P.M. Executive Briefing - Feb. 1
This Afternoon's Headlines:
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UPS's Gains Fail to Satisfy Investors
United Parcel Service's stock price Monday saw its biggest one-day drop thus far, even after the company reported a 37% gain in fourth-quarter net income and its 56 cent per diluted share profit beat a First Call/Thomson Financial estimate of 55 cents.The 8.1% drop on the New York Stock Exchange occurred as some investors sold because UPS did not come in further above estimates. Some investors were certain that UPS figures would be raised significantly due to delivering Christmas items bought on the Internet. But UPS' Monday report said average daily package volume rose only 5.6% during the fourth quarter, lower than the 6.8% growth in the third quarter.
UPS' international division did see fourth-quarter operating profit rise to $82 million from $37 million in the previous fourth quarter, with daily international export volume up approximately 18% and domestic standard next-day delivery services rising roughly 10%. Fuel spending was up roughly a third, but the company still does not plan to impose a fuel surcharge.
In related news, Airborne Freight said its fourth-quarter earnings were down 55% to $17.3 million (78 cents per share), hit by rising fuel prices and "flat" domestic shipment growth. Wall Street Journal (02/01/00) P. A3; Brooks, Rick
Union: Volvo to Make 900 Cuts
About 900 workers at the Volvo Trucks North America plant in Pulaski County, Va., will be laid off over the coming three weeks, said United Auto Workers officials.About 800 will be laid off Friday – including the 420 layoffs announced last month – and 100 on Feb. 18, according to the union officials. The company said it anticipates that it will hire those workers back when orders increase again. UAW Local 2069 President Bill Burton said he does not expect the layoffs to be "a real short-lived thing."
Volvo has said its $148-million expansion at the plant will continue but it will remove a second shift and drop its daily VN Series tractor output to 80 from 112. The layoffs include 125 more jobs than the company added when the expansion plans were made public in 1999.
According to Jerry Frye, manager of the Virginia Employment Commission's Radford office, the New River Valley area will be able to absorb the laid-off workers at jobs with lower pay. Most were hired by Volvo during the summer, but Burton said some have held the jobs up to two years. Roanoke Times Online (02/01/00); Calnan, Christopher
Truck Drivers Pressure Port Authority
United Containers Movers Association Jacksonville, Fla., chapter President Tony Fernandez held a rally and truck convoy Monday to press the Jacksonville Port Authority not to do business with steamship lines not backing the truckers' "bill of rights." Teamsters union representatives also drove in the convoy and attended the rally.According to port authority spokesman Dave Scofield, the port only rents space to ship lines and is not authorized by its charter to dictate the union policies or compensation offered at those companies.
Similar rallies were held by truck drivers in five other port cities. [The other cities were Savannah, Ga., Charleston, S.C., Baltimore, Boston, and Detroit, according to the Associated Press.] Florida Times-Union (Jacksonville) Online (02/01/00); Gordon, Mark
Oshkosh Truck Names New Chairman
Oshkosh Truck has appointed CEO and President Robert Bohn to the post of chairman of the board. He replaces Daniel Carroll, who will continue to serve on the board. Reuters (02/01/00)Transportation Technologies Agrees to a Buyout
The truck and bus component maker Transportation Technologies Industries has agreed to a $221 million buyout by a management-led investor group. Chairman and CEO Thomas M. Begel and President and COO Andrew M. Weller are among the investors. New York Times (02/01/00) P. C4USFreightways Files to Sell $400 Mln in Debt
USFreightways filed with the Securities and Exchange Commission to sell as much as $400 million worth of debt securities. Proceeds from the occasional sales would be used for general corporate purposes, USFreightways said. Reuters (02/01/00)TransForce Acquires TST Solutions Inc.
The Canadian transportation company TransForce has agreed to acquire the Ontario firm TST Solutions, which will become a wholly-owned subsidiary of TransForce. After the C$85 million deal, expected to close in March, TransForce will have a total of 7,000 tractors and trailers, more than 3,100 employees, and 550 owner-operators.TST Solutions President and CEO John Stollery will be a special consultant for TransForce's management. Gary King and George Hendrie will remain the presidents of the LTL division TST Overland Express and the emergency-delivery division TST Expedited Services, respectively. The present management will also stay in place at TST Solutions' other divisions, which are the intermodal brokerage TST Load Brokerage Service, the truckload carrier TST TCEI, and the automotive-industry brokerage TST Automotive Services. Canada NewsWire (02/01/00)
Navistar Reiterates Truck Forecast for Industry
Despite a recent stock decline due to an expected drop in heavy-truck demand, Navistar International on Monday repeated a forecast from three months ago of FY2000 demand in the United States and Canada of roughly 405,000 units. That would be a drop of roughly 60,000 units from the previous year; the fiscal year for the company ends Oct. 31.Chairman and CEO John Horne said analysts have been concentrating too much on weak heavy-truck demand recently, which he said is partly due to different purchasing patterns and a seasonal decline. He said e-commerce has created more demand for medium trucks, for which the International brand has the largest market share. Medium trucks also make up the biggest share of the company's business, said a spokesman. Reuters (01/31/00)
Intermodal's Future 'Is Very Bright' Expert Says
The future for intermodal transportation is once again looking good as railroads recover from delays that were the norm during a spate of mergers. The intermodal industry is on the move again despite business lost to trucking, said Walt Whitt, president of Arkansas Best's Clipper Group.Intermodal saw freight records in 1999, with 9 million truck trailers of cargo hauled by rail. Clipper saw 1999 operating income of $1.5 million, compared to a $1.1 million loss in 1998, but it could have been better if the initial 1996 Union Pacific-Southern Pacific merger delays had not occurred.
According to Whitt, the industry's mistakes in each rail merger have been a learning experience. After the planned Burlington Northern Santa Fe-Canadian National merger, freight could be hauled by intermodal between Canada and Mexico, and Whitt hypothesized this could take place with no Customs inspection at the U.S.-Mexican border.
University of Tennessee civil engineering and transportation professor Arun Chatterjee said the mergers could feed the strong points of intermodal, which is best suited for long-distance freight without one- or two-day service demands. It does not take as much of a hit from lofty fuel prices as trucking does, he said. He praised J.B. Hunt Transport Services' decision to separate its trucking and intermodal operations.
J.B. Hunt intermodal president Paul Bergant said intermodal usually takes a day longer than trucking but cuts costs by up to 25%. But it is not suited for companies like American Freightways that make most deliveries in two days or less. Arkansas Democrat-Gazette Online (01/30/00); Wieland, Barbara
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