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Transportation News Bulletins - LTL and TL

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NAFTA trade down 33 percent in April
Monday, 06 July 2009 00:00

Tonnage rises from April but trails year ago.

A 3.2% rise in American Trucking Associations’ truck tonnage index during May from weak results in April may indicate that the worst of the recession could be over, even though the index was 11% below yearago levels, industry experts said.

“I am hopeful that the worst is behind us, but I just don’t see anything on the economic horizon that suggests freight transportation is ready to explode,” said ATA Chief Economist Bob Costello, who added that he doesn’t believe tonnage will drop much further.

The month’s increase, the first since March, brought the advanced, seasonally adjusted index to 102.3, an improvement from the April reading of 99.2, which was the lowest since November 2001. The year-toyear drop moderated from a 13.2% fall in April, which was the worst decline in 13 years.

The unadjusted index was 102 in May, up 0.4% from April. In June 2008, ATA’s index stood at 115.6 as the Bush administration’s economic stimulus package helped to improve demand.

“May was a very good month, the best of the year,” said Mike Malecha, general manger of Diversified Transfer & Storage, Billings, Mont., although he said the company, whose main business is refrigerated less-than-truckload freight, saw business fall 10% from May to June.

“We’re looking for the year to remain fairly strong,” Malecha said. “We’ve seen volatility in the market. There are opportunities when the markets are somewhat chaotic. There is pressure on rates, but if you are flexible, you can cope.”

The mixed picture in the latest tonnage report reflected the latest round of economic indicators last week.

A consumer confidence report for June showed continuing weakness, as 49% of Americans expected economic improvement, a drop from 55% in the prior report. The Institute of Supply Management’s manufacturing index released July 1 rose to 44.8 from 42.8, with a reading of 50 or more signaling expansion.

The months ahead won’t bring fast improvement, Costello warned.

“The consumer is still facing too many head winds, including employment losses, tight credit, rising fuel prices and falling home values, to name a few, that will make it very difficult for household spending to jump in the near term,” Costello said.

Reports from spot market and analyst sources gave a mixed picture of June freight demand.

TransCore’s load-matching service reported a 14% increase over May levels, a faster rate of improvement than the average 8% rise from May to June in the past five years. Year-to-year load matching activity last month trailed June 2008 by 60%.

“June 2008 will be the last of the difficult prior-year comparisons,” said David Schrader, senior vice president at TransCore, Hummelstown, Pa. “July 2008 now appears to be the front end of the severe freight recession we just went through. The year-over-year comparisons moving forward should look much less worse.”

“The freight market appears to be bottoming,” said Credit Suisse analyst Christopher Ceraso. In a June 29 report, he predicted third-quarter freight tonnage would rise 0.3% from second-quarter levels and another 0.1% in the fourth quarter.

“As of June 26, the improvement in our proprietary [truckload] index has stopped,” Morgan Stanley analyst William Greene said in a June 29 investor note, in which he said volume for last month was the lowest ever for June.

He predicted slower improvement, or decline, in the June ATA tonnage report.

“While the broader market has focused on incremental improvements in April and May [economic] data points, June could be [in] a stark contrast,” Greene wrote, noting parallels between his index and ATA’s tonnage report during April and May.

Some carriers were more optimistic about the rest of the year because a modest sequential pickup in demand will help to rectify the industry’s capacity and pricing troubles.

“Demand and supply will come back into balance by the end of the year,” said Derek Leathers, chief operating officer of truckload carrier Werner Enterprises, Omaha, Neb. “Demand doesn’t have to get much stronger, because capacity has left the market,” because of carriers’ fleet reductions and bankruptcies, he said.

Leathers estimated that hauling demand has dropped 18% from last year, and that truckload carrier capacity has fallen 15%.

Other carriers said they haven’t seen any sign of a second-half economic pickup yet.

“We’ve talked with our customers, and they are not projecting any further decreases,” said Rick Bowersox, vice president of Milton Transport Inc., Milton, Pa. “No one has said our business is picking up, either.”

Milton, which has had about a 10% decline in freight volumes this year, is coping by cutting back on its fleet size as owner-operators park their trucks, Bowersox said.

“We try to keep the drivers who are here busy,” said Bowersox. Milton is in north-central Pennsylvania, where numerous manufacturers are either working on reduced schedules or are closed.

Transport Topics, 7/6/2009

Heavy-Duty Truck Fleet Ages as Carriers Seek Cost Savings
Monday, 06 July 2009 00:00

The U.S. heavy-duty fleet truck fleet is aging as carrier executives scrimp to cut costs wherever they can amid the continuing national freight drought.

The nation’s truck makers are trying to look on the bright side of this new statistic, saying the increasing age should help prime the pump for better sales down the road when freight levels rise.

