December Truck Tonnage Rises
6.6% Jump Is 1st Year-Over-Year Gain in 15 Mos.Truck tonnage rose in December for the first time in 15 months, year-over-year, as the U.S. economy picked up steam, American Trucking Associations reported. The 6.6% increase pushed ATA’s seasonally adjusted for-hire index to 108.4, the highest reading since November 2008.
“Tonnage will likely continue to grow on the year-over-year basis, in large part because it was so weak a year ago,” Bob Costello, ATA’s chief economist, told Transport Topics on Jan. 25.
The index last rose year-over-year in September 2008, before the U.S. recession deepened. It dropped as low as 99.2 last April.
Fleet executives, at least in the truckload sector, confirmed the improving picture.
“As we moved through the 2009 fourth quarter, both the number of loads and rate per load continued to show signs of strengthening,” Landstar System CEO Henry Gerkens said Jan. 27, with daily volume growth between 5% and 10% in January.
Kevin Knight, chairman and CEO of Knight Transportation, said he believes “we are in the early stages of a turnaround in the truckload freight market.”
“We saw significant gains throughout the quarter, but overall demand was frankly surprising,” Celadon Group Inc.’s CEO Stephen Russell said during a conference call on Jan. 26. For the U.S. economy as a whole, the latest forecasts continue to point toward growth, despite continuing troubles in sectors such as housing, where new starts and sales of existing homes fell.
The Conference Board’s index of leading economic indicators, intended to signal economic vitality at least three months into the future, increased for the ninth consecutive month in December. In addition, the board’s consumer confidence index hit a 15-month high in January.
While the outlook is brightening, Costello cautioned that tonnage and economic growth won’t continue to rise at the December pace.
“Economic growth will come back to Earth, so to speak,” from the estimated 5% improvement in the fourth quarter to a range between 2% and 2.5% growth this year, he said. At the same time, Costello underlined the importance of a strengthening economy.
“It is fantastic news that we are growing,” he said. “It is going to be modest growth, but it is growth nonetheless.”
Sequential trucking trends also were positive as ATA’s index rose 2.1% in December after a 2.6% increase the month before.
“The robust tonnage numbers in November and December were aided by better economic growth, as well as a positive inventory effect,” Costello said.
“Inventory levels no longer will be a drag on trucking,” he said, because inventories have shrunk to the point that restocking has to continue to keep up with strengthening demand.
The ratio of all goods in stock relative to sales is 12% lower than it was a year ago, according to the Commerce Department.
In fact, retail inventories have shrunk to their lowest level ever, Costello said.
During a Jan. 26 webinar, he said he expects growth in manufacturing, housing, light vehicle sales and durable goods sectors. Growth should be gradual over two years, which should help to further boost freight demand, he said.
Two recent analyst reports also predicted growth.
“Truck tonnage is up 9% since its recent trough in April, and we expect tonnage to gradually improve as the economy strengthens and inventories are built,” Deutsche Bank analyst Justin Yagerman said in a Jan. 25 report that predicted improving results for truckload carriers.
The less-than-truckload outlook is less favorable because of significant excess capacity, he added.
“Truckload demand trends remain strong on both an absolute and year-over-year basis,” William Greene, a Morgan Stanley analyst, said Jan. 22. “As the economy continues to recover, we expect a restocking of inventories to produce the next leg of truckload volume growth.”
A spot trucking index compiled by TransCore of Hummelstown, Pa., that compares loads available and truck availability, also improved in December. It more than doubled from that month in 2008 and rose 11% in December from November levels.
However, not all news was positive.
The Cass Freight Index, a monthly report by St. Louis-based Cass Information Systems Inc. that measures freight spending and shipments, fell about 3% in December from November levels.
Taking a longer view, ATA’s index for the full year fell 8.3%, making 2009 the worst year since 1982. In that recession year, the index fell 12.3%.
