P.M. Executive Briefing - July 15
This Afternoon's Headlines:
- Y2K Anxiety Driving Sector to Higher Pricing, Analysts Say
- NationsWay Selloff Gets Into High Gear
- Xatas for USPS
- Personnel: Mack Trucks Inc.
- Trucking Dot Com
Y2K Anxiety Driving Sector to Higher Pricing, Analysts Say
Trade analysts expect truck lines to raise rates as fuel prices rise and shippers increase their inventories to hedge against potential problems caused by the Y2K computer bug. Jeff Kauffman of Merrill Lynch predicts a 2% rise in rates and Anthony Gallo of Deutsche Banc Alex. Brown foresees margins rising 2% to 4%. Although Roadway Express tonnage decreased 0.6% for the second quarter, the company posted a 1.9% growth in quarterly revenue.Expectations of a sluggish first quarter following the Y2K change have already led shippers to begin inventory padding. Consequently, carriers are seeing an upward trend in pre-booking. Although J.B. Hunt Transport and U.S. Express said their second-quarter earnings are below expectations, analysts expect healthy overall earnings for the second quarter in the trucking sector. In particular, Donald Broughton of A.G. Edwards has predicted a 12% increase over the second quarter of 1998. However, the sector's outlook for the future is somewhat diminished by rising fuel costs and continuing problems with driver supply. (Journal of Commerce (07/14/99) P. 17; Watson, Rip)
NationsWay Selloff Gets Into High Gear
NationsWay Transport senior vice president Harold R. Roth has told creditors at a federal bankruptcy hearing that he is heading the company's liquidation. The company, owned by NW Transport Service, has approximately $103 million in liabilities. Roth is unsure whether sales of company terminals will cover the minimum $19.5 million guarantee to creditors. Nationwide, 3,500 employees were laid off because of the bankruptcy, and the company is facing a $2 million claim for the approximately $4.5 million it owes employees. (Denver Post Online (07/10/99))Xatas for USPS
Some United States Postal Service (USPS) short-haul trucks will use Xata Corp. onboard computers for local runs in St. Paul, Minn., beginning July 22. The computers will also be used for runs to Kansas City. The USPS began buying Xata-equipped Mack trucks in 1997 and will soon be installing the systems in all of its trucks that are five years old or newer. Carriers with long-haul USPS contracts will not be forced to install Xata systems, but the postal service will favor Xata-equipped carriers in making contracting decisions.The USPS hopes to save money on fuel and maintenance by reducing the time the truck idles while the driver does paperwork. Xata chief financial officer Gary Thomas recommends equipping the entire fleet with the computers, but USPS financial considerations preclude this. Xata system data will be integrated with other automated USPS information systems. (Traffic World (07/12/99) Vol. 259, No. 2, P. 38; Hickey, Kathleen)
Personnel: Mack Trucks Inc.
Mack Trucks has named Scott Kress, formerly vice president of sales at Sterling Trucks, its new vice president of business development and industry. (Automotive News (07/12/99) Vol. 73, No. 5828, P. 23)Trucking Dot Com
A report from the Arkansas-based equity research company Stephens says the impact of the Internet on truck lines won't be clear for another one-and-a-half to two years. Stephens Vice President Timothy Quillin, though, predicts that less-than-truckload lines and small-package carriers will see the most benefit from the online economy, particularly online sales. Many regional distributors and wholesalers will fall by the wayside as online shipper activity and electronically-planned supply chains shift more business to nationwide companies. Inventory and cycle times are projected to drop as online communication allows more precise replenishment.Although TL-carrier retail deliveries are expected to decrease, business should become more consistent as current small shipments are consolidated. Quillin anticipates, Carriers that have small shipments and process more transactions by using some kind of web interface and thus don't have to have call centers or face-to-face transactional processing will save money. While small companies lacking technological savvy may suffer, electronic processing will help them become more efficient and lessen their amount of drives without paid loads. Quillin estimates that private TL carriers waste about $20 billion by having to run unloaded. (Traffic World (07/12/99) Vol. 259, No. 2, P. 39; Hickey, Kathleen)
