March 2009


Traffic cameras are being used for more than red light monitoring these days. The Wall Street Journal gives an excellent update on how cities are increasingly using them to catch speeders and others by way of reading license plates.

 

The core app of red-light spying is still popular. And profitable. Tiny Schaumburg, Ill., put a camera at a mall and issued $1 million in citations for red-light runners over three months, The Journal reports.

 

There’s about 3,000 red light and speeder cameras in operation now, and protests have likewise increased. One complaint is that private companies make about $5,000 per snooping eye each month.

 

The story mentions Photoradarscam.com, which is devoted to protesting the use of cameras. It argues that instead of enhancing safety and providing other benefits,

 

  • Cameras Cause an Increase in Accidents Where They Are Installed
  • Cameras Are About Revenue Only
  • Cameras Malfunction Constantly and Do Not Modify Driver Behavior
  • Camera Programs Are Illegal and Unconstitutional

Another counter-offensive website is www.Trapster.com, though it covers all types of speed traps. It includes a comprehensive national map with traps pinpointed.

— Max Heine

 

 

 

Martin Crutsinger of the Associated Press this week notes that five key economic areas show potential early signs of a turnaround, in spite of continuing signs of worsening problems.

 

Three of the five directly impact trucking: new homes, retail sales and durable goods. Each also was accompanied with a “reality check” reminding readers of the ongoing bad news, of which there is no shortage. The other two areas were existing home sales and Wall Street.

 

Looking strictly at freight, the American Trucking Associations’ advanced seasonally adjusted For-Hire Truck Tonnage Index edged up 1.7 percent in February, marking the second consecutive month-to-month increase. Backing this up was an observation from Michael Hinz of Schneider, as I mentioned in my last post. He noted last week that the carrier’s volume had picked up since early March, though he didn’t go out on a limb to say it marked the end of the downturn.

 

I’m no economist, but I’ll toss in one final indicator of my own: diesel prices. Granted, there are many factors that drive global fuel prices, but it’s hard to ignore that the steady decline in diesel since mid-2008 has corresponded with the onset of the most serious part of the recession. After all, diminished economic activity means less demand to fuel trucks and construction equipment. This week saw a reversal. The weekly report from the U.S. Department of Energy showed the national average price of on-highway diesel jumped 7.3 cents to $2.090 per gallon, the first increase in 10 weeks.

 

 

— Max Heine 

 Schneider National is taking a variety of measures, some different than their competitors’, to cope with the downturn. Last week at the Mid-America Trucking Show in Louisville, Ky., the VP for driver recruiting, Michael Hinz, reviewed Schneider’s latest developments with me and Linda Longton, the editorial chief for all our magazines here at Randall Reilly Publishing.

One big change is closing the door on inexperienced drivers, Hinz said. Unless you have six months’ fairly recent driving experience, forget about the nation’s largest truckload fleet. At least for now. When the economy rebounds, the company might loosen a bit on this, but the plan is not to return to the same level of taking on newbies.

“When you have an experienced driver base, they can make a contribution sooner,” Hinz said. Even though this transition was planned, he said, the economy helped. It’s no secret that the industry’s turnover problem has virtually gone away for now, given soft freight and the number of laid-off people looking for new lines of work.

Among other developments Hinz noted at Schneider:

• Pay is frozen for all employees. If you’re an owner-operator on percentage of revenue, that doesn’t affect you.

• The company plans no change in its owner-operator balance, now about 2,400 of its 14,000-driver workforce.

• Schneider is buying 1,200 new trucks this year, mostly Freightliners and Volvos.

• Starting at the beginning of March, freight volume has been up, though Hinz didn’t believe it necessarily indicated any definitive turnaround.