The average age of the nation’s total highway tractor fleet is now nine or 10 years old, depending upon the estimate used. That estimate covers a wide variety of fleet types: Large truckload carriers still have the youngest fleets, while private and less-than-truckload carriers have much older vehicles, and small truckload carriers fall in between.

“Due to the economic situation today, we have no choice but to put off purchases of new trucks,” said William Reed Jr., president of Skyline Transportation, Knoxville, Tenn., whose company runs about 75 tractors.

“Margins are getting slimmer and slimmer, so there’s no choice but to continue to run equipment,” said Reed, who also is chairman of the Small Carrier Advisory Committee of American Trucking Associations.

“Private fleets generally keep their equipment longer,” said Larry Dean, general manager of corporate transportation for NCI Group, a Houston metal-products company.

“We have been using a six-year cycle with full-service leasing, but our game plan is for a longer time now. Our intention is to extend for another year or two. I’ve seen there’s a lot of interest in that,” said Dean, who also is a board member of the National Private Truck Council.

“We’re looking for every reduction in cost we can find. If we can extend the useful life of the vehicles without going for another six-year obligation, that’s how we hedge our bets,” he said, adding that the company leases about 80 trucks.

The average U.S. Class 8 tractor was 10.3 years old at the end of last year, up from 9.4 years at the end of 2006, according to R.L. Polk & Co., which analyzes motor vehicle registrations.

FTR Associates has tracked an increase both in the national average and among publicly traded
truckload fleets. FTR, Nashville, Ind., said that from 2006 to this year, the national average for Class 8 tractors has risen to 9.15 years from 8.28 years.

For the publicly traded truckload fleets, the first-quarter average this year was 2.3 years, up from 1.61 years during the fourth quarter of 2005.

The fleet age of the second-largest truckload carrier, Schneider National Inc., is four years and four months, Vice President Steve Duley said in May at an investors’ conference. He described that as “kind of high for us.”

Original equipment manufacturers have been following the trend, saying it is an omen for eventual good sales when the trucking economy finally does recover.

Thomas Plimpton, vice chairman of Paccar Inc., told parts makers at a meeting of the Heavy-Duty
Manufacturers Association in February that at some point, aging trucks must be replaced. Paccar owns Kenworth Trucks and Peterbilt Motors.

The truck-fleet age “is the highest we’ve seen in 10 years,” Scott Kress, senior vice president of Volvo Trucks North America, said at a May 8 press conference, and Leif Johansson, chief executive officer of VTNA parent corporation Volvo AB, said that partly because of the aging population of U.S. trucks, he expected fourth-quarter truck sales in North America to be better than a year ago.

And on June 9, Navistar International Corp. mentioned the aging fleet and the need for replacement sales in a sales forecast with its quarterly earnings report.

CK Commercial Vehicle Re-search produces a quarterly Fleet Sentiment Report, and 64% of carriers surveyed in the first quarter said that their tractor age had increased an average of 16%.

Steph Sabo, chairman of ATA’s Technology & Maintenance Council, said older trucks are now a given among maintenance managers. The main question now is how to deal with them.

“Many people have trucks parked and they can’t get rid of them” because of the low resale values, Sabo said. That means truck-utilization is low, and tractors are not piling on the miles that lead to more maintenance.

“Some fleets are doing more maintenance, but the trigger is whether they’re running more miles,” said Sabo, who heads maintenance at Norrenberns Truck Service, Nashville, Ill.

Reed of Skyline said using auxiliary power units has helped to counteract the effects of running
equipment longer. Reed said he installed the APUs to save on fuel costs, but found that by not idling his trucks’ engines for heat and air conditioning, engine wear and tear is reduced, which allows him to defer maintenance.

“This takes off hours of idling by the engine, which extends its life,” Reed said, adding that his company used to trade in tractors every four or five years, and now that’s up to five or six years.

Dean of NCI said fuel costs have led him to examine the miles he runs more carefully, shedding mileage from his leased fleet by asking for-hire carriers to make some one-way runs and concentrating his inhouse fleet to concentrate on the company’s core business.

“We don’t automatically put a driver out on a run any more . . . Instead we’ll pay one-way miles to a forhire carrier,” Dean said.

While the aging trend must eventually crack, OEM order boards suggest it will not happen soon.

ACT Research Co. reported earlier this month that orders for new tractors remain at low levels.

Commenting on what it will take for him to buy new trucks at Skyline, Reed said, “when the economy recovers, and people buy more goods, which means more manufacturing and more shipping of goods. Until that changes, there won’t be much action.”

Transport Topics, 7/6/2009

DOT Prepares Braking Rule
Monday, 06 July 2009 00:00

The Department of Transportation is preparing to issue its long-delayed stopping-distance rule that would slice the stopping distance for large trucks by as much as 30%.

DOT’s National Highway Traffic Safety Administration on June 10 sent its proposed rule to the White House for review by the office of Management and Budget, setting the stage for publication later this year and likely implementation in 2011.

