A.M. Executive Briefing - Sept. 14
This Morning's Headlines:
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North American Van Lines Nears Deal With Allied to Establish Global Reach
North American Van Lines is nearing a final deal for its takeover of Allied Van Lines, which unnamed sources close to the acquisition say could come today at the earliest and cost some $400 million.North American would also be acquiring Pickfords, of the United Kingdom, and Allied Pickfords, of Europe, Australia, and Asia, the other moving companies around the world owned by London-based NFC. The new, larger company would be more than half owned by a Clayton, Dubilier & Rice fund, while employees and agents and NFC would hold the rest.
The new, larger Allied/North American company would have annual global revenue exceeding $2 billion.
ING Barings analyst Doug Rockel worries that changes in the economy could slow the pace of the housing and moving industry, hurting the demand for movers' services. But Clayton Dubilier principal Jim Rogers expects the company will save between $20 million and $30 million a year from consolidation as well as such changes as updated information technology and perhaps bringing together training and trucker recruitment in the United States. Other acquisitions are in the offing. Wall Street Journal (09/14/99) P. B4; Machalaba, Daniel
Faster Freight Clearance Sought
Can Am Border Trade Alliance U.S. executive director Jim Phillips says the U.S./Canada border crossings should be operated differently from the U.S./Mexico crossings. "The northern border is more about enhancing positive economies than it is about stopping illicit goods and people," he says, calling the United States and Canada "economically integrated."The relatively free U.S.-Canada trade amounts to more than $4 billion annually, and Phillips says the Detroit-Windsor, Ontario, crossing is busier with commercial trade than "all the southern border points combined." But things could be improved with better U.S. Customs and Immigration and Naturalization Service human and technological resources.
Customs needs to replace its "creaking" Automated Commercial System, he says; the agency has a $1 billion plan to do so. While Canada employs technology to make up for fewer employees, many U.S. inspection booths are frequently closed.
Phillips' group believes the U.S. should expedite low-risk passenger crossing and cargo pre-clearance with something like the Canadian Canpass, while Canada should give the U.S. border agents the ability to work on Canadian land to speed commercial crossings.
Canpass has been used at Niagara Falls for about a year and is soon to be added to other U.S./Canada border crossings. The idea is for people who frequently move between the two countries to make the border crossing in no more than 10 seconds. Revenue Canada figures put the amount of low-risk cars crossing at Niagara Falls at 98.5 percent of all cars. Journal of Commerce (09/14/99) P. 1; Tower, Courtney
Rate Hike Looms in Canada
The Freight Carriers Association of Canada says Canadian trucking rate hikes and fuel surcharges are necessary because costs are rising faster than revenue.FCAC President Micheline Tansey says rates should go up at least 4.9 percent by October, adding that "general freight carriers' tonnage and ton-miles have gone up by 7 percent while revenue lags with only a 2 percent year-over-year increase," according to Statistics Canada figures.
Some diesel prices have gone up in excess of 20 percent, and the FCAC recommends 1 percent surcharges for LTL carriers and 2.3 percent surcharges for TL carriers. Two other things contributing to the higher monetary needs are labor costs are up 4.3 percent and prices of carriers' needs go up 2.5 percent annually. Traffic World (09/13/99) Vol. 259, No. 11; P. 22; Binkley, Alex
401 Debate Surfaced in '70s: Ex-Bureaucrat
Better Roads Coalition chairman Harold Gilbert, who was deputy transportation minister in the 1970s, says worries about the safety of the portion of Highway 401 west of London, Ontario, came up close to a quarter-century ago. However, the province could not afford to upgrade the road because of the popularity then of health and education spending.Gilbert's coalition supports improving the Windsor-London stretch of the highway, where 23 people have been killed in the last six months, including seven in the 80-vehicle crash Sept. 3. Gilbert and others advocate widening the highway and adding paved shoulders and a concrete median.
Highway 401 has become important in trade due to free-trade agreements, since it goes directly to the U.S./Canada border in Windsor. According to Transport Canada, truck traffic at the border is twice that in 1990 while car crossings has dropped.
Ontario Trucking Association chief David Bradley says if the growth continues, more routes between the province and the United States will be needed, although he does not believe the higher truck volumes are at fault in the spate of accidents on the 401. London (Ontario) Free Press Online (09/14/99)
Definitely Faster
More and more long-haul LTLs are turning to tiered premium-service offerings. About half a decade ago, Roadway Express market research found that customers needing timely service made up about 20 percent of all LTL customers, but that has risen to some 35 percent due to supply-chain changes and morejust-in-time schedules. Roadway market and product development director Mattie Harris says that to these customers, the service is more important than the rates.Consolidated Freightways says its PrimeTime Air freight-forwarding provides airlines with $20 million a year, and Roadway and Yellow Freight also report heavy use of their premium services. But CF President Patrick H. Blake says carriers should not ignore their core ground service.
If your core business is not producing a high percentage of your value, the other services will not make up for it," he says. "But you have to offer a stable of services or you can't compete in today's world."
The big LTLs now have to compete with such companies as air-freight forwarders, TLs without labor-union organization, and groups of regional LTLs. This month, ABF Freight System has created the guaranteed TimeKeeper Air by adding partnerships with air carriers to its old TimeKeeper ground offering.
Large national shippers need various custom services. Harris says Roadway has a complex infrastructure in place that helps it find solutions to shippers' needs, and adds that carriers need to use technology to provide even more interaction with customers. Traffic World (09/13/99) Vol. 259, No. 11; P. 27; Schulz, John D.
AmeriServe to Bring 225 Jobs to Area
AmeriServe Food Distribution, which handles food and other items for several cross-country foodservice chains, shuttered its distribution site in Virginia Beach, Va., in August. On Wednesday, the company said it will add a 115,000-square-foot facility to its Manassas, Va. site, and increase the Manassas payroll to 390 workers by 2001 from its current level of 145.AmeriServe shut down 29 sites in 1998 and 1999, and intends to close eight more before 2000. The Prince William County Economic Development Opportunity Fund is going to give AmeriServe $76,500 for needs including job training, and the company will also receive help from the Virginia Department of Business Assistance. Washington Business Journal Online (09/13/99); Sunnucks, Mike
CF's 'New Generation'
Fifty-year-old Patrick H. Blake, who became president and chief operating officer of Consolidated Freightways in May, has been working his way up the CF ladder since his Portland dock-worker days in 1969.Blake says CF's future in the LTL business now seems stable after some rocky patches following the CNF Transportation spinoff three years ago. Although CF's first-half earnings for 1999 were $5.2 million under the figure for the same period in 1998, Blake thinks CF can fend off increased competition from other national LTLs, groups of regional LTLs, some TL carriers with reduced thresholds, package carriers, and freight forwarders that provide some LTL service.
lake says trucking businesses have had to become more competitive and customer-focused since the 1980 deregulation. Blake says CF is trying to gain more 500-to-1,500-mile freight now that freight moving lesser distances is often handled by groups of regional LTLs like Con-Way. CF has also decided to work with, rather than against, the Teamsters as well as create a system of stock ownership for CF workers.
"The real issues are consistency and speed of transit," not price, Blake says, which is one reason the company has raised its usage of sleeper-cab teams from 5 percent to 28 percent of overall mileage since 1994. Traffic World (09/13/99) Vol. 259, No. 11; P. 34; Schulz, John D.
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