A.M. Executive Briefing - Dec. 26
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FedEx Gets Extra AF Corp. Stock
Delivery giant FedEx Corp. (FDX) received extra shares of stock from its purchase of trucking company American Freightways Corp., Bloomberg reported.FedEx had originally sought 16.29 million shares in American Freightways. However, FedEx received 16.96 million shares or an extra 670,000 more shares under last week's agreement, the wire service noted.
FedEx agreed to buy 50.1% of American Freightways in November in order to increase its heavy freight shipments, Bloomberg said. The acquisition is expected to be completed in early 2001. Transport Topics
Iran Wants OPEC to Cut 1 Million Barrels of Oil Per Day
A top Iranian official said the Organization of Petroleum Exporting Countries should cut oil production by 1 million barrels per day to avoid a slide in prices, Agence France-Presse reported.OPEC, which pumps 40% of the world's oil supply, said Friday that if oil prices fall below $22 for 10 consecutive days it would cut oil exports by 500,000 barrels per day.
Last Thursday, oil traded for $21.64 per barrel - below OPEC's benchmark - bringing anticipation of a cut. However, prices opened at $29.40 per barrel Tuesday in New York.
The article did not indicate if OPEC officials agreed to Iran's recommendation of further cuts, but did say it would consider further cuts following the cartel's next meeting on Jan. 17. Transport Topics
Weather Keeps Pressure on Trucking
The start of another business week has brought yet another wide-ranging winter storm to plague truck routes. The Associated Press reports that an ice storm struck the southern part of the Great Plains, making roads treacherous and triggering power outages across Oklahoma, Arkansas and Texas for the second time in two weeks.That makes about a month of winter-weather disruptions for truck freight shipments in large segments of the United States, and winter has barely gotten under way.
The repeated storms, which have struck major commercial centers from Minneapolis to Atlanta and everywhere in between in recent weeks, have made it hard for trucking companies that were already struggling to meet volume goals comparable to the more robust demand period at the end of 1999.
The AP said the National Weather Service was predicting for ice for the southern Plains on Tuesday.Transport Topics
Retailers Hoping for Post-Holiday Turnaround
U.S. retailers are hoping that the last week of 2000 will help make up for lackluster Christmas sales, the Wall Street Journal reported Tuesday.How retailers fare can affect trucking shipments in coming weeks, or even longer as it influences how retailers plan their orders from manufacturers for the next few months.
If stores have trouble clearing away merchandise already on their shelves, they are usually less likely to order as much new merchandise, and therefore trucks could see the sluggishness continue to ripple through shipment activity.
Retailers make by far the bulk of their yearly sales during the end-of-year holiday period, and this year was troubled by a slowing economy, a collapsing stock market and brutal winter weather in many cities that is continuing this week.
Already, some major freight haulers have reported slowed shipments in line with the weak retail sales. Some carriers and equipment suppliers have cautioned this could dampen their earnings and operating plans in coming months.
The Journal said preliminary estimates suggest the final holiday weekend just ended did not generate enough business to make up for what had been a weak Christmas sales season, so many companies will push over the next few days to make up for the hoped-for holiday sales. Transport Topics
Asche Files for Chapter 7 Bankruptcy
Citing numerous harmful conditions that it was unable to overcome, refrigerated trucking company Asche Transportation Services said Friday it had filed for Chapter 7 bankruptcy protection, which is the section for liquidation.Asche said its Chapter 7 petitions covered not only the parent but also its two operating subsidiaries for long-haul, temperature-controlled trucking. They are Asche Transfer of Shannon, Ill., and AG Carriers of Tavares, Fla.
The company said that "a number of factors contributed to the Chapter 7 filings, including the economic slowdown, driver shortages, higher fuel prices, increased insurance rates and higher interest rates. Efforts to restructure the businesses, which included attempts to sell the businesses, restructure the debt or obtain additional equity capital, were unsuccessful."
Not affected by the bankruptcy filing was a waste-hauling affiliate, Specialty Transportation Services, since about 76% of it is owned directly by a private institutional investor, Asche said.
Asche Transportation had made the 1999 Transport Topics list of the 100 largest trucking companies at number 84. Transport Topics
Pacer Completes Rail Van Buy, Files for IPO
Logistics company Pacer International has completed its acquisition of Rail Van, and filed with regulators for an initial public offering, the company announced.With its acquisition of Ohio-based Rail Van, Pacer becomes one of North America's largest providers of intermodal marketing, truck brokerage and other freight transportation and logistics services, Pacer said.
The senior management teams of both companies will remain with the larger, Walnut Creek, Calif.-based Pacer.
The non-asset-based logistics company is expected to issue an IPO in the first half of 2001, depending upon market conditions, Pacer said. A "substantial portion" of the net proceeds will be used to reduce outstanding bank debt, according to the company.Transport Topics
2001 Heavy Truck Output Could Fall 15-20%
In 2001, heavy-duty truck production in North America could drop 15% to 20% from this year's levels, an analyst at New York's H.C. Wainwright & Co. is predicting, Bloomberg News reported.The year is ending with unsold inventories of more than half a million vehicles, and the possibility of fewer than 200,000 being produced next year, Bloomberg said.
One analyst lamented the industry's tendency to overbuild and then retrench, noting that the current 500-unit-per-day net order rate is not much higher than recession-mired levels a decade ago, according to Bloomberg. Transport Topics
Headlines From the Latest P.M. Briefing
- U.S. Trucking Has Big 3Q Loss
- FedEx Completes Tender Offer for AF Stock
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- New Economic Reports Reveal Slow U.S. Growth
- Four Names Mentioned for Top DOT Post
- Analysts: DaimlerChrysler May Run Out of Cash
- MEU Ministers Reach Deal on Trucker Hours
- Snow Hits East as High Winds Wallop Plains, Southeast
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