Thursday, December 17, 2009

Impact of EPA Findings Unclear for Trucking

The EPA has officially announced that Green House Gases (GHG) are a threat to the public health and welfare of the American people. So what does that mean to the thousands of trucks that deliver almost all the items produced throughout the world and delivered to our doorsteps???

This recent article below by Fleet Owner gives us an idea of what we can expect. Of course every time there is an emissions limitation, it normally means that the price of equipment is going to go up not only for trucks, but also the manufacturers who emit GHG.



Though the U.S. Environmental Protection Agency (EPA) has officially designated greenhouse gases (GHGs) a threat to the public health and welfare of the American people, and that GHG emissions from on-road vehicles contributes to that threat, the ultimate impact this will have on the trucking industry is unknown at this point.

“The release of the endangerment finding is seen as an effort to focus more attention on pending federal climate change legislation – but it does not include any proposed regulations,” noted Glen Kedzie, an American Trucking Assns. (ATA) vp, told FleetOwner. “[But] it’s unclear at this time how the EPA’s endangerment finding will affect the trucking industry.” (Read more news about the ATA)

In a speech yesterday, EPA Administrator Lisa P. Jackson said her agency’s endangerment final finding is a response to a 2007 U.S. Supreme Court decision that said GHGs fit within the Clean Air Act definition of air pollutants and covers six key gases – carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride.

“This endangerment finding provides the legal foundation for finalizing the recently proposed clean cars program, [which] contains the nation’s first ever limits on greenhouse gas emissions from American vehicles,” Jackson said. “And starting next spring, large emitting facilities will be required to incorporate the best available methods for controlling greenhouse gas emissions when they plan to construct or expand.”

Jackson stressed that, though the EPA’s findings do not in and of themselves impose any emission reduction requirements, they allow the agency to finalize the first-ever federal GHG tailpipe standards for new light-duty vehicles. Those were proposed on Sept. 15 as part of the joint rulemaking with the Department of Transportation (DOT). Those rules are expected to be finalized by March 2010.

“These are reasonable, common-sense steps that will allow us to do what the Clean Air Act does best: reduce emissions for better health, drive technology innovation for a better economy, and protect the environment for a better future,” Jackson said.

“On-road vehicles contribute more than 23% of total U.S. GHG emissions,” she added. “EPA’s proposed GHG standards for light-duty vehicles, a subset of on-road vehicles, would reduce GHG emissions by nearly 950 million metric tons and conserve 1.8-billion barrels of oil over the lifetime of model year 2012-2016 vehicles.“

Trucking is in indeed the EPA’s sights when it comes to controlling GHGs. ATA’s Kedzie noted that the agency is currently developing carbon metrics for trucking carbon outputs and that both the House and Senate climate change bills contain provisions for the agency to take the lead in establishing regulations to limit GHGs from medium- and heavy-duty trucks.

Yet the agency’s recent Final GHG Inventory Rule does not include reporting requirements for trucking fleets. That means the ultimate impact of EPA’s GHG reduction efforts on trucking operations remains to be seen. “There are no specifics known at this time as to what the finding may mean for the trucking industry,” Kedzie stressed.
For the complete article from Fleet Owner, click here.
For a short video on the impact that legislation would have on the trucking industry - watch the video below. Important to understand if you are involved with your company's transportation - increased costs to trucking companies are eventually going to have to be passed on to the shipper. Note the "opinion" of the person who put this video together (at the end of the video).


Monday, December 7, 2009

Why Truck Capacity Will Get Worse in 2010

Below is an article from FTR Associates. FTR is a transportation industry analysis company that keeps a tab on the health of the transportation industry - especially trucking and rail.

It appears that they are anticipating higher freight volume in 2010, but capacity of new trucks will lag behind the uptick in freight for next year.

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NASHVILLE, Ind. -- FTR Associates increased its 2009 Class 8 forecast due to a surge in orders in October, but heavy truck demand for 2010 is likely to slow after EPA 2007 engine inventory is exhausted.

According to the latest issue the North American Commercial Truck and Trailer Outlook published by FTR, orders are likely to reduce early 2010 freight-induced demand, as the order activity in October was driven by truck operators lining up for the last of pre-2010 emissions engines.

Says FTR President Eric Starks: "2009 will end with modest freight growth, and we expect 2010 growth to be in the 2.8 percent range.

"However, given the huge decline in freight over the last few years, the increase in freight in 2010 will not be enough to entice fleets in large numbers to buy new, more expensive technology when such equipment is first made available."

