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 YRC Worldwide Doesn't Need is Higher Costs, for Anything

April 22, 2008

Analysis of:YRC Interest Costs to Rise After Credit Plan Change | www.reuters.com

  YRC Worldwide has restructured its long-term debt and it is coming at a price of up to $4 million more in additional interest payments. The renegotiated credit agreements cover $1.1 billion in long-term credit and term loans.   Can YRC withstand this additional financial hit at a time when virtually the entire trucking industry is hemorrhaging money due to slack demand and record-high $117-a-dollar crude oil prices?

What Happened to the $6.1 Billion Influx? Teamsters' Central States Pension Plan in "Red Zone"

April 17, 2008

Analysis of:Notice of Critical Status for Central States, Southeast and Southwest Areas Pension Funds | webmail.aol.com

  The largest pension fund in the Teamsters union system, the Central States, Southeast and Southwest Areas Pension Funds is in the "red zone," or in critical status.   This disclosure comes in a letter from Thomas C. Nyhan, executive director of the Central States, to participants in the plan. In the letter, Nyhan tries to assure nervous Teamsters  that just by "receiving this notice does not mean that your adjustable benefits have been eliminated or reduced."   Nyhan says that will  come in a separate notice.   What is stunning is that Central States' financial condition has worsened so rapidly in the wake of UPS's one-time $6.1 billion cash infusion into Central States in January. Where did that money go? What is Central States investing in?

JIT, RIP?

April 16, 2008

Analysis of:Diesel Weasels its Way Into Costs, Supply-Chain Strategy | www.financialweek.com

Record-high crude oil prices are beginning to take its toll on the U.S. and world economy, all transportation companies and are threatening economic stability around the world. Another casualty, Frank Byrt writes in Financial Week, could be Just-in-Time supply chain inventory strategy. Long favored by manufacturers as a way to save on inventory-carrying costs, JIT could fall victim to record-setting diesel costs as shippers might opt to combine more loads into more cost-saving full truckloads and rail carloads.

The Debate Rages: Food or Fuel?

April 16, 2008

Analysis of:Fuel Choices, Food Crises and Finger-Pointing | www.nytimes.com

  The fledgling biofuels industry in the United States is being threatened by a backlash from politicians in developing countries that argue that these fuels are driving up prices of food staples worldwide at an alarming rate.   The World Bank has estimated that global food costs worldwide have risen by a stunning 83 percent in the past three years. Production of corn- and grain-based ethanol is being partially blamed for that alarming rise.   Finance ministers and central bankers from seven industrialized nations are calling for urgent action to deal with these fuel spikes. Several spoke out recently in Washington calling on Western countries to reconsider their use of biofuels.

It's Not the Worst Idea in the World, But It's In the Bottom Three

April 11, 2008

Analysis of:Trucking News: NYC Congestion Pricing Plan Hits a Dead End | www.supplychaindaily.com

 The New York State Assembly has killed New York City Mayor Michael Bloomberg's idea for a fee to enter New York City via motor vehicle. The proposed fee to start was $8 for auto drivers and $21 for truck drivers.   Trucking interests immediately hailed the decision to defeat this idea. Trucking interests feared that other municipalities would quickly adopt similar ideas.   Coming to its senses, the New York State Assembly led by State Senate Majority Leader Joseph L. Bruno, killed the idea.   Transportation Secretary Mary Peters, a big fan of these types of plans, said she was :deeply disappointed in the state assembly's action.

Rails are Down, But Are They Out?

April 7, 2008

Analysis of:Railcars Idle as Economy Falters | www.helenair.com

 Some of the major Class 1 railroads are parking thousands of railcars in response to slackening demand from their non-coal and non-chemical customers.   The decline in capacity is largely as a result in the slump in 40-foot containers coming in from the West Coast. That's partly because of the recent Chinese New Year, the slowing U.S. economy and the global threat of a slowdown.   Is this the best use of capacity for the rails? Can other modes -- namely, the truckers -- capitalize on this lessening of capacity.

