Mr. John Schulz

GLG News by Mr. John Schulz, Independent Analyst - Contributing Editor

GLG News is now G+ Insights

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Just What the Trucking Industry Doesn't Need: $5.5 Billion in More Costs

December 16, 2008

Analysis of:Air Board OKs Nation's Toughest Diesel Rules | www3.signonsandiego.com

 The decision by the California Air Resources Board to require all truckers operating in California to retrofit their trucks with soot traps to catch diesel emission particulates will cost the trucking industry an estimated $5.5 billion.   The move affects all truckers based in the Golden State. It is expected to affect at least 350,000 trucks.   To put the $5.5 billion cost in perspective, that is more than at least five times the entire projected profit for the trucking industry this year. California legislators and clean air advocates are calling the move "a tough rule in tough economic times."

Is the Bloom Off Trucking's Non-Union Rose?

December 15, 2008

Analysis of:Con-way Pares 2008 Earnings Forecast, Cuts 1,450 Jobs (Update2) | www.bloomberg.com

  Con-way Freight, which perennially was the most profitable LTL carrier, is cutting it workforce and forecast for 2008 earnings.   In a sign of how truckers are battening down for what is expected to be a very slow first quarter of 2009 for freight services, non-union Con-way is slashing 1,450 jobs and is reducing its full-year 2008 earnings forecast by 20 percent.   The $4.7 billion Con-way operation says it will save $40 million annually with the cuts, which will cost an additional $20 million in one-time costs in the fourth quarter. It also is writing down $30 million to $35 million in impairment charges for its investment in a Chinese transportation company called Chic Holdings Ltd.

Another Day, Another YRCW Downgrade

December 8, 2008

Analysis of:Moody's Lowers YRC Worldwide's Credit by 3 Grades | akronohio.planetdiscover.com

  Moody's Investors Service is lowering YRC Worldwide's credit rating three grades to Caa1, or seven grades below investment quality. The downgrade comes as the nation's largest U.S. trucking concern is asking its 40,000 Teamsters rank-and-file members to approve a 10 percent wage giveback that would save the company approximately $250 million a year. A Moody's analyst calls the YRC debt a "distressed exchange."

Canary in the Coal Mine: Finally, a Trucking Deal.

December 8, 2008

Analysis of:Celadon to Buy Continental Express for $24 Million | www.arkansasbusiness.com

  Celadon Group's purchase of Arkansas-based truckload carrier Continental Express for $24 million is the first significant trucking acquisition of 2008, and may be a sign that the worst is over for the beleaguered trucking industry.   Celadon, an industry leader in north-south truckload traffic, is getting 400 tractors, 1,100 trailers, a brokerage business, an intermodal brokerage unit, about 900 employees as well as Continental Express's customer list.   The $24 million is viewed as a bargain price for the mid-sized truckload carrier, which reported gross revenue of $92 million last year.

Is This the End of Unionized Trucking in America?

December 4, 2008

Analysis of:YRC Teamsters to Vote on 10 Percent Cuts | www.tdu.org

  YRC Worldwide, which has suffered losses in four of its last five reporting quarters and seen its stock fall in value by more than 85 percent this year, is asking its 40,000 Teamsters to vote on a proposal to take a 10 percent wage cut in order to save the company an estimated $200 million annually.   In addition, rival carrier ABF Freight System, a unit of Arkansas Best Corp., will similarly ask its 12,000 Teamsters to take a similar wage cut.   Except for UPS in the parcel division, these are the two largest unionized trucking companies in the country. Will they survive even with these wage concessions?

IRS to Add Biodiesel Tax Incentives and Producer Tax Credits

December 3, 2008

Analysis of:IRS Proposes Biodiesel Tax Incentive | www.irs.gov

  With gasoline and diesel fuel prices dropping sharply, there is concern that will dampen incentives for alternative fuels. The Internal Revenue Service is moving to add some tax incentives for producers of biodiesel fuels.   The IRS is making its intentions known in Notice 2008-100, which will be published in IRB 2008-51 on Dec. 22, 2008.

A YRCW-Teamsters Deal Reached. Remember, It's a Journey, Not a Sprint.