Many carriers, he adds, have usable miles on older equipment to get them through the initial up-tick in freight demand "without taking the risk of adding unfamiliar engine technology to their fleet."The full North American Commercial Truck and Trailer Outlook Report is available to FTR subscribers.

For more information, please contact Eric Starks at 888-988-1699 ext. 45 or make an inquiry to hlile@ftrassociates.com.

For a link to this article, click here

Monday, November 23, 2009

The Latest Manufacturing Recovery News... The National Activity Index

Today's article is about the Chicago Federal Reserve's National Activity Index. By understanding this index, you can get a clearer picture of the overall economy and sharpen the "crystal ball" in order to make better decisions. This index looks at numerous indicators, not just the "best one" or the "worst one". You can't pick the best indicator and tell everyone the economy has sprung back, nor can someone pick the worst (pessimistic) one and tell everyone that the sky is falling!!

The Chicago Fed National Activity Index was –1.08 in October, down very slightly from –1.01 in September. A decline in the contribution of production and income indicators offset small improvements in the other three broad categories of indicators that make up the index.

So what exactly is the National Activity Index?

The index is a weighted average of 85 indicators of national economic activity. The indicators are drawn from four broad categories of data: 1) production and income; 2) employment, unemployment, and hours; 3) personal consumption and housing; and 4) sales, orders, and inventories.

A zero value for the index indicates that the national economy is expanding at its historical trend rate of growth; negative values indicate below-average growth; and positive values indicate above-average growth.


What do the Numbers Mean??

When the CFNAI-MA3 value moves below –0.70 following a period of economic expansion, there is an increasing likelihood that a recession has begun. When the CFNAI-MA3 value moves above +0.70 more than two years into an economic expansion, there is an increasing likelihood that a period of sustained increasing inflation has begun.


Production Indicators

Production-related indicators-with a contribution of -0.07 in October compared with +0.23 in September - made a negative contribution to the index for the first time since June 2009. Much of the decline in this category's contribution can be attributed to lower manufacturing production. In particular, durable goods manufacturing declined 0.4 percent in October after rising 1.1 percent in September. Partially offsetting this was an increase in the Institute for Supply Management's Manufacturing Purchasing Managers' Production Index. It increased to 63.3 in October from 55.7 in the previous month.


Employment -Related Indicators

Employment-related indicators made a contribution of –0.46 to the index in October versus –0.60 in September. Payroll employment decreased by 190,000 in October after declining by 219,000 in September. Household employment also declined at a slower pace in October. However, the unemployment rate increased to 10.2 percent in October from 9.8 percent in September.


The Consumption and Housing Indicators

The consumption and housing category’s contribution to the index increased to –0.52 in October, following a contribution of –0.61 in September. Small gains in a number of consumption indicators accounted for much of the increase. In contrast, housing starts were lower in October at an annual rate of 529,000 units compared with 592,000 units in September.


The Sales, Orders, and Inventories Indicators

The sales, orders, and inventories category also improved in October, contributing –0.02, compared with –0.04 in September.


So What Does This All Mean??

The index's three-month moving average, CFNAI-MA3, decreased to -0.91 in October from -0.67 in September, declining for the first time in 2009. October's CFNAI-MA3 suggests that growth in national economic activitiy remained below its historical trend. With regard to inflation, the amount of economic slack reflected in the CFNAI-MA3 indicates low inflationary pressure from economic activity over the coming year.


Basically - the expansion that we saw in July through September finally levelled off and Inflation will be held in check for now.

This probably is no surprise to anyone, there will be ups and downs during our recovery. Appears that we will muddle along for a little while longer, but there have been good signs for all.

For the complete report from the Chicago Federal Reserve, click here.

Tuesday, November 17, 2009

Shippers, Carriers Project Growth Problems

Surge in 10 months could challenge capacity, cause driver shortage

Shippers and carriers expect there will be sufficient capacity in the domestic transportation system to handle the modest growth in traffic that will occur in the coming year, but eventually there will be a day of reckoning marked by driver shortages, higher fuel prices and capacity constraints.

Although traffic volumes were soft most of the year, a seasonal spurt in activity is underway and Schneider National is projecting that its volume in November will be higher than in November 2008, said David Howland, vice president of rail management.

Schneider expects transportation activity to "bounce along" for the next 10 months, followed by a rebound in August 2010, Howland said.