Changing the Deck Chairs at YRC Worldwide, Part 1,023

April 4, 2008

Analysis of:YRC's Skarka Steps Down as Head of Yellow Truck Brand | www.bloomberg.com

  Michael Smid is in and Maynard Skarka is out as head of Yellow Transportation, one of the largest units at $9.9 billion YRC Worldwide.   This is the latest in a long string of executive changes at the struggling LTL carrier. Is this change indicative of anything more than merely changing the nameplates on the executive bathrooms at YRC?

Going Green? The IRS Wants to Help

April 2, 2008

Analysis of:Nonconventional Source Fuel Credit, Section 45K Inflation Adjustment Factor and Reference Price | www.irs.gov

  The IRS is changing its tax credit to consider inflation in tax year 2007 for alternatively produced fuel. The credit is equal to the product of $3 and the appropriate inflation adjustment factor.   The IRS defines "qualified fuels" for this consideration to be gas produced by biomass and liquid, gaseous or solid synthetic fuels produced from coal (including lignite), including such fuels when used as fuel stocks.

Bankruptcies, Independents, Owner-Operators and U.S. Trucking Capacity

March 25, 2008

Analysis of:Paying at the Pump, in a Big Way | www.nytimes.com

  Increasingly, owner-operators are parking their trucks rather than chasing scant freight at a time when diesel prices are over $4 a gallon in some parts of the United States.   Diesel costs -- which have tripled under the Bush administration -- are finally taking a toll on U.S. independent truckers.  Truck tonnage was off 1.5 percent last year, a severe enough economic climate notwithstanding the record costs of diesel.   While large trucking companies can recoup fuel spikes through surcharges -- which have reached nearly 50 percent at some truckload carriers -- independents are at the whim of the customer. Some pay, some don't.   The impact of all this is still being felt throughout the trucking industry and the U.S. economy, and it's unclear who will actually benefit.

Trucking Company Profits Being Burned Up by Fuel Costs

March 18, 2008

Analysis of:ATA Projects Record-High Fuel Expenses for Trucking in 2008 | biz.yahoo.com

  The repercussions of $110-a-barrel crude oil are being felt throughout the transportation industry. Nowhere is that more evident than in the trucking industry.   Truckers will spend $135 billion on fuel this year, up from $112.6 billion last year, according to projections by the American Trucking Associations, their trade group.   This is eating away profits at even the best-run carriers, who despite fuel surcharges, are seeing margins eroded by record-high fuel costs.

The Bear Says Trucking's Bear Market is Over

March 12, 2008

Analysis of:Logistics News: Quarterly Bear Stearns Shippers Survey Suggests Trucking Capacity Glut may be Reaching Bottom | www.scdigest.com

  A confidential quarterly survey of 200 shippers for Bear Stearns indicates that the current slump in trucking services is either over, or nearing its end.   At the same time, shippers say that overcapacity in the industry has eased and that bidding for new carrier partners has abated.   The current trucking slump dates back to around August of 2006. If a modest recovery begins in the second quarter of this year, that would make this a rather typical length trucking slump.

Missing the Green in Going Green in Transport

March 10, 2008

Analysis of:ATA Takes on California Port over Emission Programs | www.todaystrucking.com

  A unit of the American Trucking Associations is suiting the ports of Los Angeles and Long Beach over its new proposed clean air regulations. Specifically, ATA's Intermodal Conference says both plans violate federal law preempting local regulation of the routes and services of motor carriers. It cites a recent Supreme Court ruling that Maine's tobacco delivery rules put too much burden on interstate commerce and is applicable in this case.

With Capacity Exiting Trucking Industry, Will Rates Inevitably Rise?

March 4, 2008

Analysis of:Current Transportation Capacity Glut is Forcing Many Independent Truckers Out of Business | www.scdigest.com

  The current slump in ground freight demand is taking its toll on some independent truckers, pinched between high fuel costs and slack demand.   One truck repossession company reports it more than doubled the number of trucks it repossessed in 2007 compared with 2006.   But at least one transportation consultant believes this is a good thing because "the invisible hand of Adam Smith" means that eventually this lessening of capacity will mean higher trucking rates for the survivors.

Trucking Tonnage Zooms in January--Glass Half Full or Still Half Empty?