The freight decline was hardly confined to trucking. Railroads based in the United States hauled 15% less freight last year, and ocean cargo moving through the largest U.S. ports also declined by at least 10%.
The index, representing the change in tonnage that fleets actually hauled before any seasonal adjustment, stood at 103 in December, up 2.3% from the previous month, ATA said.
Transport Topics
2/1/10
OOIDA, Drivers Say HOS Needs Flexibility
Citing the need for breaks during the day, for a reduction in stress, and for maximizing quality driving time, truckers say flexibility is the key to improving the hours-of-service regulations.
The fourth listening session held by the Federal Motor Carrier Safety Administration on the hours-of-service regulation drew a standing-room-only crowd with more than 120 people attending the Davenport, IA, session.
Conveniently located next door to the Flying J in Davenport, the crowd was largely truck drivers ready to submit their comments on the hours-of-service regulations. Phone lines were flooded with drivers, numbering more than 40 callers waiting to comment at times.
The message delivered time and time again was the need for flexibility. The rigid nature of the 14-hour on-duty clock and the current split sleeper-berth exemption were repeatedly challenged as actually causing stress and fatigue on drivers.
“The majority of drivers out there are interested in flexibility,” OOIDA Executive Vice President Todd Spencer told the panel in Davenport. “Flexibility in the sleeper berth. Flexibility to be able to take a break in the middle of the day.
Spencer highlighted how science alone cannot dictate when a driver really needs to rest.
“Circadian cycles are real. But sometimes in the afternoon, you just get sleepy,” he said. “You don’t need eight hours of sleep, but you do need a catnap. You can push through that need for a nap, but is that in the interest of safety?”
Beyond flexibility, Spencer encouraged the agency to look at making the industry better. He pushed for economic incentives and disincentives on shippers and receivers.
“Some people might gasp and say that will add to the cost of goods. Not if shippers and receivers schedule drivers better and get them in and out,” he said.
“Right now, a driver’s time is not his own,” he said.
Another way to give drivers more control over their time would be for company drivers to be paid by the hour rather than by the mile. He underscored that point by saying if company drivers were under the Fair Labor Standards Act, which mandates overtime pay, less driver time would be squandered by motor carriers, shippers and receivers.
A number of drivers also beat the flexibility drum, sharing stories of coercion, stress and wasted time and the fact that drivers, ultimately, are the ones who pay.
“Everything is coming down to a stranglehold on the drivers out here,” Bob Kinsey, an OOIDA member told the panel when he called in. “I’m a professional driver, but I'm not treated like it out here ... unless I do something wrong.”
Repeatedly, drivers talked about if they only had the flexibility to take a nap or break during the day—perhaps while delayed at docks—they would not lose their productive driving time because of the 14-hour clock. And they would be driving more refreshed.
OOIDA Member Tom Bower of Nicholasville, KY, who is a small fleet owner and driver, drove that point home very simply.
“Waiting makes you tired,” he called in and told the panel.
OOIDA Life Member Harold Babbitt, Fremont, NE, may have very well put the exclamation point on Bower’s statement when he recounted his waiting time at one shipper’s facility.
“You talk about fatigue. Dominex forces me to sit on a bench 4-5 hours while getting unloaded when I could be in sleeper,” Babbitt told the panel during his comments.
Many drivers continued to push for shippers and receivers to be subject to some accountability under the hours-of-service regulations.
That point, one that OOIDA representatives and member have made at all four of the listening session started drawing follow-up comments from the FMCSA panelists.
The panel repeatedly heard stories from drivers, and even from one company logbook clerk, that the 34-hour restart is almost invaluable. Drivers routinely use the full scope of the 34-hour restart, many times at home, and even take upward of 48 hours.
Outside the scope of tweaking the current hours-of-service regulations, early on in the session, at least one different way of approaching the rule was suggested. One caller tossed out the idea of tying driving time to sleeper berth time. If you’re in the sleeper berth four hours, you could drive four hours.
