News Briefs - May 16
The Latest Headlines:
- Kansas Senate OKs Fuel Tax Hike
- AAA: Expect More People to Drive Memorial Day Weekend
- Utah Dealer Sues Volvo
- Many States Expected to Raise Taxes, Fees
- Crude Oil Stocks Fall Below 2001 Levels, API Says
- Fed’s Broaddus Says Inflation Is Contained
- USF Bestway Opens New Service Center
- Navistar's Loss Grows, but Sales Forecast Rises
- AAA: Expect More People to Drive Memorial Day Weekend
Kansas Senate OKs Fuel Tax Hike
The Kansas state Senate passed a compromise transportation bill that would raise the state's fuel taxes by 2 cents per gallon on July 1, the Associated Press reported Thursday.The increase would push the state's gas taxes to 23 cents and diesel tax to 24 cents per gallon.
The plan is a compromise from the package the body passed last week that was unanimously defeated in the House, the AP said. The new bill, which was sent to the House for debate, would raise $338 million, $100 million less than the original legislation.
AAA: Expect More People to Drive Memorial Day Weekend
A survey conducted for AAA found that an estimated 29.3 million people will take to the road this Memorial Day Weekend, up 2% over the 28.7 million who drove in 2001, Reuters reported.If more people are on the roads, it increases the chances of trucks being delayed by traffic congestion. Also, if demand for motor fuels pushes their prices up, it increases the operating costs of trucking companies.
AAA said gasoline prices would remain steady at around $1.40 per gallon, after a large increase during the past two months. A year ago at this time, motorists were paying an average of $1.72 per gallon.
Air travel is expected to be down 7% during the holiday weekend compared with 2001, the AAA said. Transport Topics
Utah Dealer Sues Volvo
Volvo Trucks North America, along with its parent company, Volvo AB, is being sued for $500 million by a former dealer in Utah, Bloomberg reported Wednesday.The suit, filed in federal court in Salt Lake City, alleged that the truck maker, its parent, a finance subsidiary and two former officers, violated agreements with dealers.
Great Basin Cos. Inc. said it was driven out of business by Volvo’s practices, claiming former executives used concessions and residual values to control truck pricing and reduce dealer profit.
Randy S. Bolinger, public relations manager for VTNA, told Transport Topics the company considers the suit to be without merit and said, “we expect to prevail.” Transport Topics
Many States Expected to Raise Taxes, Fees
Increases in motor fuel taxes have been among the most common ideas advanced by state governments, a report by the National Association of State Budget Officers and National Governors Association said Thursday.Trucks already pay significant federal and state taxes for fuel, registration and other elements of the business.
The report said that states facing significant budget shortfalls and must raise $2.4 billion from combined taxes and fees during the fiscal year that starts July 1.
Among the states proposing motor fuel tax increases are Michigan, which would raise its diesel fuel tax by four cents per gallon, and Minnesota, which is looking at a gasoline tax increase of five cents per gallon. The increases would raise $46.3 million and $164.3 million in revenue respectively, the report said.
News sources have reported fuel tax measures under consideration in Kansas and Missouri as well. Transport Topics
Crude Oil Stocks Fall Below 2001 Levels, API Says
U.S. crude oil inventories declined by 7.4 million barrels, or 2.3% -- their biggest drop since October, the American Petroleum Institute reported Wednesday.Dropping stocks to 313.7 million barrels, the decline put crude inventories below year-earlier levels for the first time in 14 months, the API report said.
Reserves of distillate fuels, including diesel, rose 1.65 million barrels to 122.4 million barrels.
Higher inventories of diesel fuel, used in great quantities by the trucking industry, could push the price down.
The Department of Energy said in its own report that crude oil and distillate reserves were slightly higher than the industry-based API report. The DOE said that crude oil stocks were 315.8 million barrels, down from 320 million and distillate fuel reserves were 122.5 million barrels, up from 121.5 million barrels. Transport Topics
Fed’s Broaddus Says Inflation Is Contained
In a sign that the Federal Reserve does not feel pressure yet to raise interest rates, Alfred Broaddus, president of the Richmond Fed, said in an interview with USA Today published Thursday that inflation is currently "contained."The Fed raised interest rates 11 times last year to help spur economic activity. For trucks, lower interest rates can be a benefit in a variety of ways.
Echoing comments of other Fed members, Broaddus said the U.S. economy is on the rebound, but it's unclear when the current pace of growth will pick up.
He did say he is confident the housing market and consumer spending will remain fairly strong, but it was unclear when the labor but market will improve.
Broaddus’ remarks echoed those of Dallas Fed Chief Robert McTeer Wednesday when he told the Dallas Rotary Club that the time is not yet right for an interest rate hike.
Broaddus is best known for being one of the biggest inflation watchdogs at the Fed, USA Today said. Transport Topics
USF Bestway Opens New Service Center
USF Bestway, a less-than-truckload subsidiary of USFreightways Wednesday announced the opening of a new service center in Fontana, Calif.Bestway, based in Scottsdale, Ariz., said the action increased its capacity significantly in the Southern California corridor.
The new center, which rests on 25 acres, features capacity for 167 loading doors and represents the largest construction project in the history of USFreightways Corp.
The size of the new Fontana Service Center represents a 400% increase in loading doors, and a 500% increase in yard space over its previous Fontana location.
USFreightways ranks No. 9 in the Transport Topics list of the 100 largest trucking firms. Transport Topics
(Click here for the full press release.)
Navistar's Loss Grows, but Sales Forecast Rises
Navistar International Corp. said Thursday its loss for the second quarter was $4 million, or 7 cents per share, $1 million more than its first-quarter loss.However, the Warrenville, Ill.-based truck maker increased its forecast for Class 8 truck sales.
The new forecast calls for the sale of 12,000 more units in 2002, bringing the total number of trucks the company expects to sell to 156,000. The increase was made "to reflect a pre-buy of trucks before new emissions standards go into effect on Oct. 1, as well as some renewed confidence in the economy.
For the first half of 2002, Navistar has suffered losses of $60 million, or $1 per share, compared with a $32 million loss, or 53 cents per share.
John Horne, chairman and chief executive officer, said the company's return to profitability was hampered by continued weakness in demand, particularly for Class 6 and 7 medium-duty trucks.
"The current downturn, which has been the worst in memory, has impacted all market segments," Horne said. Transport Topics
(Click here for the full press release.)
