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Transportation News Bulletins - LTL and TL

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Freight Stabilizes but Overcapacity Remains, Analysts say
Monday, 10 August 2009 00:00

Freight levels have stopped shrinking, and the recession may be coming to an end, analysts told participants of the Commercial Vehicle Truck and Trailer Outlook and Update webinar hosted by FTR Associates Friday, Aug. 7.

But the industry has about 300,000 heavy-duty trucks that either are parked or underutilized, said Noel Perry, a principal with Transport Fundamentals. This overcapacity situation may not improve until the economy shows considerable growth—about 3 percent—which possibly may not happen until late next year. “The bad news is, we don’t get the kind of capacity utilization numbers we need to improve rates until into 2011,” Perry said.

Freight stabilization is a reflection of the recession coming to an end, possibly even this month, analysts said. “Our expectation is that this current quarter will show growth at about 2 percent (of gross domestic product),” said Bill Witte, co-director of the Center for Econometric Research, the primary engine FTR uses to drive its forecasts.

While Witte is optimistic about the remainder of this year, “if you go beyond the next couple of quarters, there is lots to be concerned about,” he said. One reason is that consumers—hit hard by the tough economy—are saving more and spending less. At the same time, the federal government is pumping liquidity into the economy. If they don’t remove this liquidity when the economy starts to grow, inflation— or much higher interest rates—“will be a big concern,” Witte said. Projections of large federal deficits through 2012 and beyond further complicate a strong recovery, he said. And he expects unemployment to remain high into the next decade.

Turning to the Class 8 truck market, Eric Starks, president of FTR Associates, said fleets continue to overbuy equipment relative to the amount of available freight. “This will continue to be problematic going forward,” he said. “It will take a large amount of time to eat up 300,000 trucks unless you have a significant uptick in the economy.” FTR predicts about 105,000 Class 8 factory shipments to the North American market in 2009, rising to 133,000 in 2010 and 198,000 in 2011.

Starks also noted orders for engine components are exceeding new truck activity. “It appears that OEMs are willing to put cash on the table to put these engines in inventory,” he said. This means 2007 technology engines will be placed in trucks longer than the industry expected, delaying the changeover to 2010 emissions-compliant engines mandated by the U.S. Environmental Protection Agency, he said.

Commercial Carrier Journal, 8/10/2009

Oil prices climb back above $71 ahead of spending data announcement
Monday, 10 August 2009 00:00

Oil prices climbed above $71 a barrel Monday ahead of this week's U.S. consumer spending data that could shed light on the strength of the economic recovery.

Benchmark crude for September delivery gained 48 cents to $71.41 a barrel on the New York Mercantile Exchange.

The government this week will report July retail sales, and Wal-Mart Stores Inc. and Macy's Inc. will announce their second quarter results.

Friday's news that the U.S. unemployment rate fell to 9.4 percent in June sent stock markets surging, but crude prices still fell $1.01 to $70.93.

A strengthening economy prompts consumers and businesses to spend more on energy, but oil has also been a beneficiary of Federal Reserve "quantitative easing" policies that push interest rates lower by adding more money to the financial system, said Alaron Trading Corp. analyst Phil Flynn.

If the economy gets too good, the Fed might have to start taking away some of the stimulus, which would remove many of the reasons why money has flooded into energy markets, Flynn said.

The Fed plans to meet on Tuesday and Wednesday to discuss "whether to send a signal to the marketplace that it's time to start cutting back on the punch before they take the entire bowl away," Flynn said in his morning report. "When they do then oil will become bearish, the dollar will firm and the market will focus on oil supply."

And that supply is rising.

The Energy Department's Energy Information Administration last week said crude inventories increased by nearly 2 million barrels, adding to the 5 million barrels put into storage the previous week.

Nawal al-Fuzeih, a senior Kuwaiti oil official, told the state-owned Kuwait News Agency Sunday that compliance of OPEC members has been good in general but that the Gulf States have been especially true to their pledges.

Kuwait, along with the world's largest oil producer, Saudi Arabia, and also Qatar and the United Arab Emirates make up the Gulf OPEC nations.

The Organization of Petroleum Exporting Countries, which decided to cut production by 4.2 million barrels from September levels, will meet next month to review production policy.

Prices at the pump added two-tenths of a penny overnight to hit $2.645, according to auto club AAA, Wright Express and Oil Price Information Service. That's nearly a dime higher than last week but around $1.17 cheaper than at this point last year.

In other Nymex trading, gasoline for September delivery gained about a third of a penny to $2.0116 a gallon and heating oil rose 1.43 cents to $1.9265. Natural gas for September delivery gained 4.1 cents to $3.715 per 1,000 cubic feet.