He addressed the annual transportation conference sponsored by the Intermodal Association of North America, the National Industrial Transportation League and the Transportation Intermediaries Association in Anaheim, Calif.

The domestic transportation environment in the current economic recession is defined by idle trucks and rail equipment, a surplus of truck drivers and furloughed rail industry workers. If modest growth occurs next year, BNSF Railway will have no trouble handling the increased work load, said Barry Russell, general director of marketing.

While Russell's views were echoed by the trucking sector, some shortcomings are noticeable that could present problems in later years. Fleet managers noted that their drivers' average age is in the low to mid-50s.

Also, so much capacity has been idled that a recent brief surge in activity strained truck and driver availability, said Wayne Johnson, director of logistics at American Gypsum.

Shippers and carriers also anticipate continued volatility in fuel prices, with the trend being toward higher prices as developing nations increase their consumption of petroleum products.
Although it may take some years, truck and rail traffic will return to the high volumes of 2006-07, and will continue growing beyond those levels. "When this industry takes off, it will be challenged to handle the load," added Gary Palmer, senior director of transportation at True Value, the hardware company.

One of the solutions offered by shippers was to encourage introduction of larger equipment such as 57-foot trailers and containers that will foster improved productivity.

Carrier executives do not favor that approach, noting that the pricing premium they might realize initially will soon disappear and their large capital expenditure to purchase new equipment will not pay off.

"When we went from 48-foot to 53-foot equipment, it didn't take long to go back down to 48-foot prices," Howland said.


Source of article: The Journal of Commerce

Tuesday, November 3, 2009

ISM Manufacturing Report Shows Continued Growth

Many major indices went up in October, but one ISM analyst says they may drop slightly as part of the overall growth process
Many of the manufacturing indices measured by the Institute for Supply Management (ISM) went up in October, some to unusually high levels, but don't expect them to stay that way, according to one analyst.

Norbert Ore, chair of ISM's Manufacturing Business Survey Committee, said today that new orders, production and employment all grew sharply, along with ISM's PMI, the index the institute uses to measure the manufacturing sector as a whole. However, Ore said those numbers may be a bit too high, and will likely drop a few points next month in what he called "a leveling off" on the economy's course toward recovery.

"This is not a robust economy," he said.

The PMI rose 3.1 percentage points to 55.7 percent in October vs. September's numbers. Any value over 50 percent, for most of ISM's indices, indicates growth. Ore said the PMI hasn't been this high since a 56 percent level recorded in April 2006.

A main part of that jump, Ore said, comes from upward leaps in both production, which went up 7.6 points to 63.5 percent, and employment which rose 6.9 points to 53.1 percent, the first time that index has broken the 50 percent barrier in months.

"Employment was a surprise," Ore said.

So much so, that Ore said he did not expect it will stay that high in November, nor will production or the PMI in general.

In particular, Ore noted that most of the increase in employment was due to the hiring of temps and "callbacks," or bringing back laid-off workers. While Ore did not have a breakdown of each, he speculated that true growth in employment figures-typically measured by an index value of 55 percent or more-could not be built on temp and callback hiring alone.

"It's got a little ways to go yet, and I'm going to be surprised if it stays above 50," Ore said.
Ore also cited a continued lack of consumer confidence, as well as oil prices "quietly" hitting $80 per barrel last week, as factors that will contribute to a fallback in numbers in November.

"An increase in oil prices is a tax on growth," he said.

Ore also noted a disparity in the Customers' Inventories index-which dropped slightly to 38.5 percent in October-and the Inventories index, which rose 4.4 points to 46.9 percent.

"The customer inventories [index] shows there are some major gaps in the supply chain," he said.

Ore said there were a multitude of factors responsible for the gaps, but ultimately, the coming months should show the gap shrinking.

"It's just an inconvenience more than anything else," he said.
This article was found in Logistics Management. For a link to their site, click here.

Thursday, October 29, 2009

"Green" Goes Mainstream - The Effect of the Environment on Everyday Products

Walmart has announced their worldwide sustainability index initiative. They want vendors to produce products that are more efficient, last longer, and are made in a responsible way - a.k.a. - GREEN.



Here is an excerpt from Walmart's Blog:

"We will provide our more than 100,000 global suppliers with a brief survey to evaluate their own companies’sustainability. The questions will focus on four areas: energy and climate; material efficiency; natural resources; and people and community. The survey is a key step toward enhancing transparency in our supply chain."

So what does this have to do with you?? If your company manufactures ANYTHING, chances are that Walmart's Sustainability Index will be a major boost to the trend to go GREEN.