As of press time, the panel was still listening to commenters and scheduled to take phone calls until 9 p.m. Central.
Anyone who was unable to attend a listening session or to call in comments, can still comment on the docket.
Land Line Magazine
1/29/10
Trucking Executives Cautious About 2010
LAS VEGAS—Top executives from large trucking, truck-making and component manufacturing firms said they all see signs of a good business climate to come, but predicted 2010 will not be a boom year, and they are moving forward with very conservative business plans.
Speaking at the Heavy Duty Dialogue on Jan. 18 and the trade show that followed here, the officials agreed that surviving 2009 had been a notable accomplishment, and that they all expected this year to be better, but they weren’t sure just how much better.
One example of this split came from Jerry Moyes, chairman and CEO of Swift Transportation Co. He told attendees about what he saw as his company’s substantial opportunities in North American truckload transportation, plus international shipping from West Coast ports.
However, Moyes then said, “We’re done for this year” in terms of his truck-buying plans for 2010. “And next year, we’re taking a look at running our trucks longer.”
Moyes said for this year he’s buying only 15 to 20 tractors with 2010 engines so his staff can test them. Swift has a fleet of 14,000 tractors, and his Central Refrigerated Service unit has another 2,000 Class 8 trucks.
While large fleets have generally run their trucks for around three years, it appears that at least some are planning to extend their duty cycles by as much as two years.
Truckload carrier U.S. Xpress Enterprises won’t buy new trucks until the second half of 2010, and not many then. In the meantime, its managers are looking into the used truck market for the first time, said Patrick Quinn, the fleet’s co-chairman and president.
Moyes and Quinn were on a fleet panel during Heavy Duty Dialogue.
To kick off the day’s panels, Dennis Michels, chairman of the Heavy Duty Manufacturers Association, which sponsors the dialogue, said he saw a Detroit newspaper headline announcing, “The buzz is back,” with respect to the automobile industry.
“I think that applies to our industry as well, but are things better?” Michels asked.
“We’ve learned to be very lean and operate at the bottom of cycles,” said Dennis Slagle, CEO of Volvo AB’s two North American manufacturers, Volvo Trucks and Mack Trucks. “We’re hoping for a recovery, but planning for a continuation of 2009 and staying lean,” he said, adding that early 2010 truck sales will be dominated by selling off the inventory of 2007-generation truck engines in inventory.
Slagle said he has listened to fleet statements and talked to customers. Therefore, he was not surprised by Moyes’ and Quinn’s statements.
Diversified operations, either by geography or product line, were cited as survival techniques by others.
Parts maker ArvinMeritor Inc. survived a brutal 2009, posting a net loss of $1.21 billion for the 12 months ended Sept. 30, although $944 million of the loss was from noncash charges.
“We got through and made it to the other side,” said Chairman and CEO Charles “Chip” McClure. “And we didn’t need any government help and avoided bankruptcy court.”
In an interview with Transport Topics, McClure said recent experiences made him especially confident of decisions made to shed costs, sell off the company’s light vehicle lines and concentrate on on-highway and off-road commercial vehicles.
Among the places where ArvinMeritor operates, McClure said China currently is doing best, India and Brazil are tied for second and the United States and Europe are the most sluggish. Although the recession proved to be global in nature, the fact that it was not simultaneous among the continents was helpful.
“India did not have the subprime mortgage problems we did. Their economy eventually dropped off, but it’s come back nicely,” he said.
“The Chinese government stimulus really hit our sweet spot last spring,” McClure said, funding programs that led to truck manufacturing. He also said Brazil has improved its economy considerably.
“Business is much better now than during the first half of 2009, when it was absolutely miserable,” said Joseph McAleese, CEO of Bendix Commercial Vehicle Systems.
Interviewed at his company’s booth on the trade show floor, McAleese said that there is reason to be optimistic, but economic expansion has not yet gained traction.