In London, Brent prices rose 2 cents to $73.61 a barrel on the ICE Futures exchange., 8/10/2009

DOT Targets Distractions
Monday, 10 August 2009 00:00

WASHINGTON—Transportation Secretary Ray LaHood announced last week he will take steps to try to further curb distracting driving activities such as text messaging or using a cell phone or a Global Positioning System device.

LaHood said Aug. 4 he will hold a summit in September with transportation leaders, members of Congress and safety groups that will create a list of steps to reduce “the rash of accidents and fatalities that have cropped up because of distracted driving.” “If it were up to me, I would ban drivers from texting immediately, but laws aren’t always enough. Often, you need to combine education with enforcement to get results,” LaHood said.

The secretary announced his plan shortly after the release of a Virginia Tech Transportation Institute report, in which a study found that text messaging while driving exponentially increased the chance of a crash.

“The bottom line is, we need to put an end to unsafe cell phone use, typing on BlackBerrys and other activities that require drivers to take their eyes off the road and their focus away from driving,” he said. In recent years, 16 states and the District of Columbia have enacted bans on text messaging while driving. In addition, four Democratic senators introduced a bill in July that would strip federal highway money from states that did not enact similar bans.

LaHood told reporters that “we’re primarily focusing our attention on drivers that are texting, using cell phones and also trying to adjust their GPS system in their car.

” When asked by reporters, he indicated other types of in-cab technology used by truck drivers were “the kind of distractions that we don’t want drivers being distracted by.”

“These distractions are real, real serious problems,” he said.

A spokesman for the National Highway Traffic Safety Administration said the federal government does not have specific data on the relationship between texting and crashes, but the Virginia Tech study found that truck drivers were 23 times more likely to have a crash or a close call if they were texting.

A study by the AAA Foundation for Traffic Safety released July 27 found that 87% of drivers thought texting or emailing while driving was “a very serious threat to their safety.”

American Trucking Associations President Bill Graves praised DOT’s announcement, saying “eliminating distractions, including those caused by text messaging, will greatly improve the safety of all motorists.”

However, the trucking group is concerned that necessary technology might be swept into the effort to eliminate distractions.

“We’re walking a bit of a fine line here,” said Dave Osiecki, ATA vice president of safety, security and operations. “We don’t want to advocate for wholesale use of systems that can be used to text or communicate or read, but there are some limited, legitimate uses that we’re trying to protect.”

For example, Osiecki said truckers occasionally can receive urgent text messages from their dispatchers through onboard computing systems about delivery or route changes.

“Drivers need information, and the easier it gets to them—if it is a voice fashion, not a text fashion, that’s better, but in some cases drivers do get limited text information on lots of different systems,” he said.

ATA officials said they expect to be invited to the summit.

Russ Rader, spokesman for the Insurance Institute for Highway Safety, told Transport Topics that the issue of distracted driving was a difficult one to address, given the proliferation of technology available for vehicles.

“The larger problem is that there are all these devices that are coming into our vehicles that hold the potential to be a distraction,” Rader said. “It’s tough to know how we put this problem back in the bag, and it’s only going to get more acute.”

However, he said IIHS wasn’t sure an outright ban was the right solution, or even possible, because of enforcement issues.

“With most traffic safety problems . . . there’s a pretty straightforward legislative solution, and with distractions like this, there really isn’t a straightforward legislative solution,” he said.

Barbara Harsha, executive director of the Governors Highway Safety Association, also was skeptical about a ban on texting.

“We don’t think there’s any single countermeasure that’s going to work, so there’s a combination of things that need to be done,” she said. “There’s a lot of attention on texting bans, but we think those laws are very hard to enforce.”

Harsha said there are technologies that could be employed to curb texting, but she also cited “employer policies” relating to texting and driving.

“It is in an employer’s self-interest to have a policy banning that,” she said.

Osiecki said that “most responsible fleets have policies against” reading messages, but he added that some companies allow it “for very good reasons,” citing team operations where presumably the team member not driving would read the message.

Transport Topics, 8/10/2009

Bill would fund fuel tax options
Monday, 10 August 2009 00:00

A federal House bill would provide $154.5 million to study fuel tax alternatives, including systems based on the number of vehicle miles traveled.

On July 27, U.S. Rep. Earl Blumenauer introduced the Road User Fee Pilot Project bill, or HR 3311. House members referred the legislation, which has no co-sponsors, to the Subcommittee on Technology and Innovation. Other than VMT, no other alternative funding methods are specified.

The bill would direct the treasury secretary to establish the program. The Democrat’s home state of Oregon has a VMT pilot program, which charged drivers for miles traveled rather than fuel consumed.

The Owner-Operator Independent Drivers Association considers the VMT method unproven. The American Trucking Associations, when testifying July 23 before the House Subcommittee on Select Revenue Measures, said the fuel tax is the most cost-effective way to fund highway infrastructure.

