

Chuck Johnston, claims department supervisor of the Owner-Operator Independent Drivers Association, which says it has 160,000 members, told TT that members have not filed more claims for cargo theft since the recession started. “

Of course, most of our members are carrying leased tractors that are insured by the shipping company,” Johnston told TT.

Insurance provider de la Cova said he believed the recession has driven a percentage of employers of fleets, warehouses, and drivers to provide inside information to criminal rings.

“I insured a company that had a trailer going down a highway carrying designer purses valued at $50,000 surrounded by hundreds of other trailers, but somehow thieves knew to grab that one as soon as it stopped at a truck stop,” de la Cova said.

“In a warehouse, we had some pallets of laptops that were wrapped exactly like other pallets, but a group broke into the yard and they jumped over dozens of pallets to get those three that had the laptops,” he added.

ATA’s Chandler said that thieves of everyday products had ready markets for the stolen goods.

“It appears the crooks are looking for those items that can be easily turned into cash, easily introduced to the marketplace and hard to track,” Chandler said.

“Law enforcement sources in Florida and California have reported that they are seeing small, local community groceries that have become an expanded distribution point for stolen essentials, unwittingly or consciously,” she said.

Transport Topics, 8/31/2009

 
FMCSA May Test Proficiency Of Start-Up Motor Carriers
Monday, 31 August 2009 00:00

Exam Would Be Part of Revised Federal Regulation.

In its first major regulatory action under the Obama administration, the Federal Motor Carrier Safety Administration said last week it may for the first time require new trucking companies to pass a proficiency exam before being allowed to begin operations.

FMCSA said in an Aug. 25 notice in the Federal Register that it was “considering whether to implement a proficiency examination as part of our revised new entrant safety assurance process.”

In the notice, FMCSA said it is seeking “information concerning issues that should be considered in the development and use of such an examination.”

FMCSA spokesman Duane DeBruyne said if the agency adopted an exam as part of the new entrant process, it would be in addition to the existing regulations.

Finalized in the waning days of the Bush administration, the new entrant process requires new trucking companies to submit to a safety audit within 18 months of opening shop, and would shutter any that fail to comply with any one of 16 federal safety rules.

Former FMCSA Administrator John Hill told Transport Topics that while he was with the agency, officials were “strategizing about ways that we could deal with new entrants . . . we felt like there needs to be a little bit higher bar to entry.”

“So, we thought maybe an entrance exam, or some other elevated bar to entry could achieve that,” he said, but added that since an entrance exam was not part of the agency’s proposal in 2006, it was not included in final rule.

“We couldn’t incorporate it at the last minute, but we felt it was very important to consider it and frankly, I’m very pleased to see that the agency is looking for ways to sharpen this up a little bit,” Hill said.

DeBruyne said the agency and its partners conduct roughly “40,000 safety audits conducted each year,” that the “majority [of new entrants] are small operators of between one and five trucks.”

However, he did say that larger, existing firms may be subject to the new rules under some circumstances.

“Someone buying a trucking company from outside the industry is purchasing business assets and business liabilities, [but] U.S. DOT operating authority cannot be purchased,” DeBruyne said. “The new owners would have to apply to obtain their own operating authority [and] they would be considered a ‘new entrant.’

” The lack of a proficiency exam in the final rule, along with other issues led Advocates for Highway and Auto Safety to file a petition with the agency to reconsider the entire rule.

FMCSA said its investigation of a proficiency exam “responds to issues raised by” the advocacy group.

The notice asks for comment on issues ranging from the feasibility of creating a new testing regime and the cost to operate it, to how a test should be administered.

Henry Jasny, general counsel for the Advocates, said the group was “happily reading this and hoping that they will fully reconsider their position on new entrant proficiency exams.”

The advocacy group often has been critical of FMCSA and has repeatedly challenged agency actions on topics such as hours of service and Mexican trucks.

Advocates filed a petition with FMCSA in January, asking it to reconsider a number of issues with the new entrant rule, and while Jasny said he hoped other issues may be resolved through this process, the exam “was one big issue . . . that they hadn’t addressed.”

An exam would “hopefully increase the level of safety knowledge and operating safety on the roads. It’s important to do some screening of new entrant motor carriers and what their familiarity is with the rules and regulations, rather than have people just starting up and learning as they go along” he said. “That kind of experiment on our highways is unsafe.”

Dave Osiecki, vice president of safety, security and operations with American Trucking Associations, said the federation was “pleased FMCSA is taking a hard look at ways to raise the safety bar for new carriers.”

Potentially reopening the new entrant rule “gives ATA an opportunity to advocate for a required ‘Safety Management 101’ training course for new carriers—a key element of ATA’s safety agenda,” Osiecki said.

There already are a number of government-sponsored and private testing that could be used as a basis for a new federal standard, he said.

“It may not be a one-for-one match, but there are exams and courses in the marketplace that might serve as models,” Osiecki said. “This is not plowing entirely new ground.”

Steve Keppler, director of policy and programs for the Commercial Vehicle Safety Alliance, said that an exam “is something that makes some sense.”

“Any chance we can get to reach out and educate carriers about their responsibilities under the regulations is a good thing,” he said.

Transport Topics, 8/31/2009

 
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