P.M. Executive Briefing - April 26
This Afternoon's Headlines:
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Norfolk Southern Begins Mexico RoadRailer Service
A deal in the works between Norfolk Southern's retail intermodal unit Triple Crown Services and the Grupo TMM member TMM Logistics will see RoadRailer trains running to Mexico City from the United States five days a week.The service will provide customs inspections at drop-off sites in both countries, eliminating customs delays at the border, and will come with cargo insurance, enhanced security, and single invoices for customers. It should start operating by July. Journal of Commerce Online (04/26/00); Kaufman, Lawrence H.
Online Tire Exchange Launched
A new business-to-business Web site, TrucktireXchange.com, will enable truck tire dealers and distributors around the world to find and buy new and retread tires online. Chicago Sun-Times Online (04/26/00)Competition Suit No Sweat: Canada Post
Canada Post dismissed United Parcel Service's lawsuit against the Canadian government for allegedly breaking Nafta foreign-investment and monopoly rules as another in a long string of attempts by UPS to get more business.According to UPS, the claimed violations of Nafta rules calling for fair competition between public and private firms have cost the company $160 million.
A Department Foreign Affairs and International Trade spokesman said each point UPS made will be refuted during hearings with a Nafta tribunal. Those hearings are expected to start by fall, with several months or more to pass before a ruling. Montreal Gazette (04/26/00) P. D16; Brown, Jim
No Plan to Lift Tolls on Coquihalla Highway
Although the Coquihalla Highway in British Columbia has brought in more than 10 times the amount in tolls that the province once said it would take, there are no plans to stop collecting tolls in the near future. For trucks with more than five axles, the toll is C$50, equivalent to US$34. Associated Press (04/26/00)Cat Digging Deeper Into Diversification Plan
After seeing revenues and earnings drop last year due to poor sales of heavy equipment, Caterpillar is ramping up its diversification into compact equipment and truck engines to build earnings this year and next.The company also plans aggressive strides into the equipment-rental sector as well as online equipment and parts procurement. But with its move into compact machines and engines Cat faces tough competition in both fields as well as tighter margins than the heavy-equipment sector offers.
Merrill Lynch Global Securities analyst James R. McCann says Cat will be able to succeed in the compact-machines field thanks to its worldwide network of dealers and its brand image, but it will not "be an overnight sensation."
Collins & Co. analyst Brian L. Eisenbarth says Cat will have the challenge of breaking into foreign markets, particularly in developing areas, in order to build market share.
Meanwhile, analysts say Cat will have to continue its acquisition strategy in the engine field in order to make it a major profit driver, and Cummins Engine, International Truck & Engine, and General Motors present formidable competition.
Even though sales of truck engines was one of the few parts of Cat's business that increased last year, profits from the sector saw only a small increase. Crain's Chicago Business (04/17/00) Vol. 23, No. 16; P. 4; Knapp, Kevin
Should You Lease Your Next New Vehicle?
Associates Commercial Corp.'s Dan Clark says the decision of what sort of truck lease to get depends on where the trucker leasing the vehicle plans to use it and expected annual mileage.Paccar Financial's Rich Forsyth says the number of owner-operators that are leasing is increasing due to the "TRAC" (terminal rental adjustment clause) lease; according to Clark, the advent of leases enabling reasonably priced buyouts has driven up the number of lessees.
Among the benefits of leasing over loan finance payments are lower down payments and lower payment totals, giving the lessee more cash flow over the term of the lease - which could make up for the lower equity a TRAC lessee will have compared to a buyer. Another selling point is potential lower tax payments due to depreciation of the equipment.
Another kind of lease is the full-service lease, which provides such management services as spec'ing and maintenance. Another type of lease is the fair-market value, or "walk-away," lease, in which the lessor may assume total risk with regard to the equipment's final value, so the owner-operator need not worry about potential declines in equipment value. But this type of lease can bring spec'ing and mileage restrictions and keeps the owner-operator from enjoying the equity that comes from top-rank equipment. Owner Operator (04/00) Vol. 30, No. 3; P. 38; Baxter, John
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