A.M. Executive Briefing - Dec. 19
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U.S. Average Diesel Price Falls Another 3.2 Cents
Continuing to decline for the third straight week, the average price of diesel fuel at U.S. retail pumps as of Dec. 18 fell 3.2 cents per gallon from a week earlier, the U.S. Energy Department reported.The national average pump price settled to $1.545 a gallon, down from $1.577 the week before and the lowest weekly average since Aug. 28. That is good news for drivers of heavy trucks who had seen diesel spike severely over the past year and had feared that winter would bring a new price hike.
Diesel had peaked on Oct. 16 at $1.670 - the highest average on record - then fell for several weeks. But it started a new rise in November that took it to $1.645 before the recent series of declines.
In addition, an Energy Department calculation that blends the price of various types of gasoline showed that price is continuing to decline as well, which is a big help to trucking and utility fleets that use light trucks. Transport Topics
Simon Transportation To Acquire Westway Express
Refrigerated carrier Simon Transportation Services Inc. said late Monday that it is in the process of acquiring the trucking assets of Westway Express Inc.If the deal is finalized, Simon would assume the lease of Westway's tractors and trailers. The deal also increases Simon's operating lanes that previously overlapped with Westway. As for personnel, Simon plans on retaining Westway's drivers.
Simon is based in Salt Lake City, Utah, and specializes in temperature-controlled transportation services. Denver, Colo.-based Westway also operates temperatue-controlled tractors and trailers. Transport Topics
Cummins Expects 4Q Loss on Weak Sales
Diesel engine maker Cummins Inc. (CUM) said Tuesday that it expects to lose 35 cents to 40 cents per share in its fourth quarter. The Columbus, Ind.-based company says the loss would be due to a 50% fall in heavy-truck engine shipments compared to the fourth quarter last year.Cummins shut down its midrange engine plant in Walesboro, Ind., last week due to decreased orders from DaimlerChrysler for the Dodge Ram pickup truck, the company noted.
To cope with a slowing truck market, Cummins will terminate at least 1,000 employees. It also plans to pick up sales in the filtration business that has grown due to increased worldwide demand for exhaust systems. Transport Topics
Crude Oil Prices Up Slightly Amid Cold Weather Forecasts
Crude oil prices rose slightly Tuesday in spite of cold weather forecasts in the U.S. Northeast, which uses 80% of the nation's heating oil, Bloomberg reported.In London, crude oil prices rose 1 cent to $26.25 per barrel in early Tuesday trading, while in New York, oil rose 69 cents to $28.68 per barrel.
The resumption of Iraqi oil exports did not affect prices, the report said. Iraq, which supplies 2.14 million barrels of oil per day, had halted exports for nearly 10 days in early December due to a conflict with the United Nations.
Crude oil prices may further jump in the near future after the Organization of Petroleum Exporting Countries meets Jan. 17 to discuss production cuts. Transport Topics
Weather Continues to Sock U.S. Transportation
Another week has not yet brought a letup to winter storms that have battered much of the United States, effectively shutting down or sharply reducing truck-freight activity in numerous commercial centers.Reports on Tuesday morning showed snow-choked streets and bone-chilling temperatures still hampering Chicago and Minneapolis. Dangerously low wind chills were reported as well in Indianapolis, St. Louis, Kansas City, Mo., and Little Rock, Ark.
This means the snow and ice storms that swept the central United States in recent weeks have not been followed by enough warm weather to clear many streets. Meanwhile, the cold alone can hinder a range of truck- rail- and air-cargo activities from dock loading to keeping equipment running and repaired.
The storms have forced numerous airline flight cancellations, which hurts trucking operations linked to airfreight and often throws additional freight volumes onto over-the-road truckers.
On Monday, a new layer of snow hit northern Georgia, plus parts of Tennessee and Alabama - a state still digging out from a spate of deadly tornadoes. Arkansas is still reeling from an ice storm and bitter cold.
