A.M. Executive Briefing - Oct. 11
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U.S. Diesel Fuel Prices Continue On Downward Trend
The U.S. national average diesel fuel price continued to fall last week, dropping 0.9 cents to $1.614 per gallon, the U.S. Energy Information Association said.Most regions again posted slight decreases in their per-gallon pump prices, with the Gulf Coast area showing the biggest fall of 1.9 cents to $1.551 per gallon, the lowest regional average in the country, the report said.
The New England and Rocky Mountain zones reported increases of less than a cent each, rising to $1.678 and $1.743 per gallon, respectively, EIA said. The West Coast, where prices had fallen 1.3 cents last week, went back up 1.2 cents to $1.843 per gallon, the report said.
House Vote Would Spread Fuel Surcharges to More Truckers
The U.S. House of Representatives on Tuesday approved a bill that would allow more truckers to collect fuel surcharges when diesel fuel costs soar, Bloomberg reported. Earlier Tuesday, congressional sources had told Transport Topics they expected the measure to fail, but it was approved late in the day on a voice vote.It covers more than 275,000 truck owner-operators, Bloomberg said, and they would be able to levy a surcharge to their normal rates whenever diesel prices jump by 5 cents or more per gallon from the same week a year earlier.
Currently, large trucking companies can impose fuel surcharges when they think the market can accept them, but independents who work for themselves or who hire out to larger trucking companies usually have to eat their own fuel bills with no way to levy a surcharge.
Even with the House passage, however, the measure's final approval is not guaranteed. No such bill is in the Senate, so for it to become law it would have to get through that chamber as well and then be signed by President Clinton. Transport Topics
U.S. House Approves Auto, Tire Safety Bill
The U.S. House of Representatives passed a bill Wednesday aimed at increasing auto and tire safety, as it will allow stiffer penalties for executives hiding safety problems, the Associated Press reports.The bill, inspired in part by the 6.5-million-unit Firestone tire recall, will also mandate vehicle rollover testing and the use of systems that warn against tire under-inflation.
This bill has met with opposition from the auto industry. With little time left in the current session of Congress, it has an uncertain fate in the Senate, AP said. Transport Topics
Congress Said to Look Into SPR Release
U.S. House and Senate committees will be checking into President Clinton's release of oil from the Strategic Petroleum Reserve, on concerns the process might not get more heating oil to the Northeast where it is greatly needed, the Wall Street Journal reported Wednesday.That is also an automatic issue for truckers who need diesel fuel to power their freight-hauling rigs, since heating oil and diesel are nearly identical and in some cases the same fuel is used for both needs. A reserve of heating oil, or something else that stabilizes such fuel prices, will also affect trucking fuel costs.
Some members of Congress question the SPR bidding process by which 11 companies - three of them small firms with reportedly little to no experience in large oil deals - were selected to receive parts of the 30 million barrels being released from the SPR, the Journal said.
The New England region is heavily dependent on heating oil, and stocks of that fuel are at 60% below usual levels with winter rapidly approaching.
The 11 companies have until Thursday to submit letters of credit from banks to provide financial assurances against the oil each is borrowing from the SPR. Should any not submit those letters they would lose their contract, and the government would re-open bidding, the Journal added. Transport Topics
Matlack to Report Loss, Signs Credit Amendment
Matlack Systems Inc., (MLK) a North American chemical transportation firm, said Tuesday it will report a loss for the quarter ended Sept. 30, mainly due to non-cash charges resulting from its efforts to consolidate operations.The company also has signed with its bank group an amendment to the company's revolving credit agreement. The amendment waives defaults from March and June 2000 and resets certain covenants for future periods, Matlack said. Transport Topics
American Freightways Beats Analysts' Estimates for Quarter
Crediting strong demand for its American Flyer express delivery service, trucking company American Freightways (AFWY) reported a 42.2% increase in net income for the fiscal quarter ended Sept. 30. American is in the less-than-truckload, general commodities segment. The company's earnings of 63 cents per share topped analysts' estimates for the quarter, which reportedly averaged 56 cents per share.
