P.M. Executive Briefing - Dec. 22
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U.S. Trucking Has Big 3Q Loss
Holding company U.S. Trucking Inc. (USTKE) announced losses far in excess of revenue for the third quarter, and said it is negotiating with several small transportation companies about sale of its subsidiaries.For the quarter ended Sept. 30, it had revenue of $16.5 million, and a loss of $21.5 million, the company said.
The company has taken every possible charge against earnings, including the write-down of goodwill on discontinued operations, increased reserves for bad debts, loss from discontinued operations and loss on the sale of equipment, said Chairman Dan Pixler.
FedEx Completes Tender Offer for AF Stock
FedEx Corp. (FDX) succeeded in its quest to buy up to 50.1% of the outstanding shares of American Freightways Corp. (AFWY) at $28.13 per share, the company announced Friday.About 16.9 million shares were properly tendered and not withdrawn by the Thursday deadline, including 4.2 million shares subject to guarantees of delivery.
The tender offer will be followed by the merger of American Freightways with and into FDX inc., with American Freightways becoming a wholly owned subsidiary of FedEx.
American Freightways shareholders must approve the move. A class-action suit to block the merger was withdrawn earlier this week. Transport Topics
New Economic Reports Reveal Slow U.S. Growth
New reports released Friday on U.S. consumer spending, durable goods orders and consumer sentiment were in line with ideas that the economy is still growing but at a slower pace from earlier in the year.That contains mixed messages for the trucking industry. On the one hand, Friday's report did not show the economy weakening dramatically, which implies that freight shipment activity is not caving in. On the other hand, since the reports show growth remains mild, they imply freight hauling is not about to surge immediately.
Together, they appear to reinforce the outlook for the Federal Reserve to cut interest rates soon. That would be good news for truckers, both by stimulating freight shipments and by paring interest costs on equipment loans.
The Commerce Department said consumer spending grew 0.3% in November. That was in line with expectations, but was the weakest monthly growth rate since last May. The slow rate was blamed on higher energy costs, which depressed spending on other goods. The consumer sector makes up two-thirds of the U.S. economy.
Commerce also said new orders placed at U.S. factories for goods designed to last three years or more rose 2.3%, which was a bit more than expected but follows a much sharper decline in orders in October.
Finally, the University of Michigan's report on consumer sentiment for December showed a pickup in consumers' attitudes about the economy. That could suggest improved spending patterns that could in turn drive factory orders higher in coming months.
However, there are also new reports by several manufacturers - including automakers General Motors Corp. (GM) and Ford Motor Co. (F), and furniture maker La-Z-Boy - that weak demand conditions would curb output in coming weeks. Transportr Topics
Four Names Mentioned for Top DOT Post
President-elect Bush has not yet named a transportation secretary, although four names have been mentioned.Wisconsin Gov. Tommy Thompson said he was interested in the job, although Bush had asked him to head Health and Human Services, the Associated Press reported Thursday. Rep. Jennifer Dunn, (R-Wash.), was also mentioned - previous reports had pegged her as a Labor Department candidate. Elaine Chao, former maritime administration head and defeated Sen. Spencer Abraham (R-Mich.) have also been mentioned, according to AP.
Whoever gets the post will have plenty of trucking-related responsibilities. Unlike his or her predecessors, that person will be starting out with a trucking-specific agency within the Department of Transportation, the Federal Motor Carrier Safety Administration.
FMCSA will continue to work on a proposal that could have tremendous impact on trucking, the hours-of service rulemaking that could drastically change work and sleep patterns for drivers. Any such changes would ripple throughout the industry, and could conflict with local efforts - in New York City, for example - to shift truck travel and deliveries to night. The new secretary will soon have a stack of comments to consider on another FMCSA proposal for securing truck loads.
The new leader may face pressure to beef up a small agency within DOT that has come under fire - the National Traffic Highway Safety Administration. Some analysts say stronger data-gathering would have enabled NTHSA to stop the recent Firestone tread separation controversy in its tracks early on, heading off wrecks as well as an explosion of litigation. Transport Topics
Analysts: DaimlerChrysler May Run Out of Cash
Industry analysts say DaimlerChrysler (DCX) may drain its cash reserves next year, driving it into further debt, Bloomberg reported Friday. At the end of September, the company - which also owns Freightliner and Western Star Trucks - had only $3.3 billion in cash compared $10 billion at the beginning of 2000, the article said. The company had a poor showing in the third quarter, and the slumping U.S. car and truck market is expected to hit DaimlerChrysler with more losses.
DaimlerChrysler is trying to overcome its losses by reducing production. In January, the company plans to idle several of its North American plants.
However, the analysts say the company must consider further cuts and reverse the poor sales of its Ram pickups, Jeep sport-utility vehicles and Caravan minivans.
EU Ministers Reach Deal on Trucker Hours
European Union transport ministers announced Friday that had reached an agreement on reducing the number of hours truckers may work.The plan, which was proposed in November, must still be approved by the European Parliament. It would limit European truckers to 48 hours of work a week. Drivers would be allowed to work up to 60 hours in a week as long as they averaged the 48-hour limit over a four-month period.
In addition, a 30-minute break would be required after six hours of work, and a 45-minute break after nine hours on the job.
The EU transport council has been working on new hours-of-service regulations for two years now, but has been stymied by concerns in some countries over whether owner-operators should be subject to the rules.
The compromise approved Friday would temporarily exclude independent truckers from the new law, and would require the Transport Commission to study the effects of this exemption. Jeff Johnson, Transport Topics
Snow Hits East as High Winds Wallop Plains, Southeast
Truckers trying to meet Christmas deadlines may face delays when traveling in the Mid-Atlantic and up the eastern seaboard.Snow was delaying air travelers - and airfreight - at Philadelphia International Airport up to four hours and at Boston's Logan Airport up to two hours, the Associated Press reported.
Although the East Coast is expected to bear the brunt of snow on Friday, strong winds bearing bitter cold are expected from the Plains to the Southeast, ABCNEWS.com reported.
Up to three inches of snow is expected in northern Maine, and six inches in Buffalo, N.Y. The Great Lakes region is expecting wind chills down to 40 degrees below zero, according to ABC. Transport Topics
Headlines From Today's A.M. Briefing
- OPEC Officials Set Price Limit for Oil Export Cuts
- Rail Intermodal Traffic Near 1999 Levels
- GM to Idle Six Plants After New Year's
- Ford to Cut Output, Warns on 4Q Earnings
- US&T Appoints Executives, Raises Prices
- Ashcroft is Bush's Pick for Attorney General
- SUVs, Small Trucks Stealth Target of EPA Rule
- Whitman Administration Has Favored EPA Diesel Rule
- Teamsters Plan New Organizing Push for FedEx
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