A.M. Executive Briefing - July 12

Oil Prices Drop Amid Low Inventory Warning

West Texas intermediate crude was down 27 cents to $29.42 on the New York Mercantile Exchange, while London benchmark Brent crude went down 30 cents in early dealings to $28.92. Oil prices have been consistently in the $22-$28 range.

However, AP reported that former Saudi Oil Minister Sheik Ahmed Zaki Yamani said Saudi Arabia, the world's largest oil producer, could afford to sell oil for $15 a barrel rather than the $25 it says it wants.

American Freightways Earnings Top Estimates

An AF statement said this was performance, the best since it began operating in 1982, resulted from strong volumes in its less-than-truckload market "and, for the LTL business, a relatively stable price environment." AF noted that extra trucking capacity in that segment "is the lowest it has been in years, and this no doubt is having a beneficial effect on pricing stability."

It added, though, that the improved freight rate environment has also come from shippers not willing to settle for inferior service. AF emphasized that its results came despite significant start-up costs from a big April expansion into the six New England states and New York on April 17. Looking ahead, it said on July 17 AF will open five customer centers in Arizona and one in California. Transport Topics

Canada Squabbles With Its Own Hours-of-Service Issue

The Canadian Council of Motor Transportation Administrators put forth a proposal that could allow drivers to work 14-hour days and up to 84 hours in a seven-day period with one night of rest.

Currently, Canadian drivers can work in a seven-day, eight-day or 14-day cycle. Once they reach their legal limit in one cycle, they switch to a higher cycle. One motor carrier safety advisor claims these current regulations can be interpreted to allow a 104-hour workweek, and the proposal would knock that down to a maximum of 84 hours with a 36-hour break. The proposed 14-hour workday is backed by a $6 million study of 80 U.S. and Canadian drivers, conducted in 1993, that U.S. officials have discredited.

Teamsters Canada has stated its opposition to the proposal and 90 Ontario municipalities have passed resolutions opposing increased hours for truck drivers.

Safety advocates in Canada fear the proposed changes could lead to increased driver fatigue and accident rates. While highway deaths have declined in Canada over the last decade, the percentage of fatalities involving large trucks increased from 16.5% to 20%. Transport Topics

KLLM Investor Says Reno's Actions Leading To 'Remonopolization'

Ebbers comments, made during a New Orleans trade show, come not only on the heels of federal authorities shooting down his company's $129 billion bid for Sprint Corp., but also days after his venture into the trucking industry. He recently joined up with Jack Liles, chief executive of KLLM Transport Services, Inc. to form High Road Acquisition Corp. Last week High Road announced it had amassed 83.1% of KLLM stock via an $8.05 per share tender offer as part of the friendly take over of the company. Transport Topics

High Road Extends Offer Period for KLLM Shares

High Road was formed last month by KLLM's chief executive officer, Jack Liles, and WorldCom CEO Bernard J. Ebbers to acquire the trucking company. Its earlier tender offer expired midnight Tuesday, New York City time; the extension ends at 5 p.m. July 18. Transport Topics

BAX Global Boosts Freight Capacity to Southern California

Any air freight expansion of course requires truck tie-ins at both ends for local and regional freight shipment to and from customers. The plane began service July 10 between Los Angeles International Airport and Toledo Express Airport in Ohio, where BAX has its main hub.

Joey Carnes, BAX Global's president, noted that besides this aircraft acquisition, "BAX has added substantially to its surface network" or trucking component to enhance its "BAXSaver" service that delivers within one to three business days. And there's more to come, Carnes said. "The surface network is virtually limitless and based on our early success with BAXSaver, we anticipate adding substantially to our ground fleet to meet customer demand." Transport Topics

Car Hauler Allied Automotive Names Burgess as CEO

Burgess, 49, has nearly 30 years of executive experience in the logistics, distribution and transportation business, most recently as president of Lykes Brothers in Florida, one of the largest citrus processing plants of private label and national brands in the world. He was previously president of the corporation's transportation unit, Lykes Transport. Transport Topics

Impact Of Rising Diesel Prices May Reach The Classroom

The Associated Press reported this week that state education administrators are being forced to use funds set aside for new-bus purchases to keep the aging ones fueled up.

For the 2000-01 school year, state lawmakers have budgeted $4.4 million to purchase fuel and $8.2 million for buses, parts or fuel. The Education Department, however, is projecting some or all of the $8.2 million will be needed for fuel. The department's fuel budget projection is $11 million, up $2 million from last year and twice as much as four years ago.

The Education Department had asked for $44 million from the state to help replace the aging buses, many of which are 10 to 20 years old and have more than 300,000 miles.

The start of the new school year in the fall coincides with the peak of the trucking season nationwide, as well as the start of fuel stockpiling for winter. Transport Topics