February 27, 2008

Analysis of:ATA Truck Tonnage Index Jumped 2.4 Percent in January | biz.yahoo.com

  The American Trucking Associations' seasonally adjusted for-hire truck tonnage index rose 2.4 percent in January following an amended rise of 1.5 percent in December of 2007.   That's three consecutive months of year-over-year growth, albeit small increases. Still, it's a sign that the current recession in ground freight volumes could be over and that a trucking rebound is in its nascent stages.

Carrier Switching? Not so Much as in Past Downturns

February 25, 2008

Analysis of:Transportation trends: LM survey finds that shippers are sticking to their favorite transportation partners | www.logisticsmgmt.com

   In past freight recessions, shippers jumped to other trucking companies for as little as a nickel a mile in freight rates. That does not appear to be the case today.   This story quotes numerous shippers as saying that while many will continue to price shop and hedge their bets, "many more" shippers are sticking with their reliable, proven transportation providers.    That is quite different from the carrier-jumping which routinely occurred in past trucking slowdowns.

Mexican Trucks May Soon be Barred from U.S. as Court Challenges Mount

February 19, 2008

Analysis of:BNA Daily Labor Report: Court Considers Injunction on Mexican Truck Program | tdu.org

 The U.S. Court of Appeals for the Ninth Circuit  is being asked to suspend a pilot program that is allowing trucks from up to a 100 Mexican fleets to operate in this country.   It's the latest court challenge to the Mexican trucks program, which is being opposed by environmentalists, labor unions and other activist organizations.

The Government Can Too Write a Legal Rule on Truck Driver Hours of Service

February 11, 2008

Analysis of:BNA Daily Labor Report: Court Denies Action on Hours of Service Rule | tdu.org

  Uncertainty over truck driver hours of service has diminished in the wake of a U.S. Court of Appeals ruling upholding the Federal Motor Carrier Safety Administration's latest "interim" rule regarding HOS.   The issue has been in doubt since FMCSA first tried to update the 65-year-old HOS regulations in 2003. The Teamsters, Joan Claybrook's Public Citizen watchdog group and various owner-operators have filed suit nearly constantly since trying to get the rule overturned.   It now appears the road is clear for the government to issue a "final" rulemaking on this subject, which has caused uncertainty among carriers and shippers alike in making long-term logistics plans.

This is the Current Truckload Operating Environment in a Nutshell

February 4, 2008

Analysis of:Werner Enterprises Reports 4Q and Full-Year Earnings | www.tradingmarkets.com

Werner Enterprises, the nation's fifth-largest truckload carrier, is reporting an 18 percent decline in earnings per share for 2007 on basically flat revenue of $2.071 billion. Fourth-quarter earnings per share plummeted 13 percent, excluding extraordinary income, on a 4 percent drop in revenue to $435 million. What's most interesting in Werner's earnings release is the steps the coming is taking to cope with changing shipper distribution patterns.

No Easy Solutions to YRC Worldwide's Woes

January 30, 2008

Analysis of:YRC posts huge losses for quarter, year | www.bizjournals.com

  YRC Worldwide Inc. posted a $735.8 million loss in the fourth quarter, a 1,682 percent plummet from earnings of $46.5 million during the fourth quarter of 2006.   Most of that was because of a $782 million one-time impairment charge related to the value of its former USF regional carriers, which are severely underperforming.   YRC's regional carriers performed at a 101.7 operating ratio in the fourth quarter, a deterioration from the 100.2 OR from the third quarter. It is believed only the former New Penn unit, ironically a Teamster carrier, is making money among all the YRC regional units.

Is This the Start of the Trucking Financial Recovery?

January 24, 2008

Analysis of:Trucking Takes Off | www.forbes.com

The notoriously cyclical trucking industry, which has been hammered by excess capacity and lowered rates for the better part of 20 months, may be rising off its bottom. One major analyst, Ed Wolfe of Bear Stearns, has upgraded his entire group of trucking stocks, albeit only to "market perform." But when one has been down as long as trucking has, any light at the end of the tunnel looks like a beacon of hope.

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