Consumers are going to be demanding more responsible manufacturing processes and companies that recognize and adapt will more than likely gain a competitive advantage over companies that do not. The Product Carbon Footprint World Summit was held in September - of course, Walmart was present.

You can bet that Walmart will be having labels and promoting a major campaign on the topic of green products and manufacturing processes. With Walmart's lead, consumers are going to become increasingly aware of the need and demand for GREEN products.

Not only will the manufacturing process will be considered, but you may want to make sure that your transportation carriers have the Smartway Certification, which indicates that carriers have met requirements to promote a "greener" environment.

Click Here To view the Walmart Supplier Sustainability Assessment

Tuesday, October 20, 2009

What Does the Spot Market Tell Us About Truck Supply??

What does the spot freight availability tells us about the market?? We'll let you decide, but here are some interesting statistics:


Source: TransCore Trendlines



1) Spot Freight Availability is on track to exceed 2008 levels for all equipment types in the fourth quarter, on a year over year basis;

2) Freight Postings rose by 9% in the last week of September, as shippers expedited before the end of the 3rd quarter;

3) Load Availability Declined by 6% in the week ending October 10th, while the load to truck ratio rose to 2.46;

Of particular interest are the highlighted areas - notice the increases in loads to trucks - in other words, there are more loads with fewer trucks. We all know what is coming when demand starts to inch toward exceeding supply!!

Van freight is up 31% and reefer freight is up 25%.


We've had many indicators that the economy is improving. If you are a shipper, you'll want to keep all the indicators and today's article in mind. The trend is that pricing is already starting to change. Companies who are smart enough to recognize this trend will be doing what they can to lock in their trusted carriers before it is too late - overpayments for shipping could be the result in playing the "spot freight" game!

For more information on TransCore Trends, visit http://www.transcoretrends.com

Monday, October 5, 2009

Logistics business: Cass Freight Index is up, but economy remains down

Jeff Berman, Group News Editor -- Logistics Management, 10/2/2009

WALTHAM, Mass.—In what may be viewed as positive news for freight trends, the Cass Information Systems Freight Index was up on a sequential basis from August to September, with a 2.8 percent gain for shipments.

The September index, which measures freight expenditures and payables at 0.966 (1990=1.00), was down 10.6 percent year-over-year, ahead of August, which was down 16.6 percent year-over-year and July, which was down 15.3 percent year-over-year.

According to Credit Suisse Analyst Chris Ceraso, the Cass Freight Index sometimes leads the American Trucking Associations’ (ATA) monthly tonnage index when freight picks up. The ATA tonnage index is also showing positive momentum of late, with a 2.1 percent gain in both August and September.

While the Cass Freight Index is up, many economic indicators remain mixed—making it hard to gauge in some cases just how much the economy is recovering since many economists and industry organizations have indicated it has bottomed.

A few examples of the mixed signs include: today’s jobs report from the Department of Labor indicating unemployment is just under 10 percent, the Department of Commerce’s report that manufactured goods orders in August were down 0.8 percent—or $2.8 billion—to $352.9 billion, consumer spending remaining down, coupled with trucking volumes and the Cass Freight Index up, as well as the Institute of Supply Management reporting its September manufacturing index was up for the second straight month.

Even with the economy showing some signs of life, an industry source told LM there is still more bad news than good news when it comes to a meaningful recovery.

“I don't see the economy improving, said the source, “and I don't see reason to be hopefully optimistic. Unemployment continues to rise, which means spending will continue to drop which means companies will have to continue to cut.”

In a recent interview with LM, IHS Global Insight Economist Paul Bingham said even though the economy remains largely down, there are reasons for optimism, as well as recognition that a contributor to the recent freight transportation volume increases is the long-standing seasonal factors at work, even if muted by reduced household and business purchasing activity.

“There are early signs of recovery also in the numbers as same-month year-ago comparisons turn positive, against already weak comparable months last year ago when the recession was already underway,” said Bingham. “We project the recovery is upon us in North America in the 4th quarter of the year, albeit with a slow pace. The projection is not for any return to the booming double digit annual volume growth rates we saw during the first half of the decade. This is primarily due to consumer spending not being able to reach the rate of consumption that implied because household savings rates will remain positive and more limited consumer credit availability both work to constrain import spending.”