NHTSA issued its proposed rule in December 2005 after several years of study, but publication was postponed several times during the Bush administration.

The rule, which has been in the works for several years, is expected to require Class 8 trucks traveling 60 mph to stop within 249 to 284 feet. Trucks now are required to stop within 355 feet.

NHTSA said the stopping distance could be met using enlarged versions of the S-cam drum brakes now prevalent in the industry.

Jim Tipka, vice president of engineering for American Trucking Associations, said that, in some
applications, air disc brakes may be necessary, “particularly in short-wheelbase situations where tractor stability with a heavy brake imbalance could be put in question.”

Paul Johnston, senior director of compression and braking products at Meritor Wabco, said many trucks that now come with steer-axle brake drums 15 or 15.5 inches in diameter and 4 or 5 inches wide would have to use 16.5-by-5-inch drums.

On the rear, brakes may have to be wider, he said.

The larger drum brakes would add about 90 pounds to a truck’s weight and cost $1,000 to $1,500 more per axle.

The proposed rule would not require air disc brakes, which would cost more than larger drum brakes.

Light & Medium Truck, 7/6/2009

Trucking related fatalities drop 12%, overall fatalities lowest
Thursday, 02 July 2009 00:00

WASHINGTON—The number of overall traffic fatalities reported in 2008 hit the lowest level since 1961.Additionally the fatality rate, which factors in things such as fewer miles traveled, also reached the lowest level ever recorded, according to the National Highway Traffic Safety Administration’s 2008 Fatality Analysis Reporting System (FARS) which released the information July 2.

Those killed in large trucks numbered 677 in 2008, which was down 16 percent from 2007 when 805 were killed.

People killed in crashes involving large trucks totaled 4,229, a reduction of 12 percent from 2007 when 4,822 died. This decrease of 593 fatalities is due primarily to the 469 fewer fatalities of occupants of other vehicles in these crashes, NHTSA stated.

The fatality data for 2008 placed the highway death count at 37,261, a drop of 9.7 percent from 2007 when 41,259 died.

The fatality rate for 2008 was 1.27 persons per 100 million vehicle miles traveled (VMT), about 7 percent below the rate of 1.35 recorded for 2007.

“While the number of highway deaths in America has decreased, we still have a long way to go,” said Transportation Secretary Ray LaHood said, adding that the country has made major strides in increasing seat belt use, curtailing impaired driving, making roads and highways safer, and maximizing vehicle safety, all of which play important roles in the declining death rate.

Unfortunately motorcycle deaths increased for the 11th straight year and now account for 14 percent of all highway fatalities.

Passenger car occupant fatalities declined for the sixth consecutive year, and are at their lowest level since NHTSA began collecting fatality crash data in 1975.

The 2008 rates are based on the latest (April 2009) Traffic Volume Trend estimates from the Federal Highway Administration (FHWA). Overall 2008 VMT decreased by 3.4 percent from 2007 VMT—from 3,029,822 to 2,925,503 million. VMT data will be updated when FHWA officially releases the 2008 Annual Highway statistics later this fall.

“It is important to note that while there has been a consistent decrease in VMT since December 2007, there has been an even steeper decline in the number of fatalities, as evidenced by the continued drop in the fatality rate,” NHTSA stated. “While the reduction in total fatalities may be due in part to a decrease in miles traveled, there are many other additional factors that affect the outcome from motor vehicle crashes.”, 7/2/2009

July 1: New state and provincial laws kick in
Thursday, 02 July 2009 00:00

Although it’s not officially declared as such, July 1 is “new law day” across the U.S. In many states, bills passed in the last session of the legislature become law Wednesday.

Here’s a sampling of a few laws that affect truckers:

In Ohio, the split speed limit has ended, and truckers will be able to do 65 miles an hour just like cars.

In Florida—where 152 new laws take effect—drivers who aren’t wearing their seat belt can now be pulled over for that offense alone.

In Colorado, another $55 is being tacked on to truck registration fees to pay for roads and bridges.

In Kansas, the law limiting use of the left lane for passing applies to highways outside city limits. Warnings will be issued until July 2010.

Tennessee and Virginia are enforcing bans on texting while driving. An Indiana law banning texting for teens 18 and under is also in effect.

Florida is banning local governments from applying a fee for emergency personnel responding to a vehicle accident. Ambulance services are not affected.

Fuel taxes in Maine are increasing 1.1 cents per gallon. The diesel tax now is 30.7 cents, and the gas tax is 29.5 cents.

Virginia law increases the maximum gross vehicle, axle weight limits for large trucks equipped with idlereduction technology.

And north of the border—in Ontario and Quebec—hard enforcement started Wednesday, July 1, on speed limiters, with penalties starting at about $390 for truckers who haven’t limited their speed to 105 kilometers an hour.

Land Line Magazine, 7/2/2009

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