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Transportation News Bulletins - LTL and TL

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ACT Equipment Forecast: Stronger Second Half, Better 2011
Friday, 12 February 2010 00:00

COLUMBUS, IN—Trends in the economy and transportation sector continue to point to strengthening in the truck transportation sector in the second half of 2010, which will then lead to stronger demand for commercial vehicles late in the year and into 2011, according to market analyst ACT Research Co.

In the latest release of the ACT North American Commercial Vehicle Outlook, ACT continues to project heavy-duty (Class 8) vehicle production will grow 18 percent year-over-year in the first half of 2010, largely due to stronger orders late in 2009 in advance of new EPA 2010 emission mandate engines and very easy annual comparisons. With fundamentals expected to improve in the truckload market by midyear, demand is expected to increase into the end of 2010.

Medium-duty vehicle (Classes 5-7) production, which is largely tied to the health of the housing market, is expected to see a more steady, gradual increase through 2010 and 2011.

“As we have been saying for months, a series of events is required to put commercial vehicle production on more solid footing, and those events continue to play out as expected,” said Kenny Vieth, partner and senior analyst with ACT Research. “With a modestly improving economy and used truck values moving higher, finance firms appear less interested in using forbearance to keep vulnerable carriers alive. When you combine increased carrier bankruptcies with record large fleet capacity reduction efforts, the truckload sector is forecast to see freight volumes outstripping tractor supply by mid-year, which will set the stage for dramatic improvements for both trucking and commercial vehicle demand.”

ACT publishes commercial vehicle (CV) industry data, market analysis and forecasting services for the North American market., 2/12/2010

U.S. Trade Gap Widens, Sending Mixed Signals About Economy
Wednesday, 10 February 2010 00:00

The U.S. trade deficit widened in December, suggesting that the economy didn't grow quite as strongly in the fourth quarter as first thought, but also indicating that global trade is accelerating as the world emerges from a deep recession.

The U.S. trade deficit shrank last year to $380.7 billion, a 45% drop from 2008, the Commerce Department said Wednesday, as both imports and exports plunged amid the global downturn. Even the U.S. trade deficit with China narrowed last year.

The December figures, however, show U.S. exports and imports are both growing sharply again, a sign of economic vitality, with the deficit growing simply because the U.S. is importing more goods to feed domestic growth—in part to rebuild inventories depleted during the recession—than it is selling abroad. Most of the import surge was accounted for by a larger volume of oil imports.

The trade deficit in December rose to a seasonally adjusted $40.2 billion, up from $36.4 billion in November. Adjusted for inflation, the deficit rose to $43.7 billion in December, up from $40.9 billion the month before.

Economists had predicted December would bring a $35.8 billion shortfall, seasonally adjusted.

The government has estimated that in the fourth quarter net exports added 0.5 percentage point to the 5.7% annual growth in gross domestic product, the broadest measure of goods and services produced by the economy. The larger than previously estimated trade deficit for December is expected to mean a slight reduction in that growth rate when the figure is revised at month's end because a wider trade deficit makes reported GDP smaller.

IHS Global Insight predicted fourth-quarter GDP would be revised down to 5.6% from the government's previously reported 5.7% annualized growth. Nomura Global Economics expected it to be revised to 5.5%, and Morgan Stanley economist thought it would be revised to 5.6%.

"It is true that the wider deficit will shave a couple of tenths off...growth, but it is hard to describe the trade figures as bad news, since they show a continuing robust rebound in world trade," said Nigel Gault, an IHS Global Insight economist.

Exports increased 3.3% to $142.7 billion on gains in industrial materials, capital goods (largely aircrafts) and automotive products. Imports climbed 4.8% to $182.9 billion, largely from the boost in oil imports. Capital goods and auto imports also rose. As long as increases in imports continue to surpass that of exports, trade won't make a positive contribution to U.S. growth.

Continued expansion in emerging economies may help boost exports in the future, but in the near term economists agreed that imports were likely to continue gaining speed at a faster pace than exports, weighing down GDP growth. That prompted Morgan Stanley economists to also lower their first quarter forecast of GDP to 2.8% from 3%.

Wall Street Journal, 2/10/2010

Execs Warn on CSA 2010
Monday, 08 February 2010 00:00
Safety Rating System Seen as ‘Game Changer’

SAN DIEGO—CSA 2010, the new federal safety monitoring and rating system for motor carriers, is likely to be the most important and potentially disruptive federal policy development for trucking to come out of Washington this year, fleet executives and industry watchers said last week.

American Trucking Associations President Bill Graves said CSA 2010—or the Comprehensive Safety Analysis program—which is set to supplant the Federal Motor Carrier Safety Administration’s SafeStat system, is “at the top of the list” of federal policy issues that will affect the trucking industry in 2010.

