May 2009


What company supplies food to a third of all U.S. restaurants, cafeterias, and sports stadiums? If you pull a reefer, chances are you well know that it’s Houston-based Sysco, which each year ships 21.5 million tons of produce, meats and other food-related products.

Fortune magazine has an detailed look at the “complex web of software, databases, scanning systems, and robotics” that enables one of the company’s distribution centers to turn over 11,000 items every 17 days.

There’s a bit about trucking, too, such as this:

“Sysco has also saved money by revamping its truck routes. That became imperative last year when fuel prices skyrocketed. It uses Roadnet, a software program developed by UPS, to determine the most efficient routes for its trucks. In the past nine months, the company says, diesel usage is down almost 8% from a year earlier.”

— Max Heine

Your freight might be down, your dog might be snarling at you, but your fellow Americans are looking up, money-wise. At least relative to recent months, which isn’t saying too much.

U.S. consumer confidence jumped in May to its highest level in eight months, according to the Conference Board, an industry group that measures this. It was the biggest one-month jump since April 2003.

Likewise, the government’s Index of Leading Economic Indicators saw its first rise in seven months, 1 percent, in April.  

For a more sobering assessment, consider what Tavio Headley, economist with the American Trucking Associations, reported Friday for residential construction. He said new housing starts plunged 13 percent in April, the lowest level since the government started compiling statistics in 1959. This was due to a 46 percent drop in multi-family housing starts. Single-family home construction actually rose a bit from the prior month.  

One final note, also on housing, is that the continuing turmoil in construction is reflected in housing prices. The S&P/Case-Shiller National Home Price index plunged a record 19 percent during the first quarter compared with the first three months of 2008. And that came after an 18 percent drop last quarter.

If you’re a first-time buyer with good credit, there’s got to be some killer deals out there for you.

— Max Heine

It’s not every day someone offers you an interest-free loan. The U.S. Small Business Administration recently announced a program to do just that. As part of the stimulus package, SBA is launching America’s Recovery Capital loans June 15.

The basics:

  • Loans are up to $35,000.
  • After you get the money, you have five years to repay.
  • Not only is there no interest to be paid, but there are no SBA fees, either.
  • Qualifying debt includes mortgages, lines of credit, credit cards, capital leases, and notes payable to vendors and others.
  • To apply, find a bank that’s participating. The SBA guarantees the bank loan, but doesn’t dish out the money.

To qualify, you’ve got to jump through some hoops:

  • You must have been in business two years.
  • You must have financial statements showing you turned a profit in one of the last three years.
  • You must be able to project sufficient cash flow to meet current and future loan payments over a two-year period from loan approval

One potential holdup on this is that some banks are leery about participating. In a CNN.Money story, Emily Maltby reports that SBA has yet to spell out details on how much it will pay the banks to make it worth their while, since no interest is being charged. Bankers also aren’t exactly sure about where to draw the line on what businesses are “viable” and which aren’t.

Maltby writes that SBA plans to tell the banks more by June 8.

For more information, visit the SBA website.

— Max Heine

As recently as April, manufacturing still looked mostly bad, notes the latest weekly roundup from Bob Costello, chief economist for the American Trucking Associations.

April output grew for autos, paper, wood products and nonmetallic mineral products. It shrunk for furniture, primary metal and fabricated metal products. From a year ago, manufacturing production was down 14 percent in April.

Inventory still has a ways to go before demand strengthens. The combined manufacturing, retail and wholesale trade inventories dwindled a little in March, but sales for the same group fell further. “The very important total business inventories/sales ratio remained unchanged at very high levels; thus, the current inventory correction will continue, which will be a further drag on truck freight volumes,” says ATA.

 A report this month from the Institute for Supply Management also was glum. “With operating capacity at 67 percent, an expected capital investment decline of 22.7 percent and prices expected to decrease 5.3 percent during 2009, manufacturers will need to focus on cost-cutting to offset lower revenue,” says ISM’s spring forecast.

ISM’s Norbert J. Ore summarized, “Given the significant decline in activity, 2009 shapes up as a very difficult year for U.S. manufacturers.”

Food, Beverage & Tobacco Products is the only manufacturing industry expecting a revenue increase in 2009, says ISM.

 — Max Heine

 As one of my former editors was fond of saying, “The stuck pig squeals the loudest.”

You can hear a little squealing from the headquarters of pork consumption, Washington, D.C., in this blog entry from U.S. Transportation Secretary Ray LaHood. He tries to discredit a recent Associated Press report saying that federal stimulus spending on transportation-related projects appears headed for counties of low unemployment, not high.

“Nothing could be further from the truth,” says LaHood of the project lists AP studied. His rationale: “Until the states make a request and the experts at the Department of Transportation certify that a project meets the criteria for Recovery dollars, those lists are not the final word.”

Judge for yourself how far from the truth this is by reading the report. AP acknowledges right off that it was reviewing “planned transportation projects,” not final contracts. Perhaps the DOT “experts,” in their infinite wisdom, will make everything come out fair in the end, but I doubt it. Perhaps that’s why the blog didn’t bother to link to the analysis it so eagerly criticized. Here’s an excerpt:

“Altogether, the government is set to spend 50 percent more per person in areas with the lowest unemployment than it will in communities with the highest.

“The AP reviewed $18.9 billion in projects, the most complete picture available of where states plan to spend the first wave of highway money. The projects account for about half of the $38 billion set aside for states and local governments to spend on roads, bridges and infrastructure in the stimulus plan.

“The very promise that Obama made, to spend money quickly and create jobs, is locking out many struggling communities needing those jobs.

“The money goes to projects ready to start. But many struggling communities don’t have projects waiting on a shelf. They couldn’t afford the millions of dollars for preparation and plans that often is required.”

— Max Heine

First quarter figures from ATBS show a few encouraging notes. Among all hauling segments, clients of the Denver-based owner-operator accounting firm saw average income rise from $3,892 in January to $4,074 in March, due in large part to low fuel prices.

Flatbedders had a steady rise in miles, from 7,216 in January to 8,303 in March. ATBS President Todd Amen says their lot has improved, but they’re still struggling. “I don’t think we are into any shovel-ready projects yet that are bringing freight,” he says. Flatbed’s average miles are still not back to the level of a year ago, 8,828 miles.

Those pulling dry vans averaged $3,838 in the first quarter, a little ahead of the $3,710 in the first quarter of 2008.

— Max Heine

Legislation that would remedy much of the credit card industry’s consumer abuses is closer to reality. It was approved by the House last week and now is before the Senate.

As mentioned earlier in this space, it would eliminate abrupt, huge increases in interest rates and prevent other tactics that consumer advocates have called for. It’s about time. For too long, credit card agreements, filled with wide rivers of microscopic, self-serving type have allowed card issuers to run customers through the washer. Such treatment has been particularly abusive to people such as owner-operators, who often lean heavily on plastic for day-to-day operations.

President Obama is among the many backers of this bill, known as the Credit Cardholders’ Bill of Rights. Supporters hope to get it to him for signing by Memorial Day. There is still time for the banking industry to weaken it before the Senate approves.

The measures are H.R.627 in the House, S.235 in the Senate.

— Max Heine