In addition, for the first time since 1995, American Freightways reported a quarterly operating ratio below 90%, at 89.5%. That is well below the industry average for the percentage of costs to revenues. Transport Topics
Rail Giant BN Said Curbing Capital Spending
The second-largest U.S. railroad, Burlington Northern Santa Fe, (BNI) will further curb the amount of money it spends on its infrastructure in the coming year, the Washington Post reported Wednesday. That could help the trucking sector compete against a rail system that sprawls across the entire western United States. However, the BNSF cutback also comes at a time when various types of freight haulers are struggling with a weakened goods-shipping industry, and when many transport firms are snipping parts of their business plans.
In a story from an interview with BNSF's chief executive, Robert Krebs, the Post said the company will spend enough to keep the line in good shape but would curb some projects. Capital spending will total about $1.4 billion, it said, down from $1.75 billion this year and more than $2 billion in each of the prior years.
Krebs complained to the Post about resistance from shippers and federal regulators to BNSF's plan to merge with Canadian National (CNI) – a plan that both sides abandoned after a U.S. agency slapped a moratorium on mergers and that was upheld in court – and about pressure for competing railroads to use BNSF lines.
He said such factors work against investing more in the railroad, and could push more freight onto the highways in trucks. Transport Topics
Oil Price Rises on U.S. Inventory Concerns
The price of crude oil rose more than 2% Wednesday on reports that U.S. distillate inventories fell unexpectedly, raising concerns of winter shortages, Bloomberg reported.Oil hit $34 per barrel on the New York Mercantile Exchange and $32.85 per barrel on London's International Petroleum Exchange.
The American Petroleum Institute reported late Tuesday that U.S. distillate inventories, which include heating oil and diesel fuel, fell 2.8% or by 3.31 million barrels last week. This, combined with an early cold spell that set record lows in the eastern United States, is cause for concern with winter weather coming. Transport Topics
India's Fuel Price Hike Pushes Truck Rates
Although fuel-price protests by truckers around the world have eased some over the past week, the ripples continue.After the Indian government raised fuel prices by 6% last month, that country's trucking companies have raised rates by 11-20%, the Journal of Commerce Online reported.
Independent truckers have also raised rates 12-16%, according to an Indian Foundation of Transport Research and Training survey cited by the Journal. Door-to-door delivery rates have not increased, the JOC said. Transport Topics
S&P Cuts Daimler Outlook to "Negative"
Vehicle maker DaimlerChrysler (DCX) was hit with more bad news Tuesday as Standard and Poor's changed its outlook from "stable" to "negative," warning that woes for the U.S. unit could continue for an "extended period," the Wall Street Journal reported Wednesday.Standard and Poor's did not lower Daimler's debt rating, but said it could if the U.S. unit – formerly Chrysler Corp. – does not boost earnings with its cost-cutting efforts and new vehicle rollouts, the article said. Daimler's long-term debt rating is actually better than that of U.S. rivals General Motors and Ford, the Journal noted.
DaimlerChrysler has several truck- and engine-making holdings in addition to passenger vehicles. Its Freightliner big-rig unit recently acquired Canada's Western Star Truck Holdings (WSH) , and Daimler also is purchasing truck-engine builder Detroit Diesel Corp. (DDC)
The Chrylser problems could continue into next year, Standard and Poor's said in the story. DaimlerChrysler also recently warned the U.S. division would post a $528 million loss for the fiscal third quarter. Transport Topics
Headlines From Yesterday's P.M. Briefing
- Oil Prices Rise on Weather, Conflict Concerns
- Minnesota Experiments With Ramp-Meter Shutoff
- Cummins Develops Natural-Gas Engine
- Florida East Coast Completes Recapitalization
- New Bridgestone/Firestone Chief Boosts Recall Timetable
- House Seen Rejecting Truckers' Fuel Surcharge Bill
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