The Associated Press said a new storm was also sweeping across the Great Plains, temporarily closing some Nebraska highways and contributing to a pileup involving five tractor-trailer rigs. As much as 17 inches of snow were headed for Wisconsin, with lesser amounts across Minnesota, Illinois and Indiana.
Finally, although the north-south truck traffic along busy Interstate 95 near the nation's capital has been spared most winter weather problems until now, a storm that could dump about four inches of snow was predicted Tuesday for Washington, D.C. Transport Topics
Fed Decision Could Set U.S. Economic Pace
A key decision Tuesday by the Federal Reserve, to be announced early in the afternoon, may either set the stage for a future cut in U.S. interest rates or give the stumbling U.S. economy a new lift if the Fed decides to cut rates now.That is an important decision for the trucking industry. Since many fleets as well as owner-operators carry debt on their equipment, a Fed rate cut could pare operating costs of paying down that debt.
But even more important, a rate cut should stimulate an economy that is growing ever more slowly and that is continuing to curb freight shipments for an already-ailing trucking sector.
Most Fed watchers still think the central bank will only position itself for rate cuts by taking a policy stance that warns of the risks from the economy slowing too much. Others, though, are urging an immediate easing of Fed policy, including the president of National Association of Manufacturers, because of a decline in industrial output and weakness in consumer sales in the crucial holiday season.
If and when the Fed does cut rates, it will be the first time since it launched a series of three rate cuts amid the global economic crisis of late 1998. The Fed went on a rate-raising spree starting in mid-1999 that lasted until May 2000, as it tried to cool economic growth to head off inflation risks. With that, plus the huge run-up in energy costs and sharp drop in financial market values this year, the economy now appears to have slowed too much. Transport Topics
Hino Said to Eye Construction of U.S. Truck Plant
Hino Motors Ltd., a Japan-based truck manufacturer, is exploring the possibility of assembling trucks in the United States using American-made components, Reuters reported Tuesday.Hino currently exports about 2,000 trucks to the U.S. each year, but exports about 14,000 to other countries, according to the news service.
A Japanese newspaper had reported that Hino planned to begin construction on a U.S. plant in 2002 with production to start on 2003. Hino aims to sell 30,000 trucks annually in 10 years, Reuters reported.
The Japanese paper also said that Hino was talking with Toyota about using its U.S. manufacturing network to get components. Toyota owns 33.7% of Hino. A company spokesperson did not confirm the specifics, but only told Reuters that Hino's exploration of U.S. assembly was at an early stage. Transport Topics
ShipChem Names Chief Financial Officer
ShipChem, Inc., a provider of management and logistics services for the chemical and plastics industries, announced the appointment of Samuel Hensley as chief financial officer.Hensley has more than 17 years of experience in all aspects of accounting, finance, treasury and investment relations. He joins the Atlanta-based firm from Georgia Gulf Corporation, a public company with revenues exceeding $1 billion, where he participated in the 1984 spin-off from Georgia Pacific Corp. Transport Topics
Bush May Name Alcoa Chairman as Treasury Secretary
President-elect George W. Bush is considering Alcoa Inc.'s (AA) chairman Paul O'Neill as a possible choice for U.S. Treasury Secretary, the New York Times reported Tuesday. Alcoa is the world's biggest aluminum maker.The article noted that Bush is considering O'Neill because of his Wall Street background and previous experience at the White House Office of Management and Budget from 1967 to 1977.
Other Treasury Secretary candidates include former Chase Manhattan Corp. Chairman Walter Shipley, Paine Webber Group Chairman Donald Marron and the former chairman of Credit Suisse First Boston, John Hennessy. Transport Topics
Headlines From Yesterday's P.M. Briefing
- Volvo-Renault Merger Gets U.S. Antitrust Approval
- Chairman: DaimlerChrysler Commercial Trucks Strong
- Shareholders Call Off Suit Over AF/FedEx Merger
- German Truck Maker MAN AG Plans Stock Buyback
- Snow, Wind Hitting Central States
- GM Buying Into Chinese Truck Maker
- DHL's Lupo Coming After US Market
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