December 3, 2008

Analysis of:YRCW, Teamsters Reach Tentative Deal | www.logisticsmgmt.com

  The Teamsters union hierarchy has reached a tentative deal on wage concessions covering some 40,000 union members at YRC units Yellow Transportation, Roadway, USF Holland and New Penn.   The exact amount of the wage give-backs is not known yet. It is expected to be in the 10 to 15 percent range. A 10 percent give-back would mean about $200 million in annual earnings before interest and taxes (EBIT) for the $9.6 billion LTL giant. A formal announcement is expected Wednesday, Dec. 3.

New Truck Sales Tumbling; Recovery Not Seen Until 2010

December 2, 2008

Analysis of:Out of the Spotlight, an Industry Copes With Crisis | www.nytimes.com

  The seized-up credit markets have basically stalled the market for new Class 8 heavy trucks in this country. New Class 8 sales are projected to reach just over 111,000 this year, compared with a record sales year of 265,000 just two years ago.   Nearly every significant heavy truck fleet in the nation is either scaling back or eliminating capital expenditures for 2008 and 2009.   C. David Gerrard, a Chicago-based businessman who runs the biggest heavy truck dealership in America, explains how his customers are having to forego new truck purchases in order to merely stay in business.

The Obama-Teamsters Connection. Or, Is a Deal in the Works?

December 1, 2008

Analysis of:Teamster Corruption and the Consent Decree | tdu.org

  The Teamsters union might soon be a major beneficiary of the Obama administration. The union, which has been struggling financially, might be able to extricate itself from a 20-year-long consent decree it signed with the Justice Department requiring federal oversight of its day-to-day financial matters.   This is costing the union at least $3 million annually, and it is estimated to have cost the Teamsters more than $100 million since it began in 1988.   The Teamsters were one of the first large unions to back Obama, and contributed both money and manpower to help the Democrat win a landslide over Sen. John McCain. Is it now payback time?

Happy Thanksgiving, YRC Workers. Now, Give Us Back 15 Percent

November 27, 2008

Analysis of:YRC to Get Concessions? | tdu.org

 YRC Worldwide's decision to go to the Teamsters and request a wage concessions underscores the financial difficulties the nation's largest trucking company is facing.   YRC is under pressure from its lenders to reduce its debt load. It already has placed some of its terminals for sale as collateral to pay down debt. It is consolidating the Yellow and Roadway long-haul national networks. Now it is going directly to its 40,000 Teamsters asking for wage concessions.   Will this all be enough to save YRC?

In 11th Hour at YRC Worldwide, Teamsters Have Few Choices

November 21, 2008

Analysis of:Yellow, Roadway Change of Operations Approved | www.tdu.org

  A change of operations regarding cost-cutting moves at the Yellow, Roadway and USF units of YRC Worldwide has been formally approved by the Teamsters union.   More such changes are coming as YRCW stock drops to $1.20 per share, a 90 percent drop in a year and its lowest intraday trading price since at least 1982.   YRC is trying to close as many as 150 terminals formerly operated by Yellow and Roadway. But whether even potentially millions of dollars of  proceeds from those real estate sales are enough to save YRCW is an open question right now.

OK, Enough is Enough; In Fact, it's TOO Much

November 21, 2008

Analysis of:Boss May Choose Not to Watch You Pee | tdu.org

  The Department of Transportation has decided to make it optional, rather than mandatory, for employers to require transportation workers be directly observed while providing urine specimens.   This is a victory for common sense. And probably for safety as well.   Talk about getting the government out of our bedroom! How about keeping it how of our bathrooms as well?

Two Words About New Trucking and Logistics Index: "Yes, But..."

November 20, 2008

Analysis of:New Global Trucking and Logistics Company Index | seekingalpha.com

 A new index of global trucking and logistics companies claims to "rate" to top 10 worldwide companies.   The list includes some of the top names in both industries. A Wisconsin-based refrigerated trucking company, Marten Transport, tops the list even though it has a minuscule market capitalization of $416 million. Also on the list is the world's largest transportation company, UPS, with a market cap of more than $52 billion.   Most interestingly, Marten's stock has risen 49.6 percent in the past 52 weeks. UPS stock, meanwhile, has dropped 24.1 percent during that same time frame--but is ranked fifth on the list compiled by ETF Innovators.