“Since the last four or five months of last year there was an expansion in original equipment sales, and it’s continued into January, but I think after the inventory of 2007-generation engines is gone, then we could go backwards,” said the maker of brakes and stability systems.
“The aftermarket sales picked up around August, and they’ve been OK, but they’re not robust,” he said.
Transport Topics
1/25/10
$79 Billion Budget for the DOT Promotes Safety, Infrastructure Investment
U.S. Transportation Secretary Ray LaHood today said President Obama’s $79 billion budget for the U.S. Department of Transportation continues strong levels of investment for safety, the department’s top priority, along with critical investments for infrastructure to generate economic growth and support livable communities.
“President Obama’s budget builds on an historic first year for this Department of Transportation,” said Secretary LaHood. “In addition to making critical investments in our nation’s infrastructure, we jump-started high-speed rail across America, launched a campaign against distracted driving and proposed landmark transit safety legislation. This budget reflects our priorities and values by continuing to invest in safety, livable communities and an improved national transportation system.”
Secretary LaHood said the budget promotes safety in a number of areas, starting with a new $50 million incentive grant program to the states to combat distracted driving. Since Secretary LaHood convened a national Distracted Driving Summit last fall, he has undertaken a nationwide campaign to put an end to the deadly epidemic.
The budget further advances traffic safety with $12 million to improve the New Car Assessment Program (NCAP) Five-Star Safety Rating System, which is used to rank the safety of new automobiles, and 66 additional personnel in the National Highway Traffic Safety Administration assigned to highway and vehicle safety issues.
Safety personnel will be added across agencies, with $7 million and 118 people for additional motor carrier safety inspectors; $14 million for the FAA to hire 82 new safety and certification inspectors and safety technical specialists; and $1.4 million to the Pipeline and Hazardous Materials Safety Administration to continue carrying out their action plan to address pipeline and hazardous material safety.
Aviation safety is a top priority, receiving $1.1 billion for NextGen air traffic control technology, an increase of $275 million, 32 percent, over the FY 2010 enacted levels.
The budget also places a strong emphasis on transit safety by including $30 million and up to 260 positions to support the Obama Administration’s Public Transportation Safety Program Act of 2009, which the administration proposed to congress last year to ensure a high and standard level of safety across all transit systems.
Recognizing that a strong transportation infrastructure is an engine for future economic growth, Secretary LaHood announced that the budget establishes and provides $4 billion for a National Infrastructure Innovation and Finance Fund (NIIFF) to issue grants and loans in support of projects that provide a significant economic benefit to the nation or a region.
The budget includes an additional $1 billion for high-speed rail, coming on the heels of President Obama and Vice President Biden’s January 28 announcement of $8 billion in Recovery Act funds for states across the country to develop America’s first nationwide program of high-speed intercity passenger rail service.
Secretary LaHood also highlighted the importance of livable communities, and providing greater choices for transportation users through the integration of transportation, housing and commercial development decisions. This budget provides $527 million for livable communities by establishing an Office of Livable Communities, creating a program to improve local and state project planning and development capabilities, and funding programs that expand transit access for low-income persons.
A budget summary document is available at www.dot.gov.
TheTrucker.com
2/1/10
BTS Says Surface Trade with Canada and Mexico Down 2.9 Percent in November
WASHINGTON—Trade using surface transportation between the United States and its North American Free Trade Agreement (NAFTA) partners Canada and Mexico was down 2.9 percent in November 2009 compared to November 2008, falling to $51.8 billion, according to data released by the United States Department of Transportation's Bureau of Transportation Statistics (BTS).
This output represents the fourth time in the last ten months there was not a year-to-year decline of more than 27 percent. The BTS said the value of U.S. surface transportation trade with Canada and Mexico fell 4.0 percent from October 2009 to November 2009. BTS officials said that month-to-month changes can be affected by seasonal variations and other factors.