Click Here a link to this article in Logistics Management

Monday, September 28, 2009

16th Annual 3PL CEO Survey Released

Recently, key findings from the 2009 3PL Provider CEO Perspective survey were presented at the Council of Supply Chain Management Professionals Annual Global Conference. The survey author, Dr. Robert Lieb, Professor of Supply Chain Management at Northeastern University, and Joe Gallick, Senior Vice President of Sales for Penske Logistics were responsible for the survey. The findings, sponsored by Penske Logistics, analyze responses from 35 third-party logistics company CEOs across North America, Europe and Asia-Pacific whose companies were responsible for generating approximately $64 billion in revenue in 2008.

"This year's survey results underscore the caution and anticipation felt by 3PL executives as they wait for signs of a global economic recovery," commented Lieb. "Yet, despite bearish growth projections and acknowledgement that consolidation, pricing pressures and operational reductions were, and may continue to be, necessary adjustments, the opportunities for improved collaboration with customers, expansion into emerging markets and the possible addition of new management talent have many excited about the next several years."

Revenue Projections of the 3PL's

The global recession's influence has been profound, prompting very modest revenue growth projections. In fact, on average, 3PL CEOs in Europe project negative growth rates for their companies during the next year.

  • One-year company revenue growth projections were 6.9% for North America (12.6% in 2008), -3.3% for Europe (10.8% in 2008) and 12.9% for Asia-Pacific (21.4% in 2008). The average three-year company growth projections were 11.8% for North America (13.4% in 2008), 8.7% for Europe (10.0% in 2008) and 16.7% for Asia-Pacific (23.1% in 2008)

  • One-year industry revenue growth projections averaged 3.5% for North America (9.0% in 2008), -1.4% for Europe (7.3% in 2008) and 10.7% for Asia-Pacific (11.2% in 2008). The average three-year industry growth projections were 7.9% for North America (9.8% in 2008), 4.9% for Europe (6.5% in 2008) and 11.7% for Asia-Pacific (12.9% in 2008).
  • 16 of the 35 companies surveyed failed to meet their revenue growth projections during 2008, while 33 CEOs reported their companies were at least moderately profitable during 2008, with only one reporting unprofitability.


Shortened Supply Chains and Reverse Globalization

While the scale of the shift is small at this point, many CEOs surveyed expect that the trend toward reverse globalization and the shortening of supply chains will continue during the next several years.


  • CEOs surveyed in North America and Europe reported that, on average, nearly one-quarter of their customers had taken steps during the past year to shorten supply chains; the reported average was 9% in Asia-Pacific.

  • 20 CEOs reported that some of their major customers had shifted manufacturing activities from Asia to North or Central America or Eastern Europe.


Commitment to Sustainability and Human Capital

Despite the global economic downturn, 3PLs have identified environmental sustainability and human capital issues among those worthy of continuing ongoing support.


  • 25 of the companies involved in this year's survey reported launching new sustainability initiatives during the past 12 months, 22 have expanded existing sustainability programs and none reported scaling back "green" programs.

  • While 28 of 35 CEOs reported layoffs during the past year, 27 CEOs noted a reduction in recruiting efforts. There were 26 leaders who reported reduced executive trips to industry conferences. Only six noted a cut in employee training programs.

Business Relationships, M&A and Price Compression


  • CEOs in all three regions noted more adversarial relationships with approximately one-quarter of their customers due to recession pressures; however, at the same time more collaborative relationships were reported with more than one-third of North American customers, 20% of European customers and 13% of customers in the Asia-Pacific region.

  • Only nine companies were involved in significant merger or acquisition activity during 2008; but many believe that industry consolidation will continue. On average, executives in all three regions expect less than 9% of their revenue growth to come from acquisitions during the next three years.

  • 33 CEOs indicated that the economic downturn has intensified price compression in the industry.


For access to the full Executive Summary, click here.


Survey Design

Thirty-five CEOs completed surveys via an Internet-based questionnaire during the summer of 2009. Companies participating in the annual survey included: Cardinal Logistics, DSC Logistics, DHL Exel Supply Chain, Genco Supply Chain Solutions, Kuehne+Nagel Logistics, Landstar, Menlo Logistics, Panalpina, NYK Logistics, Penske Logistics, Pittsburgh Logistics, Ryder Integrated Logistics, Schenker, Schneider Logistics, Transplace, UPS Supply Chain Solutions, UTi Integrated Logistics, Caterpillar Logistics Services, CEVA Logistics and Wincanton.

For more information about Northeastern University click here http://www.cba.neu.edu/.