Another Day, Another Dose of Bad Financial News from YRC

November 14, 2008

Analysis of:YRC Reports $823 Million Q3 Impairment Charge | www.reuters.com

 YRC Worldwide's decision to write down $823 million in impairment charges for its YRC National long-haul and logistics units guarantees that YRC will report its fourth losing quarter in its last five reporting periods. Counting the $756 million in goodwill it wrote off on its 2005 purchase of USF regional trucking units, that's nearly $1.6 billion in writeoffs in just the last year.   YRC insists it is not in danger of violating its financial covenants. That's because it is madly selling real estate from its closed terminals. Such deals appear to be the only thing standing between YRC and the bankruptcy court.

DHL Drops the Other Shoe, Will Exit U.S. Marketplace

November 11, 2008

Analysis of:DHL Express to Focus U.S. Business on International Services | www.marketwatch.com

  Deutsche Post World Net's decision to essentially exit the U.S. domestic parcel market means a boost to rivals UPS and FedEx. Those two giants should be able to divide about 80 percent of DHL's domestics U.S. business, 70 percent of its ground revenue and perhaps 5 percent of its import and export revenue.   But more importantly than that, UPS and FedEx eliminate a low-priced competitor. DHL never could reasonably compete in the U.S. on service, so it sold itself as the low-cost provider. With DHL out of the U.S. market (except for international deliveries) as of Jan 30, 2009, that should enable FedEx and UPS to raise rates without fear of shipper defection.

Con-way's Move Signals Pessimism for Trucking Market

November 6, 2008

Analysis of:Con-way Freight to Revamp Operating System, Close 40 Terminals | www.etrucker.com

Con-way's decision to revamp its regional LTL footprint and close 40 terminals is a significant move for a $4.6 billion company that has been on a go-go growth path since its inception in 1984. Con-way is usually two or three steps ahead of the rest of the LTL market, and its move to retrench must be taken as a negative signal for future prospects in the overall LTL sector. Con-way has one of the top reputations in the market, has an excellent management team, is diversified in all sectors since its purchase of TL carrier Contract Freighters Inc. last year, so it's move to step back is significant as trucking seeks to recover from a 28-month freight slump.

A Tough Market, a Merger of Two Units, Debt Covenant Threats and YRC Worldwide

November 5, 2008

Analysis of:YRC Worldwide to Pay off Debt, Preserve Liquidity | www.forbes.com

  YRC Worldwide is hoping it can ride out the current credit crunch and sour freight environment to avoid bankruptcy or further erosion of customer confidence.   With about $1.19 billion in debt, the $9.6 billion trucking concern is trying to pay off long-term debt to preserve liquidity and to stay within its loan covenants.    YRC's stock has been pummeled, off nearly 90 percent in this calendar year. It's a bad time for all trucking companies, but YRC has uniquely pressing problems because of its high debt levels.

Down, Down, Down: Three Straight Months of Truck Tonnage Declines

November 3, 2008

Analysis of:ATA truck tonnage index falls again | www.etrucker.com

 The American Trucking Associations' advanced seasonally adjusted for-hire truck tonnage index dropped by 0.9 percent in September, it's third straight month-over-month decline. The details are even worse. The seasonally adjusted index was just 0.8 percent above year-ago levels. September 2007 was hardly a peak period either,a nd the index is quickly falling toward negative territory.

Arkansas Best Corp. Stands to Gain Most from YRC Woes

October 24, 2008

Analysis of:Arkansas Best Corp. Announces Third Quarter 2008 Results | www.prnewswire.com

With LTL giant YRC Worldwide teetering, the biggest potential winner from any shutdown or wholesale closing of YRC operating units would appear to be Arkansas Best Corp., parent of ABF Freight System. At nearly $2 billion in revenue, ABC (or ABF, which makes up the lion's share of its parent's revenue) is about one-fifth the size of YRC but is more profitable. ABC has reported third-quarter results which, while not outstanding, show the savviness of its senior management team and its inherent advantages of being more nimble, smarter and better operators than YRC.

It's a Ton of Money, But It's Probably Money Well Spent

October 22, 2008

Analysis of:Transportation Officials Propose $545 Billion in Highway Spending | www.cqpolitics.com

A major group of transportation officials has adopted recommending that Washington spend $545 billion in federal-aid highway spending, or just about double the current five-year spending plan of $286 billion. It would allow the nation to address its infrastructure needs, fix freight bottlenecks, improve highway safety, and place a 5 percent cap on "earmarks" for pet projects from lawmakers.

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