Executive Briefing - Sept. 28
- Yellow Corp. Announces Job Cuts
- Automakers May Post Worst Sales Since 1992
- Dutch Airline to Raise Cargo Rates
- Daimler Scraps Earnings Forecast
- Volvo to Close Mack Plant in S.C.
- Indicators Show Dim Outlook
- UPS Lowers Earnings Expectations
- Daimler Forms Strategy Council
- Eaton Lowers Earnings Forecast
- Importers Face Security Cost Hikes
- Canadian Truckers Say Thanks to Relief Workers
- Vitran to Repurchase Up to 5% of Shares
- Rail Intermodal Trails Previous Year by 2%
- Automakers May Post Worst Sales Since 1992
Yellow Corp. Announces Job Cuts
Yellow Corp. (YELL) announced Friday that it has cut 151 salaried and non-union jobs.
The reductions, which were made at various field offices and company headquarters in Overland Park, Kan., were made necessary by the current economic slowdown, the company said.
“These adjustments are part of our continuing effort to proactively manage our costs in response to the currently uncertain business conditions while remaining responsive to our customers' needs,'' said Bill Zollars, Chairman, president and chief executive officer of Yellow.
The cuts amounted to 3% of the company’s 4,700 salaried and non-union jobs. Transport Topics
Automakers May Post Worst Sales Since 1992
General Motors Corp. (GM), Ford Motor Co. (F) and DaimlerChrysler AG's (DCX) Chrysler unit are expected to post their worst U.S. sales since 1992, Bloomberg reported.They are expected to sell as few as 10.3 million North American-built vehicles combined, the lowest since a combined 9.5 million nine years ago, according to estimates from CSM Worldwide, an automotive industry analyst.
Slow sales will likely force the three automakers to scale back production at factories in the next 12 months. This will hurt the trucking companies that haul the vehicles from the factories to dealerships.
The story said that North American industrywide production is expected to decline 9.7% to 15.5 million from 2000 because of lower demand. The forecast assumes 300,000 fewer cars and light trucks will be built as a result of the terrorist attacks. Transport Topics
Dutch Airline to Raise Cargo Rates
KLM Royal Dutch Airlines NV said it is increasing its cargo rates by as much as 7%. The rate hikes will go into effect by Nov. 1 according to Bloomberg.
Rate for cargo being shipped between Europe and North America will go up by 5% on Europe’s No. 4 airline. The rates will rise between 5% and 7% on other routes to Mexico, Asia and some destinations in the Middle East.
While KLM may not compete directly with trucks for cargo, a hike in air rates may cause overseas shippers to go to cheaper forms of transport like ships. Once in port, cargo may be transferred to rail lines, which connect directly to seaports in many cases - as opposed to being transferred to trucks which pick up a sizeable amount of air cargo at the airport. Transport Topics
Daimler Scraps Earnings Forecast
Slowing demand in the United States has forced DaimlerChrysler AG (DCX) to abandon its earnings forecast for the current year, news services said.
DaimlerChrysler is parent company to the Chrysler automotive unit in the U.S., as well as to Freightliner, the nation’s biggest truck manufacturer.
Bloomberg said the earlier forecast for profit, before interest, tax and one-time items of up to $1.5 billion, has been labeled “at risk” in a company statement.
Daimler said the earnings targets are clouded by risk after the terrorist attacks on the United States, but that it is too early to issue new forecasts, the Associated Press said. Transport Topics
Volvo to Close Mack Plant in S.C.
Volvo Global Trucks said Friday it will phase out the Mack Trucks Inc. plant in Winnsboro, S.C., over the next 15 months because of slow sales in the North American market.
It will leave Volvo AB (VOLVY), which acquired Mack last year along with its parent company, Renault SA, with two truck manufacturing plants in the United States.
Volvo said it is expecting a restructuring charge of about $120 million, but this will result in improved annual profits of $150 million after next year. Transport Topics
(Click here for the press release.)
Indicators Show Dim Outlook
Two leading economic indicators showed more of the same gloomy results when they were released Friday.The National Association of Purchasing Management-Chicago announced that the region showed its 12th consecutive month of decline in September. Also, a University of Michigan survey showed consumers are becoming more cautious about the economy.
The NAPM-Chicago factory index did rise to 46.6 from 43.5 in August. However, any figure below 50 signifies a contraction.
The last month the index showed growth was September 2000. The last time the index contracted for 12 consecutive months was during the 1990-1991 recession.
The University of Michigan’s final index of consumer sentiment plummeted to 81.8 in September from 91.5 in August. The drop was blamed on layoffs in the wake of the Sept. 11 terrorist attacks and the general stagnation in the U.S. economy.
