GLG News by Mr. John Schulz, Independent Analyst - Contributing Editor
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If the Rails Are Worried About Trucking's Profitability, Should We?
June 5, 2009
Trucking Industry's Near-Term Fundamentals are "as Bad as We've Ever Witnessed" | www.progressiverailroading.com
The trucking industry has been slow to recover out of the current economic downturn. The old axiom of "first in, first out" may not be applicable to all players in the trucking industry this time around. Two well-respected trucking analysts, John Larkin and David Ross of Baltimore-based Stifel Nicolaus, said in a note to investors that "near-term fundamentals are about as bad as we've ever witnessed."
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Mexico Gets Serious in the U.S. Crossborder Trucking Fight. So Should Obama.
June 4, 2009
Mexican Truckers File $6 Billion Claim Against U.S. in NAFTA Spat | online.wsj.com
Mexico is ramping up the pressure on the United States to get the Americans to live up to terms of the NAFTA fine print that allows Mexican truckers to operate in this country. The latest squeeze is a $6 billion lawsuit against the U.S. government because of its refusal to allow Mexican-domiciled trucks into this country beyond the current 25-mile free trade zone at the southern border. Will the Obama administration cave?
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Deck Chairs Rearranged, Sir. Full Speed Ahead.
June 3, 2009
Trucking Woes: YRC Worldwide Shuffles Top Ranks | fleetowner.com
YRC Worldwide has made yet another series of changes in its executive suites. But will these latest changes help stem the flow of red ink stemming from the $8.9 billion concern? The largest trucking conglomerate in the U.S., YRC has closed terminals, rearranged its geographic coverage, changed its marketing, is heavily discounting its services and still lost $257 million in the first quarter of this year. Its losses for the last nine quarters are approaching $2 billion. It is dangerously close to violating its loan covenants and may not be profitable in the second quarter. Will rearranging the names on some senior executives' suites make much difference?
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For Sale: One Trucking Company's Headquarters. Not Its Business.
May 29, 2009
YRC Worldwide Sells HQ to Load Up More Cash | kansascity.bizjournals.com
YRC Worldwide, which has been closing terminals and selling others to raise cash, has solid its Overland Park, Kan., headquarters for $22.5 million to a group of Kansas City investors. The motive for the sale is similar to what YRC has been doing elsewhere in its operations. Desperate for cash to avoid running aground of its debt covenants, YRC is using the cash to "enhance its liquidity position," according to an e-mail from the company to the Kansas City Business Journal, which broke the story.
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Looking for a Trucking Success Story: Go to Richmond
May 28, 2009
Steady Hands at the Wheel | www.virginiabusiness.com
Estes Express has remained on a growth track despite arguably the worst three years in trucking since deregulation in 1980. The Richmond, Va.-based LTL carrier is diversifying and expanding its reach from Canada to Mexico. It also is one of the few trucking companies actually expanding. Privately held Estes has grown to just under $1.5 billion revenue while exploiting what one trucking analyst called the "value proposition."
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You Have to Give YRC Points for Creative Thinking
May 15, 2009
YRC to Apply for Bailout Funds | online.wsj.com
YRC Worldwide, the nation's largest trucking company which has lost close to $2 billion over the last nine quarters, is applying for $1 billion in bailout funds under the government's Troubled Asset Relief Program (TARP). YRC Chairman and CEO William Zollars says the funds are necessary "to get the conversation started" about the company's estimated $2 billion in pension obligations to various multi-employer pension plans, including the Teamsters' Central States plan. While YRC is not a financial institution and its odds of receiving the bailout are considered slim, Zollars says it's unfair for YRC to be paying billions of pension payments when roughly half its contributions are going to workers who never were employees of YRC companies.
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Trucking's Version of a Rorschach Test?
May 14, 2009
Head of YRC Worldwide Logistics Unit Will Leave Company | www.bizjournals.com
YRC Logistics CEO Jim Ritchie is leaving parent YRC Worldwide to become president of CHEP USA, effective June 1. As YRC Worldwide struggles with nearly $2 billion in posted losses the past two years, is Ritchie's departure a sign of more turmoil at the troubled Overland Park, Kan.-based company, the largest LTL carrier in the country with about a 27 percent market share of the $34.5 billion sector. Last year, YRC Chief Financial Officer Steve Bruffett resigned to take a similar post with rival Con-way Inc.
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How Much More Capacity Needs to Exit the Trucking Industry?
May 13, 2009
Race to Bottom, As Huge Drops in Shipper Demand Parallel Equal or Greater Losses in Carrier Capacity | www.scdigest.com
The persistent slump in U.S. industrial freight demand continues to take its toll on all modes of transportation carriers. Despite double-digit percent capacity coming out of various modes, there continues to be too many trucks chasing too little freight. When will the correct equilibrium arrive that will allow carriers to return to profitability?
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If You're Squeamish on the LTL Sector, Don't Read This.
May 4, 2009
Recession Sends Trucking on New Routes | www.joc-digital.com
The current economic downturn has been brutal on all the trucking industry, but especially the LTL sector. A $34.5 billion sector that has been flat for more than 10 years, it is being punished even further by trends toward consolidation by third-party logistics operators and truckload carriers seeking to expand their bases. Is this, indeed, the beginning of the end for LTL?
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Public-Private Partnerships for Infrastructure: RIP
May 1, 2009
India's Infrastructure Funds Fall | online.wsj.com
India's once-heralded public-private infrastructure spending has come to a screeching halt. Out of 60 new road projects issued by India's National Highways Authority, 38 haven't received one single bid through this process. This is despite some of the biggest banks and private equity funds--Morgan Stanley, J.B. Morgan Chase and Blackstone Group, among them--once being interested.
