February 27, 2009
Recent trucking news has reported the reversal of the driver shortage, which had appeared to be, as Jesus said of the poor, with us forever. Friday’s Wall Street Journal highlights how the competition for drivers is worse than ever partly because of people recently unemployed from car plants or construction and desperate for a paycheck.
At Prime Inc., even white collar workers are knocking on the door, a recruiting director told the Journal. The company “now more closely scrutinizes an applicant‘s driving record, number of prior jobs held and other qualifications,” says the Journal.
At Con-Way Truckload, “I’ve never seen it like this in 24 years,” says President Herb Schmidt.
– Max Heine
February 24, 2009
Railroads were advertising a lot during last year’s period of rising fuel prices, touting their good cost-per-mile for moving a ton of commodities. Lest you think the super-heavy-duty engines are stealing your livelihood, consider this anecdotal evidence from the Wall Street Journal:
Boxcars used to be a “fleeting sight” in the town of New Castle, Ind. For the past year, though, 100-plus yellow boxcars have been parked in the middle of town. The line stretches for a mile. “Now an elementary-school playground sits only feet from a line of rail cars covered with curse words,” writes The Journal.
It isn’t just New Castle. “The nation’s five largest railroads have put more than 30% of their boxcars – 206,000 in all – into storage, according to the Association of American Railroads. Placed end-to-end, the cars would stretch from New York to Salt Lake City,” says the article.
Of course, there are many more parked trailers and out-of-service ships, too, but as far as the truck-rail balance of freight, I don’t think it’s changed even a full percentage point in the 10-plus years I’ve worked in this industry. Trucks still haul almost 70 percent of the nation’s freight, says the American Trucking Associations.
– Max Heine
February 18, 2009
The $787 billion economic stimulus doesn’t offer much for leased operators other than hopes of better roads and, with federal aid to banks, easier credit.
Some tax provisions, though, can benefit carriers, including small owner-operator independents, and to a lesser extent leased operators with an extension of capital expenditures deduction. The American Trucking Associations reports that the package:
• Extends bonus depreciation, allowing businesses to make a tax deduction of 50 percent of the cost of depreciable capital expenditures within the first year of the property’s purchase;
• Extends enhanced small business expensing; and
• Provides incentives to hire unemployed veterans and disconnected youth.
For more detail, read here.
– Max Heine
February 16, 2009
In case you missed the news from last week’s foulup about Caterpillar and the economic recovery plan, you can see and hear the remarks yourself.
President Obama, visiting Caterpillar in Peoria, Ill., claimed Cat CEO Jim Owens said “that if Congress passes our plan, this company will be able to rehire some of the folks who were just laid off.”
Whether the president was just overeager or there was some miscommunication, Owens later set the record straight about the company’s recently announced 22,000 layoffs and the foreseeable future. “The truth is we’re going to have more layoffs before we start hiring again,” Owens said.
– Max Heine
February 13, 2009
The latest bit of bright news is Friday’s report that retail sales rose 1 percent in January over December. The Wall Street Journal says economists attribute the blip – following six consecutive months of falling retail sales – “to discounting and easier automobile-financing terms in January. Sales of cars, electronics and clothes all were up. Year-over-year, January retail sales decreased 9.7%.”
For a dose of reality, the weekly roundup from Bob Costello, chief economist at the American Trucking Associations, has some bubble-busters:
- The number of truckload loads contracted 9.1 percent from November and dropped a whopping 16.4 percent from December 2007.
- Dry van and tank truck freight each plummeted 24.9 percent during the second half of 2008, only to be surpassed by flatbed freight, which plunged nearly 30 percent.
- In December, total less-than-truckload shipments contracted 7.2 percent and 11.2 percent from November and December 2007, respectively.
— Max Heine
February 11, 2009
The graph of Sirius XM Radio stock looks like a runaway truck descending a mean mountain pass. News reports today speculate the escape ramp might take the form of Chapter 11 bankruptcy filing.
CNN.Money.com reported that shares plunged again Wednesday, to 6 cents, following reports late Tuesday that the company might try bankruptcy protection to avoid a takeover by Charlie Ergen, the chairman of satellite-television provider Dish Network and set-top box maker EchoStar.
The New York Times says a bankruptcy would be the second-largest Chapter 11 of the year. Not only is Sirius XM stuck with a $100 million contract with shock-jock Howard Stern, but it’s total debt is $3.25 billion. The company has never turned a profit.