“Many of you are going to have to become experts about CSA 2010 in a way that you never in your wildest dreams imagined,” Graves told an audience of trucking and technology executives gathered here Feb. 1.

Robert Lowe, president of refrigerated carrier and flatbed carrier Prime Inc., Springfield, Mo., said that CSA 2010 will be a “game-changer” for trucking companies. The initiative will push more technology into trucks and push cash-strapped truckers who cannot afford the technology out of the market entirely, Lowe said.

Transport Topics, 2/8/2010

Report hones in on vehicle mileage tax for future surface transportation funding
Monday, 08 February 2010 00:00

At a time when funding for the next surface transportation reauthorization remains in flux, coupled with an ongoing series of continuing resolutions to keep funding at its current levels, a report in the Washington Post raised the specter of future highway funding through a so-called vehicle mileage tax (VMT), as opposed to the current method of a fuel tax.

The fuel tax, which has not been raised since 1993, is comprised of an 18.4 cents per gallon fee for gasoline and 24.4 cents per gallon fee for diesel. VMT fees would be based on a federal funding system based on user charges through a charge for each mile driven and would be based more directly on miles driven and possibly also on time of day, type of road, and vehicle weight, and fuel economy, as opposed to indirectly on fuel consumed, according to a February 2009 report from the National Surface Transportation Infrastructure Financing Commission, a bi-partisan commission established by Congress charged with coming up with new financial payment methods to maintain and expand transportation infrastructure.

The Washington Post report quoted former Department of Transportation Secretary Mary E. Peters as telling a Senate subcommittee in 2008 that "the fuel tax is unsustainable in the future...virtually every economist who has studied transportation says the direct pricing of road use, similar to how other people pay for other utilities, holds far more promise...than do traditional gas taxes."

What's more, the Commission's report cited other reasons for fuel taxes not providing the needed financing to maintain U.S. surface transportation infrastructure, including how real highway spending per mile has fallen by nearly 50 percent since the federal Highway Trust Fund (HTF) was established in the 1950s, adding that the fuel tax is not adjusted for inflation and has experienced a cumulative 33 percent loss in purchasing power since 1993. On top of that, the report also noted that without changes to current policy, revenues raised by all levels of government for capital investment will total roughly one-third of the nearly $200 billion needed annually to maintain and improve the nation's highway and transit systems.

And, as the Washington Post report outlines, if fuel consumption drops 20 percent by 2017—a goal set by former President George W. Bush—gas tax revenue will also decline albeit as a quicker rate due to President Barack Obama's mandate that new cars get 35.5 miles on average per gallon by 2016.

"The direction you are going to see [going forward] is an emphasis on consumption-based pricing and the VMT is a form of that, as is tolling," said Michael A. Regan, CEO of transportation rate analysts TranzAct Technologies, in a 2009 interview with LM. "You are philosophically going to see a push towards a system that says the more you use the system the more you are going to pay to be in that system, and you cannot pay for it with the gas tax or fund a Highway Bill with it."

And unless major steps are taken to increase revenues for surface transportation funding, it is unlikely much will get accomplished on that front, according to Tom Donohue, CEO of the U.S. Chamber of Commerce. Donohue has previously stated that the U.S. needs "to quit fooling itself" when it comes to the motor fuels tax, explaining that without an increase it is likely that infrastructure and related funding issues will continue.

Logistics Management, 2/8/2010

Outlook Points to Higher Truck and Trailer Sales in 2011
Monday, 08 February 2010 00:00

Accelerating economic activity has led FTR Associates to increase its estimates of the amount of truck freight that was moving at year-end 2009. If sustained, the stronger freight picture will result in higher truck rates and better financial results for truckers in 2010 and higher truck and trailer sales in 2011. Meanwhile, 2010 tractor sales will be affected by the new EPA mandate, with higher sales in the first half and a second-half slowdown likely.

According to Eric Starks, president of FTR, “Higher freight demand will cause the existing large overhang of surplus equipment to be worked down more quickly, translating into the potential for more units to be sold in 2011. While freight demand will increase throughout 2010, actual build numbers for Class 8 vehicles will likely be higher in the first part of the year because of the late pre-buy activity for vehicles with pre-2010 emission engines. Our 2010 production forecast remains unchanged but this demand for 2009 vehicles will pull ahead and build to the first half of 2010 at a corresponding decline in second-half numbers.”

FTR Associates is a transportation forecasting company that collects and analyzes all data likely to impact freight movement and is based on specific characteristics for over 200 commodity groups.

Logistics Today, 2/8/2010

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