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ABF Freight System's Latest Change of Operations: Harbinger of YRC Unit Acquisition?
April 29, 2009
ABF Consolidation: Change of Operations | tdu.org
ABF Freight System is planning to close Teamsters' road board operations in six locales. It says it is doing this because of declining freight volumes and to consolidate operations. The proposal means a loss of 127 Teamsters jobs.
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Longer and Heavier Trucks? Not This Year
April 20, 2009
Truckers Face Uphill Battle Over Truck Size and Weight Modernizaton | www.logisticsmgmt.com
The trucking industry most likely will not be receiving any relief from Washington in areas of improved productivity through greater use of longer and heavier trucks. This is a double-edged sword. On one hand, some truckload carriers could have benefited from the more productive vehicles. However, on the other hand, the capital expenditures for the additional equipment plus the likely rate cuts that would have occurred with the additional capacity probably would not have been worthwhile for the industry.
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The Latest YRC Survival Tactic: Defrring Teamsters' Pension Payments
April 15, 2009
YRC Wants to Defer Pension Payments | stlouis.bizjournals.com
YRC Worldwide is asking its lenders and the Teamsters union for permission to defer some pension payments if it offers real estate from its trucking terminals as collateral. Lender JP Morgan Chase Bank holds to key to this gambit. If the bank refuses, YRC's financial future could be in jeopardy as the highly leveraged $9.6 billion company--which has lost at least $1.5 billion the last two years in the roughest freight environment in the past 30 years--struggles to stay within bounds of its debt covenants.
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How Far Can Jury Awards Go in Trucking Accidents? This C.H. Robinson Case Provides a Clue
April 8, 2009
Trial Results in $23.7 Million Jury Award Verdict Over Fatal 2004 Trucking Accident | www.healylawfirm.com
In what could be the largest jury verdict ever awarded in Will County, Ill., a jury recently awarded $23.7 million as a result of a trucking accident that killed two persons and seriously injured another in 2004. What is different in this case is that the jury found C.H. Robinson, one of the nation's largest freight brokers, liable for the accident even though the truck driver was not affiliated with CHR, but was rather an independent contractor. CHR has indicated it will appeal the ruling.
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New IRSTransition Rule for Biodiesel to Affect Tax Incentives
April 7, 2009
IRS Makes Changes to ASTM Standards for Biodiesel | www.irs.gov
The IRS is setting forth a transitional rule that affects the tax incentives for production, sale and use of biodiesel. The IRS is extending its transitional rule through Sept. 30, 2009. This notice will be published in IRB 2009-17 on April 27, 2009.
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FedEx vs. UPS: The Gloves Come Off Over Labor
April 3, 2009
FedEx Threatens to Cancel Jet Orders | online.wsj.com
FedEx Corp. is threatening to cancel billions of dollars of orders from Boeing Co. if a pro-labor bill in Congress becomes law. But that is not the major point. The bigger issue is the ongoing battle between non-union FedEx and unionized UPS over what will be the new labor landscape in Washington under the Democrats and pro-Labor President Barack Obama. How far will these cargo giants go in getting their way?
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The World's Airlines Need to Go Green--As is Cash
March 27, 2009
World's Airlines Are Said to Be Facing Heavy Losses in '09 | www.nytimes.com
The world's airlines will lost an estimated $4.7 billion this year, according to the Air Transport Association's revised estimate. That's up from a projected loss of $2.5 billion made just last December. This is occurring despite of a nearly 75 percent drop in diesel fuel costs with crude oil hovering under $50 a barrel at the moment. What is fundamentally wrong with the airlines' business plans?
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WIll a Much Smaller YRC Regional Unit Be Profitable?
March 24, 2009
Harrisburg Trucking Hub Will Close, Leaving 50 Jobless | www.pennlive.com
YRC is making moves to close 11 terminals in the Northeast that belonged to the former USF Holland unit, now a part of the money-losing YRC Regional trucking operation. The closings include terminals in Harrisburg, Allentown, Bedford, DuBois, Wilkes-Barre and Philadelphia. The move comes after parent YRC Worldwide has lost more than $1.6 billion the last two years.
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Is FedEx a Harbinger of All Trucking Earnings in the First Quarter?
March 20, 2009
FedEx Corp. Reports Third Quarter Earnings | news.van.fedex.com
FedEx has reported a disappointing financial report for its most recent quarter ending Feb. 28. Net income was off 75 percent to $97 million on a 14 percent drop in revenue to $8.14 billion while operating income fell 72 percent to $182 million and operating margins fell 2.2 percent from 6.8 percent in the year-ago quarter. Most surprisingly, its FedEx Freight LTL unit had a operating loss of $59 million, compared with year-ago profit of $46 million on a 21 percent drop in revenue to $914 million, from last year's $1.16 billion. FEF had an operating ratio of 106.5 compared with a 96.0 OR in the year-ago quarter.
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Hey, Teamsters, Get Over it. Truck Driver Hours of Service Rules Are Here to Stay
March 11, 2009
Teamsters Seek HOS Reversal | www.joc.com
The Teamsters union is petitioning the new Transportation Secretary, Ray LaHood, to overturn the changes in the truck driver hours of service rules, which were modernized in 2003 and have withstood numerous court challenges already. This seems like pure politics on the part of the Teamsters union.
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