The index, established in 1966, has a base number of 100, and changes based on how comfortable people are with their personal finances and the economy in general. Transport Topics
UPS Lowers Earnings Expectations
United Parcel Service (UPS) announced Friday that it was reducing its earnings forecasts for the third quarter after assessing the impact of the Sept. 11 terrorist attacks.
The company had expected to earn between 52 and 55 cents per share, but that figure has now been lowered to 45-48 cents per share.
Prior to Sept. 11, the company was on pace to meet its earnings goals, but shipping volumes have declined more than 10% during the week of the attacks.
"The financial impact of this event on UPS in the third quarter will be approximately $130 million," said Scott Davis, chief finanical officer for UPS. "This represents the additional costs we incurred to maintain service and lost revenue as a result of lower package volume since the attacks.”
Davis also said that the new earnings guidance does not include any potential funds from the government relief package for the airline industry. Transport Topics
(Click here for the full press release.)
Daimler Forms Strategy Council
DaimlerChrysler AG (DCX) has formed a new, independent council of non-executive directors to get advice on global strategy, according to Bloomberg.
DaimlerChrysler is the parent company of Freightliner, biggest of the U.S. truck manufacturers.
The world’s No. 5 vehicle maker said it hopes the council will help the company better meet the expectations of shareholders. The general operation structure remains unchanged, with all decision making authority coming from the company’s supervisory board.
The new council is made up of executives from IBM, Mitsubishi, drug maker Novartis AG, Nortel Networks and Bayer AG. Transport Topics
Eaton Lowers Earnings Forecast
Eaton Corp. (ETN) has lowered its earnings expectations for both the third quarter and the full fiscal year, citing weakness in the markets it serves and the impact of the Sept. 11 attacks.
The Cleveland-based company, which manufactures a variety of products including many used in trucks, said it now expects third-quarter profits to be 20% to 30% below analysts’ consensus estimate of 88 cents a share.
Full-year earnings, the company’s press release said, will be about $3.20 to $3.40 a share, which is below the estimate of $3.93.
Chairman and Chief Executive Alexander Cutler said that the economic impact of the Sept. 11 tragedy has been immediate “and, we believe, will persist for some time to come.” Transport Topics
(Click here for the full press release.)
Importers Face Security Cost Hikes
As the U.S. government tightens border-security rules, big importers could face cost increases of as much as $4 billion, Bloomberg said.Reg Kenney, vice president for sales and marketing at Danzas AEI Intercontinental, told Bloomberg that customers were being warned to expect additional procedures and regulations and attendant additional costs.
Danzas AEI said various tests associated with security could add up 12% to shipping costs which, for all U.S. imports, currently run about $36 billion.
Danzas AEI is a unit of Danzas Holding AG, whose clients include Caterpillar Inc. and Deere & Co. Transport Topics
Canadian Truckers Say Thanks to Relief Workers
The Ontario Trucking Association made donations of $2,500 each to the Canadian Red Cross and the Salvation Army in gratitude for their service to truckers stuck in traffic at the border.The groups brought food and water to drivers as they waited -- sometimes for hours -- to cross the border into the United States. The delays were caused by increased inspections in the wake of the Sept. 11 terrorist attacks on the U.S.
The trucking industry is very grateful to these charitable organizations, as well as to the Canadian Coast Guard in Sarnia -- all of whom provided assistance to truck drivers," said David Bradley, president, Ontario Trucking Association. "We also want to extend sincere thanks to the many organizations, church groups and businesses that donated food supplies for distribution to transport drivers." Transport Topics
(Click here for the full press release.)
Vitran to Repurchase Up to 5% of Shares
Vitran Corp., a North American transportation and logistics firm, said Friday its intends to repurchase up to 5% of its outstanding class A shares by way of open market purchases on the Toronto Stock Exchange. The company said it is expects to start on October 2, 2001, and end October 1, 2002. The shares will be repurchased for cancellation. Transport Topics
(Click here for the full press release.)
Rail Intermodal Trails Previous Year by 2%
Rail intermodal loadings in the week ended Sept. 22 totaled 188,377 trailers and containers, 2% less than in the corresponding week last year, the Association of American Railroads reported.Intermodal is the segment of the railroad business most directly competitive with trucking because, as with trucks, the loads are in trailers or containers. On the railroads, however, the trailers and containers ride flatcars.
As has been the case all year, trailers, which are used more in domestic trade, showed the biggest falloff from the previous year, with a drop of 9.1%.
Containers loaded during the week totaled 134,911, which was 1.2% up from the 133,342 loaded in the corresponding week of 2000.
For the year-to-date, trailer and container loadings totaled 6,477,278 which was 2.8% below the same period in 2000. Trailers loaded totaled 1,890,758, which was 9.7% below 2000.
Container loadings in the year-to-date amounted to 4,586,520 which was 0.4% higher than the 4,569,003 loaded in the previous year. Transport Topics
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