— Max Heine

Following are items that came our way in the last several days. Hey, it’s not all gloom and doom. Of the four, two anticipate positive change in trucking:

 

  • The current glut of trucking capacity won’t last too long, says Chief Economist Bob Costello of the American Trucking Associations. He notes that thousands of fleets have gone belly-up, those truckload carriers that are surviving have been downsizing for a few years, and the driver shortage will return as soon as things pick up.
  • The overall job scene is deteriorating at a faster pace, reports The Conference Board. Its Employment Trends Index fell sharply in February. Over the past year, it has declined “faster than at any other time in its 35-year history, with the most severe decreases taking place since the fall,” says Gad Levanon of The Conference Board. “As job losses persist, the drop in overall earnings makes a rebound in consumer spending unlikely for the next few months.” 
  • Class 8 total net orders for all major North American truck makers fell to 6,167 units in February, the lowest order rate in over six years, says FTR Associates. “We have been anticipating this slow-down in order activity for some time now and expect orders to drop to 5,000 units or below over the next several months,” says FTR President Eric Starks.
  • A turnaround in the second half for truck sales? That’s what’s predicted by Jefferies & Co., a securities and investment banking firm. “The truck sector should be one of the first to recover — 2009 will mark the third year that the Nafta truck sector operates well below replacement demand, and the average age of the fleet is now near an all-time high,” write Stephen Volkmann and Chris Edwards in Barron’s. “Pent-up replacement demand coupled with more stringent (and expensive) emissions regulations in 2010 should drive some buying in the second half of 2009.” Their stock picks, in order: Navistar International, Paccar and Cummins.

 

 

 

There’s plenty of bad news from the economy-watchers at the Institute of Supply Management. As the headline for the February roundup of manufacturing stats says: “New Orders, Production, Employment and Inventories Contracting.”

 

No surprise there. So for what it’s worth, here are a few shiny needles among the haystack:

 

  • Factory output is still shrinking, but not as fast as in January. “ISM’s Production Index registered 36.3 percent in February, which is an increase of 4.2 percentage points from January’s reading of 32.1 percent,” says ISM. The index needs to average above 50.4 percent to reflect what the Federal Reserve Board considers to be growth.
  • The two industries reporting production growth in February were Petroleum & Coal, and Products; and Printing & Related Support Activities.
  • On the non-manufacturing side, the one industry reporting growth in February was Arts, Entertainment & Recreation. 

As for non-manufacturing in general, it didn’t show the slowing of contraction that manufacturing did. Its index dropped to “41.6 percent in February, 1.3 percentage points lower than the 42.9 percent registered in January, indicating contraction in the non-manufacturing sector for the fifth consecutive month at a slightly faster rate,” says ISM.

 

— Max Heine

 

You’ve heard reports about the diverse types of projects that the federal bailouts are funding, in some cases how few jobs they will create, and how some of the expenditures are scheduled to take place years after the economy is likely to have rebounded.

 

Two websites can help you track this fiscal free-for-all. They’re both called “Stimulus Watch,” but are quite different.

 

The most publicized one is Stimulus Watchwhich lists many proposed projects that could become eligible for the federal funds. For example, item 1: almost $10,000 to put doorbells on public housing units in Laurel, Miss. It would create two jobs, presumably quite temporary.

 

Users can vote for or against any project as worthy of funding, and the running tally is displayed. You can also add comments about a project’s worthiness. For example, 95 percent of respondents consider spend $386 million for a 1,000-room hotel (owned by the city, operated privately) to connect to the Dallas Convention Center to be not a critical use of federal money. Opposing comments note that if it’s such a great idea, let the private sector pony up.

 

One thorough, nitty-gritty site for following the money is the Stimulus Watch  that’s part of US Budget Watch, a project of the Committee for a Responsible Federal Budget at the New America Foundation. At a glance, you can glean status info, such as automakers having already spent of $23 billion of the $25 billion loan approved in December.

 

Or click on any project area and see a detailed breakdown by line item and year. For instance, one spreadsheet tells you all the areas that fall under “infrastructure,” which covers a lot more than roads and bridges. It also tells how infrastructure’s $142 billion share of the $787 billion will be dragged out all the way until 2019 … by which time another recession probably will have come and gone and we’ll be measuring federal budgets not in trillions, but quadrillions.

— Max Heine