P.M. Executive Briefing - Mar. 13
This Afternoon's Headlines:
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Trucking Firms Wheel Out Innovations to Combat Surging Price of Diesel Fuel
As diesel fuel prices skyrocket, many trucking companies are increasing rates, while others have additional strategies.USA Truck has set up its engines to shut off when they are idling and hit a certain temperature, it recognizes truckers who save fuel by posting their names at terminals, and it has lowered its speed governors to 63 mph. Celadon Group began the Truckersco-op.com site to enable volume discounts for drivers and to generate revenue from vendors.
M.S. Carriers Chairman and CEO Michael Starnes believes the high diesel costs will shake out the carriers whose fuel use is poor, accelerating consolidation in the trucking industry and helping "the better managed and financially stronger carriers." Wall Street Journal (03/13/00) P. A19A; Machalaba, Daniel
Caterpillar's Truck-Engine Sales May Hit Some Braking
A projected 15 percent to 20 percent drop in heavy-truck sales this year threatens to weaken Caterpillar's diesel engine sales, which saw a 5% growth last year to make it one of the few healthy divisions at Cat. Tractors, dump trucks, wheel loaders, and bulldozers have all seen demand dropping, and rises in leasing and purchases of used equipment are keeping heavy-machinery sales down, and the company saw a 37% drop in earnings last year.At one time, most Cat diesel engines went into Cat equipment, but in the 1980s it embarked on a plan to supply engines to other companies. Now, nine out of 10 Cat diesel engines go to other manufacturers, engine sales are 35% of total company sales, and Cat's market share rose to 29% in 1999, passing Detroit Diesel, which had 27.5%, and threatening Cummins Engine, which topped the industry with 30.4%.
Cat wants to become the industry leader by further slashing its thin margins, but with signs that the industry is headed for doldrums, some analysts are saying the diesel division at Cat has reached the end of its heady days. But Cat believes engine sales can still grow quickly, with plans to double it in the next 10 years, because 75% of its diesel engines now end up in equipment other than heavy trucks.
Glen Barton, Chairman and CEO, believes Cat will see a 2% to 7% growth in overall sales this year, with earnings growing at the same pace; he cites higher sales of non-truck engines as well as increased Asian and Latin American heavy-equipment sales. Wall Street Journal (03/13/00) P. B6; Tatge, Mark
Ryder, State Split Cleanup
Ryder Truck Rental settled with the New Mexico Environment Department last week for cleanup of the biggest underground diesel storage tank leak Albuquerque has ever seen. Ryder will spend $1.3 million for the cleanup, with about $1 million paid for by the state's Corrective Action Fund, which is paid for by fees from petroleum marketers.In 1998, Ryder applied to be paid back from the Corrective Action Fund for what it had already paid for cleanup, but the Environment Department said Ryder had inadequate inventory records. Last week's settlement ends Ryder's appeal of the decision.
Joyce Shearer, project manager for the state, said if Ryder had had a better inventory system it might have found the leak faster, since the system to detect leaks was also malfunctioning. But the possibility that the diesel fuel will contaminate ground water has been minimized because Ryder worked assertively at containment, she said.
Ryder removed the tank from the ground, and it has shut down the service and fuel center where it was located. Albuquerque Journal Online (03/10/00); Soussan, Tania
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