Mr. John Schulz

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

GLG News is now G+ Insights

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Venerable Alvan Motor Freight Closes in Midwest. Who Benefits and Who's Next?

July 1, 2008

Analysis of:Alvan Motor Freight Closes its Doors | www.thealpenanews.com

  After 67 years of service, Michigan-based Alvan Motor Freight is ceasing operations and will file for Chapter 11 bankruptcy protection.    A Teamsters-covered carrier, Alvan is the latest victim of the brutal operating and cost environment facing all U.S. trucking companies. Alvan President and CEO James Van Zoeren called it "the worst day of my business career."   The principal beneficiary could be YRC Worldwide unit Holland, another Michigan-based carrier and the largest unit of YRC Regional. Con-way Central, a unit of Con-way Inc., also figures to be a winner in this fallout.

If This is a Trucking Recovery, I'd Hate to See a Recession

July 1, 2008

Analysis of:ATA Truck Tonnage Index Rose 0.5 Percent in May | www.etrucker.com

  The seasonally adjusted ATA Truck Tonnage Index rose a scant 0.5 percent in may, compared with a revised 0.6 percent drop in April. This is the first month-over-month increase in four months.   The seasonally adjusted index was 3.3 percent higher compared with May of 2007. That marks the seventh straight year-over-year increase. In April, the year-over-year gain was 2.2 percent.

How Much do FedEx and UPS Compete? Check Out This Lobbyist's Dirty Tricks

June 27, 2008

Analysis of:UPS Lobbyist Outed FedEx in Tax Case | www.dispatch.com

FedEx is fighting a major threat to its FedEx Ground business model by opposing any changes to its independent contractor status for thousands of its FedEx Ground workers. The issue strikes at the heart of the business model of FedEx Ground, which at $5 billion is the lone major competitor to $50 billion-a-year UPS's small package operation. The fact that a lobbyist for UPS would compile a highly detailed, 563-page report on the alleged violations of labor law that FedEx is alleged to have committed and then leak it to Ohio government officials shows the depth that each company takes its competitive rivalry. This case has already cost FedEx a $654,000 fine and penalty, which the company is appealing. The question is how much farther will this case go?

Logistics Costs Over 10 Percent of GDP Last Year. What Does it Mean for Carriers?

June 23, 2008

Analysis of:State of the Logistics Union 2008 | www.scdigest.com

  The annual State of Logistics Report issued by the Council of Supply Chain Management Professionals shows that businesses spent a record $1.4 trillion on logistics last year. That's equal to 10.1 percent of Gross Domestic Product. It's the first time since 2000 that figure has exceeded 10 percent.   Not surprisingly, most of the increases were related to fuel. But that hardly means carriers in most modes were getting rich. Except for railroads (which posted their second-best year in history), most modes were barely making it. The increases in their revenues were, in most cases, eaten away by huge spikes in fuel costs.   Still, pricing is totally in the hands of shippers right now. The question is, how long can that last?

The Drags at FedEx: It's Not Just Fuel Any Longer

June 19, 2008

Analysis of:FedEx Swings to Loss, Citing Charge, Fuel, Economy | www.marketwatch.com

FedEx Corp.'s reported $241 million loss in its fiscal fourth quarter ending May 31 compares with a year-ago profit of $610 million. The huge swing is attributed to a $696 million after-tax asset-impairment charge connected with its  disastrous acquisition of Kinko's, higher fuel costs and a weak U.S. economy.  Looking ahead to 2009, FedEx CFO Alan Graf labeled the outlook to remain "extremely challenging." He is not optimistic that either freight demand will grow or that fuel costs will recede.

Teamsters Car Haulers Walk. Will Anyone Notice?

June 11, 2008

Analysis of:Union Car Haulers Walk Off Job in 15 States | www.forbes.com

The International Brotherhood of Teamsters called a strike affecting 1,250 workers at car hauler Performance Transportation Services. The walkout covers 24 plant sites, ports and rail heads in 15 states. The job action was called after the company imposed an emergency 15 percent pay cut granted by a bankruptcy judge.

Now We Know What DHL Stands For: "Does Have Losses."