If approved, the Treasury secretary would report findings to Congress 18 months after passage and, three years later, report detailing final findings and conclusions.

Technologies and methods tested under the Road User Fee Pilot Project will be evaluated by issues that include protection of personal privacy, compliance ease, public acceptance and costs., 8/10/2009

Senate Panel Approves Measure Boosting Truck Weights in Maine
Monday, 10 August 2009 00:00

Several measures affecting trucking advanced in Congress recently as a key Senate committee approved a bill to allow trucks weighing more than the federal limit on Interstate 95 in Maine, and a bill providing tax incentives for idle-reducing units was introduced in the House of Representatives.

Also during the flurry of activity before Congress took its August recess, a House panel approved a bill to spur research on advanced vehicle technology.

On July 30, the Senate Appropriations Committee approved the Department of Transportation’s budget for the 2010 fiscal year, including a provision that allows Maine to conduct a one-year pilot project in which the state would be exempt from the 80,000-pound weight limit on interstate highways, allowing for 100,000-pound rigs.

The increase, championed by Sen. Susan Collins (R-Maine), would keep “heavy trucks on the interstates, which are designed to carry more weight than the rural roads” and would provide an assessment of how the higher weights affect safety, commerce and highway wear.

The bill now goes to the full Senate, where, assuming it passes, it will be reconciled with the House version, which does not include the Maine pilot.

Currently, states and Canadian provinces adjoining Maine allow heavier trucks—primarily for logging—to travel on their interstates. However, heavier trucks in Maine must travel on smaller state highways where they are allowed by state law.

Tim Lynch, senior vice president of American Trucking Associations, hailed the move and said more states should be allowed to raise their weight limits if they choose to.

“The situation in Maine, where logging trucks are operating on two-lane roads as opposed to operating on the interstate, is a classic example of the negative effects of the 1991 freeze,” Lynch told Transport Topics. “I don’t think Maine is unique by any stretch; there are other states that have similar challenges.”

In 1991, Congress limited weights to 80,000 pounds on the interstate highway system, unless heavier trucks already were allowed.

Maine Gov. John Baldacci (D) said, “Allowing loads to move from 80,000 pounds to 100,000 pounds on Maine’s interstate will reduce the number of trucks on the road, thereby increasing safety while reducing net fuel consumption.”

ATA has supported efforts to allow states to boost weight limits to 97,000 pounds on interstate highways, with a sixth axle to better distribute the weight.

Earlier this year, Rep. Michael Michaud (D-Maine) introduced a bill that would allow states to increase their weight limits, while Sen. Frank Lautenberg (D-N.J.), has spearheaded expanding the current federal weight limit beyond the interstate highway system to other federally funded roads.

Both bills are still pending.

Meanwhile, a bipartisan pair of congressmen introduced a tax-credit bill July 30 that would encourage truckers to use anti-idling technology.

“We have truckers and environmentalists on the same page,” said Rep. Earl Blumenauer (D-Ore.), chief sponsor of the Idle Reduction Tax Act of 2009. “We can cut costs and the output of global warming pollution by making it affordable for truckers to buy the equipment needed to reduce fuel wasted when idling.”

The bill, cosponsored by Rep. Kay Granger (R-Texas), would provide a 50% tax credit up to $3,000 for each device purchased to reduce idling and installed on a commercial vehicle. 

Granger said reducing idling by trucks was “a common-sense way to not only cut down on the amount of fuel trucks use, but to reduce the amount of truck pollution.”

ATA President Bill Graves said the cost of technology to reduce idling “has been a major barrier to trucking companies.”

Blumenauer noted that units to limit idling can cost up to $8,500 each.

“This legislation will allow us to move forward with industry wide efforts to reduce air pollution and fuel consumption related to idling,” Graves said.

Granger has introduced similar legislation in the past, but it has failed to get through Congress. However, industry lobbyists said this year may be different.

Mike Joyce, a lobbyist for the Owner-Operator Independent Drivers Association, said that with Congress’ attention focused on the economy and the environment, “we’ve got an opportunity to get this bill across the finish line.”

Another truck-related measure saw action just before the August recess when the House Science Committee on July 29 approved legislation aimed at developing more fuel-efficient vehicles—including both cars and heavy trucks.

The bill, championed by Rep. Gary Peters (D-Mich.), would authorize $550 million in 2010—increasing to $590 million by 2014—for the Energy Department to carry out advanced vehicle technology research.

Peters’ bill would create a research program for advanced technology for medium- and heavy-duty trucks, including the appointment of a full-time director to oversee federal research.

“Investing in research and development of advanced vehicle technologies will help our auto companies turn the corner and emerge from the global economic crisis,” Peters said in a statement.

Transport Topics, 8/10/2009

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