The BTS said that the value of U.S. surface transportation trade with Canada and Mexico in October was up 5.0 percent compared to November 2004 and up 28.5 percent compared to November 1999, with imports and exports up 25.1 percent and 32.7 percent, respectively, compared to November 1999.
Surface transportation, according to the BTS, is comprised mainly of freight movements by truck, trail, and pipeline, and nearly 90 percent of U.S. trade by value with Canada and Mexico moves by land.
The BTS said the value of U.S. surface transportation trade with Canada was down 7.2 percent year-over-year in November at $35.0 billion. Imports carried by truck were valued 6.1 percent lower in November 2009 compared to November 2008, said the BTS, and the value of exports carried by truck was down 1.8 percent. Michigan paced all states in surface trade with Canada in November at $4.3 billion.
And the value of U.S. surface transportation trade with Mexico rose 4.4 percent year over year in November at $23.9 billion. Imports carried by truck were valued 11.5 percent lower in November 2009 compared to November 2008, said the BTS, and the value of exports carried by truck was up 1.7 percent. Texas led all states in surface trade with Mexico in November at $4.3 billion.
Logistics Management
2/1/10
Diesel Drops 5.2¢ to $2.781 in Third Straight Decline
Prices Is Lowest This Year; Gas Falls 4.4¢.Diesel’s national average price fell 5.2 cents to $2.781 a gallon, matching the biggest drop in six months, the Department of Energy said Monday.
Trucking’s main fuel has fallen 9.8 cents in the past three weeks, and the drop left it 53.5 cents higher the same week last year, DOE said.
While that decline is well below the 15.3-cent increase of the prior three weeks, it left Monday’s price at a 2010 low, according to DOE records. The decline matched the 5.2-cent downturn on July 13, when the price fell to $2.542.
Gasoline also fell for a third week, declining 4.4 cents to $2.661, its biggest drop since late September. Gas has fallen 9 cents in the past three weeks.
Prior to the three-week run at the beginning of this year, diesel had fallen for seven straight weeks, though the decline over that time was a modest 7.6 cents.
Diesel has fallen in 10 of the past 13 weeks, though the price is just 2.7 cents below the start of that cycle, when it averaged $2.808 a gallon on Nov. 2.
Oil prices have declined steadily in the past two weeks, closing Friday below $73 a barrel on the New York Mercantile Exchange.
Crude futures rose about $1.50 to finish the trading day Monday at about $74.40, following positive economic reports, Bloomberg reported.
Each week, DOE surveys about 350 diesel filling stations to compile a national snapshot average price.
Transport Topics
2/2/10
CREATE Partners Land $133 Million in Federal ARRA Funds for Flyover
On Friday, Chicago Region Environmental and Transportation Efficiency (CREATE) program partners announced they will obtain $133 million in American Recovery and Reinvestment Act funding to construct a flyover near 63rd and State streets on Chicago’s south side.
The funds are part of $1.2 billion awarded by the federal government to Illinois last week to develop high-speed rail in the state by 2014.
The flyover will carry Metra’s north-south Rock Island line over an east-west Norfolk Southern Railway/Amtrak line to eliminate traffic conflicts at a grade crossing, which is used by about 78 Metra and 60 freight and Amtrak trains daily.
Funded through a public-private partnership, CREATE calls for building roadway underpasses or overpasses to separate vehicle/pedestrian and rail traffic; constructing rail overpasses to separate freight- and passenger-rail tracks; and upgrading track, switches, signal systems and other rail infrastructure.
Program partners include Amtrak, the Association of American Railroads, Belt Railway Co. of Chicago, BNSF Railway Co., CSX Transportation, CN, Canadian Pacific, Indiana Harbor Belt Railroad Co., Norfolk Southern Railway, Union Pacific Railroad, and the Illinois and Chicago departments of transportation.
ProgressiveRailroading.com
2/1/10