February 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

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

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

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

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

 

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

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.

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