June 3, 2008

Analysis of:UPS Could See Windfall in DHL Deal | www.ajc.com

  UPS's decision to haul domestic air shipments for rival DHL between airports in North America is another strategic move by the world's largest package delivery company to consolidate air lifts from what once were major competitors.   UPS has a similar agreement in place with the U.S. Postal Service.   For DHL, it's a tacit admission that its U.S. business plan is not working. Not that DHL needed any reminders of that--it lost $900 million in the U.S. last year. This will result in a 30 percent reduction in its North American network and will shed between 1,500 and 1,800 DHL jobs in North America.

YRC Pressing Teamsters for Changes in Operations; Will They Be Enough?

May 27, 2008

Analysis of:Union Reviews YRC's Changes | tdu.org

  YRC Worldwide is trying to convince the Teamsters union that its proposed changes of operations at its Yellow and Roadway long-haul units and its Holland regional unit will be a win-win for all concerned.   The company is most concerned about returning to profitability and two very poor financial quarters. For their part, the Teamsters are concerned mostly about job security.   Failure to OK these much-needed changes could imperil YRC's financial recovery, and cost the Teamsters jobs as well.

Is the Bloom Off the Intermodal Rose?

May 21, 2008

Analysis of:Intermodal Shipping: IANA Report Says Overall Intermodal Volume Down, But Domestic Loadings Are Up | www.logisticsmgmt.com

  Changing shipping patterns caused a 2.4 percent overall drop in intermodal shipments in the first quarter. More importantly, there was a 5.2 percent drop in international intermodal volume, the largest such drop in nine years.   Specifically, this is because of an 18 percent drop in the number of international important shipments from the West Coast to the East Coast by either rail or truck.   That is a result of a longer-term trend of  international shippers bypassing the congested and increasingly costly West Coast ports of Los Angeles and Long Beach and opting for an all-water routing to the East Coast via the Panana Canal.

Another One Bites the Dust--Who Benefits from Jevic's Closing?

May 20, 2008

Analysis of:Jevic Transportation shutting down | www.philly.com

  Jevic Transportation, a hybrid LTL-truckload-chemicals hauling based in Delanco, N.J., is closing after 27 years of operations. Jevic was a victim of a highly leveraged buyout, record-high fuel prices and weak freight demand for its services.   Jevic's 1,500 employees are out of work. Since going private two years ago, Jevic has been on a steady path downhill.   Analysts are saying Jevic will not be the last large trucking company to close in the current difficult freight environment.

Is This a Back-Door Way to Get Longer, Heavier and Larger Trucks?

May 19, 2008

Analysis of:ATA Rolls Out New Sustainability Program | www.logisticsmgmt.com

 The American Trucking Associations is unleashing a six-point program of "sustainability," designed to save fuel, increase profits and help the industry's image.   It would require trucks to go no faster than 68 mph, reduce engine idling, increase fuel efficiency, back an increase in the federal tax on fuels, support fuel economy standards for trucks and -- in its most controversial item -- be allowed to use longer and heavier trucks on certain roads.   How much of this is PR? How much is genuine concern over the environment? How much is realistic?

Does Parcel Still Mean Profits?

May 14, 2008

Analysis of:Transportation: Solving The Parcel Express Puzzle | www.logisticsmgmt.com

  UPS and FedEx, the two dominant players in the U.S. parcel business, are facing sharply higher fuel costs, as well as increases in labor. All this comes at a time when shippers are "downgrading" from more costly same- and next-day services to cheaper, deferred services.  While the two giants have announced hefty rate increases along with hikes in their fuel surchargers, shippers are countering with another weapon: the U.S. Postal Service recently began a program of offering volume discounts for the first time.   Shippers have other strategies in hand for countering the annual rate increases of FedEx and UPS. How effective these strategies are will largely determine profitability at the two parcel giants.