In spite of chaos for the ownership, it’s believed subscribers will not see programming disappear, at least any time soon.
What would affect subscribers, at least those who are fans of the Open Road and Road Dog Trucking Radio channels, is a rumored merger of the two channels.
In response to my inquiry to Sirius XM about this and plans for Chapter 11, spokesman Patrick Reilly says, “We aren’t going to comment on that. But stay tuned.”
– Max Heine
February 9, 2009
President Obama has made much of reversing his predecessor’s decisions, and the next big enchilada could be cross-border trucking. News reports indicate the pilot program with Mexico is part of the Department of Transportation’s appropriations bill, which the Senate will be discussing this week. Reports David Hendricks of the Houston Chronicle:
“The talk on the streets of Washington is about how the Obama administration treats cross-border trucking will be a litmus test on bilateral relations with Mexico,” Kyle Burns, Free Trade Alliance president and chief executive, said last week after returning from a Washington visit with federal transportation officials.
There hasn’t been much written on this, though the Mexico Trucker Online liberally interjects pro-Mexico comments about how safe the program has been. News reports indicate Mexico would issue trade sanctions if its partner axes the cross-border program. These could be higher tariffs on U.S. agricultural products and refusal to allow U.S. deliveries inside Mexico.
February 6, 2009
Overdrive’s 2007 Trucker of the Year, two-truck fleet owner Henry Albert, knows that other independents, as well as bigger fleets, can do what he does. And in the current environment, ranking behind the competition isn’t a good idea.
“The amount of freight available is falling away at the same rate as trucking companies,” said Albert, who this week stopped for a breakfast at the T/A on I-59/20 in Tuscaloosa, Ala., where Overdrive is based. Senior Editor Todd Dills joined us. If Albert were having to rely on brokers, he’d be getting “beat up” badly on rates, he says, but years of building good relationships has allowed him to maintain rates with his five main shippers and 38 others.
There’s a lot that Albert has done to earn that loyalty. Check our cover story on him to get the full picture.
A few ingredients of his success are evident at a glance. He still wears the uniform shirt with the Albert Transportation logo. Where most guys would have an open collar, he’s got a necktie. Shippers notice, and are impressed.
His current reading: “Value Migration: How to Think Several Moves Ahead of the Competition,” by Adrian J. Slywotzky. I’d bet that not too many of his colleagues are plowing through a book published by Harvard Business School Press.
There’s another book I noticed, sitting alone on a shelf in the sleeper of his Freightliner Cascadia: a paperback dictionary. So what’s the deal with that? Albert says he likes to keep his paperwork free of embarrassing misspellings.
Habits like these are a pain in the neck, whether you’re driving a truck or driving nails for a living. Thing is, they work because they help set you apart from the competition.
February 4, 2009
One wee bit of good news from the Institute for Supply Management today: The service sector is shrinking slower than it was in December.
“The NMI (Non-Manufacturing Index) registered 42.9 percent in January, 2.8 percentage points higher than the seasonally adjusted 40.1 percent registered in December, indicating contraction in the non-manufacturing sector for the fourth consecutive month, but at a slightly slower rate,” reports ISM.
Even better news is for those tied to two sectors: Health Care & Social Assistance; and Finance & Insurance. These reported growth in January. Does the finance area’s good fortune have anything to do with the first slurps at the federal bailout trough? ISM doesn’t say.
And ISM’s top 10 for industries reporting contraction in January are, in order: Mining; Retail Trade; Arts, Entertainment & Recreation; Educational Services; Professional, Scientific & Technical Services; Wholesale Trade; Accommodation & Food Services; Transportation & Warehousing; Other Services; Management of Companies & Support Services.
February 2, 2009
The silly rules that credit card companies play by have gotten plenty of airing in recent years. Be a day late on your electric bill, and wham! That’s the sound of extra percentage points piled on top of an already high rate. Your credit score suffers, too.
The good news is that Fair Isaac Corp., which developed the FICO score method of rating credit histories, will introduce a new version this spring called FICO 08. The three major credit reporting agencies – Equifax, Experian and TransUnion – each use the FICO formula to determine their scores.
One advantage of the new system is that if virtually all your payments are on time and your overall financial picture is good, that late electric bill won’t matter nearly as much. Doesn’t mean you can expect to knock 8 percentage points off that next truck loan, but if you’re someone who’s been arbitrarily penalized because of a credit score, it could help.
Read about the other pros – and cons – of FICO 08 in this account by personal finance writer Andrew Housser.