Here's the Trade: Teamsters for Obama, Obama for No More Union Oversight

May 13, 2008

Analysis of:Obama Seeks to End Federal Oversight of Teamsters | www.huffingtonpost.com

 Sen. Barack Obama has won the support of the 1.4 million-member Teamsters union in exchange for the likely Democratic presidential nominee's support to end 19 years of federal oversight of the union. While neither side calls it a quid pro quo, it's obvious that the Teamsters union would benefit financially from less judicial oversight. What that means for long-term organizing efforts in trucking by the union is not exactly known, but the Teamsters are eying certain non-union trucking companies to boost their employee ranks.

Trucking Forecast: Lower Speeds, Higher Costs, Uncertain Profits

May 9, 2008

Analysis of:Transportation Policy: Senate Hearing Focuses on Fuel Conservation | www.logisticsmgmt.com

  Trucking leaders are mulling installing governors on trucks that would limit speeds to around 62 miles per hour. Already, one major trucking company (Con-way Inc.) has done exactly that in an attempt at fuel conservation.   Trucking will spend in excess of $130 billion on diesel fuel this year. Any attempt at conservation should help their bottom lines, but what will the impact be on time-sensitive services?

Unlike OPEC, These Fuel Thieves Operate Domestically

May 9, 2008

Analysis of:As Diesel Prices Rise, Diesel Theft Does, Too | blog.wired.com

 Diesel fuel theft is a growth industry these days. As truckers spend as much as $1,200 to fill their twin 150-gallon fuel tanks, thieves are often waiting in the wings.   The heists come in many forms, but siphoning out 300 gallons of fuel is not usually the way. Sometimes the truck is hijacked. Sometimes fuel trucks are hijacked. Sometimes construction and agricultural sites are raided at night.

The Tooth Fairy Will Help Truckers More than This Congressman Ever Will

May 8, 2008

Analysis of:DeFazio Says Congress Should Help Truckers Hit by Fuel Costs | www.ttnews.com

  Rep. Peter DeFazio, D-Ore., says he favors a bill that would require freight brokers to disclose their profits and pass fuel surcharges they assess onto their customers.   Rep. DeFazio chairs the House Infrastructure Committee's Highways and Transit Subcommittee. Still, this bill is a longshot to ever make it into law.    It is too complex, burdensome and probably illegal under the Motor Carrier Act of 1980 which economically deregulated interstate trucking.

Lo and Behold, Some Shippers Taking Longer View on Trucking Capacity

May 1, 2008

Analysis of:Trucking Update: What Goes Around Comes Around | www.purchasing.com

The current depressed market in trucking services will not last forever. Many shippers, painfully aware of the last boom market and tight capacity, are eying the lessening of over-the-road capacity warily. Continuing consolidation in the industry will eventually mean higher rates for truck services.

Whoops, There Goes the Second-Half Recovery Theory

April 28, 2008

Analysis of:ATA Truck Tonnage Index Declines 3.3. Percent in March | finance.alphatrade.com

  The American Trucking Associations advanced seasonally adjusted Truck Tonnage Index fell 3.3 percent after being unchanged in February. This is the largest month-to-month contraction since August 2006.   This is not a good sign for those anticipating a second-half economic recovery in freight. Trucking, which hauls 70 percent of tonnage in this country, long has served as a barometer of the overall U.S. economy.  

Is This Just an Influx of Money from Investors Who Know Nothing About Trucking?

April 28, 2008

Analysis of:YRC Worldwide shares leap on 2Q view, upgrade | www.guardian.co.uk

  YRC Worldwide reported its second straight quarterly loss, a net loss of $45.9 million in the first quarter. Yet its stock surged nearly 30 percent on the day after those earnings were announced. What is the dichotomy here?

IRS Fine-Tunes Meals Deduction Expenses for Leased Drivers

April 23, 2008

Analysis of:Disallowance of Deductions for Certain Entertainment, Etc. Expenses | www.irs.gov

 Generally, a trucking company or independent contractor can deduct only 50 percent of expenses for meals and incidentals. But what happens if the leasing company or the trucking company deducts those meals and incidentals as compensation on their tax returns, or treats those incidental expenses as wages for purposes of withholding taxes?   The Internal Revenue Service is fine-tuning its language on who gets to deduct what, and for how much.   The IRS made its announcement in Revenue Ruling 2008-23. It will be published in IRS Bulletin 2008-18 dated May 5, 2008.

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