Source of this article: 16th Annual 3PL CEO Survey Released - Sponsored by Penske Logistics

Monday, September 14, 2009

Economy - What Strategy Should You Employ Today for Your Transportation Costs Tomorrow?

Mixed Signals on Economic Recovery??? Here's What We Found From a Couple of Trusted Sources:

Logistics Management

"In the last two weeks there have been an abundance of signs signifying positive economic activity. Some examples include:

· the Institute of Supply Management’s manufacturing index—the PMI—which covers the overall health of the manufacturing sector, rose four percentage points to 52.9 percent, marking the first time the index has climbed above 50 since the recession began—the 50 percent mark is typically viewed as the dividing line between “growth” and “contraction”;

· the Department of Commerce’s recent report that durable goods orders were up by its largest amount in two years, with a 4.9 percent bump, that has seen the increase up in three of the last four months;

· the Cass Information Systems Freight Index, which measures freight expenditures and payables, was up 1.3 percent in August compared to July."

While the overall economic picture is blurred, one industry analyst told LM there are some things to be optimistic about “In general, things are positive, especially the ISM index which suggests manufacturing is picking back up,” said Eric Starks, president of freight transportation forecasting firm FTR Associates. “We have been looking for stabilization in the economy and have seen things stabilize in the last three months as the economy has hit the bottom.”


Supply Chain Management Review

Trucking, which accounts for 78 percent of transport by revenue and half of all business logistics cost, was particularly hard hit, rising just 1.3 percent compared with 4.4 percent for the other modes (rail, barge, air cargo, oil pipelines and forwarders).

For shippers, this has resulted in bargain transport rates, especially in trucking and ocean transport, according to Rosalyn Wilson, the long-time author of the SoL report.

“Abundant capacity, particularly in trucking and ocean shipping, pushed rates down (last year), often below costs,” Wilson said. “Many companies have not survived the prolonged downturn. Many more will not survive the upcoming months as we continue to ride out the recession.”

As a result of the shakeout—more than 3,000 motor carriers ceased operations last year, taking out approximately 7 percent of truck capacity—supply chains are being redefined and processes changing, Wilson said.

“The industry will emerge more efficient and resilient,” Wilson predicted.

“It is becoming more apparent that we will see an end to the decline by the end of this year but not a quick recovery,” she said.

One indicator of that is the sharp, record rise in inventory-to-sales ratios, which Wilson called an “unwelcome sign” of a slow recovery. Even with historic inventory reduction rates, the inventory-to-sales ratio skyrocketed from a low last June of 1.25 to 1.46 by December. That is the swiftest rise in that benchmark since 1982. And Wilson said it occurred across the entire distribution chain—wholesale, manufacturing, and retail.

That took a toll on transport pricing. After 6 percent rise in 2007, total transport costs were up less than 2 percent last year. Trucking, the largest component of transport, rose just 1.3 percent. Lower fuel surcharges and tougher bargaining by shippers were cited, especially during the soft 2008 fourth quarter, when truck tonnage fell 6 percent. That decline has carried over into this year, Wilson said.



So What Strategy Should the Smart Transportation Manager Take?

Wilson is advising shippers and logisticians to be proactive in preparing for the recovery. She is recommending shippers lock in capacity now with guarantees before space becomes scarce.

“Re-evaluate your relationships with your supply chain partners and strengthen them,” Wilson advised. “Carriers have already begun expressing the sentiment that when capacity gets tight—and it will—they will remember customers who worked with them through the recession.”

Tuesday, September 8, 2009

Will Your Trucking Company Be There For You....

August 2009 - The Month Our Economy Stopped Declining and Started Growing

Our economy has already been gaining momentum, as proven by the index below, and last weeks article The Recession is Over.... Here's more proof on the economy, then we'll get back to what it is going to mean for transportation.

Nationwide, the ISM Manufacturing Index went above 50 for the first time since June 2007, when it was also at 52.9. An index score of 50 indicates that manufacturing is neither declining or advancing.

Here is the trend for the past 12 months:





















The below report is back from May, 2009. This explains the ISM Manufacturing Index and the excitement that was actually being generated back in May.










So Why The Concern About Transportation?? Shouldn't this be GOOD NEWS for all companies???

In a recent interview with Schilli Transportation President and CEO, Thomas R. Schilli, it was explained what has been going on in the trucking industry and what WILL be going on in the industry.

According to Mr. Schilli, who has over 40 years of experience running Schilli Transportation Services, the past 18 months have seen record number of trucking companies filing for bankruptcy and many totally closing down. "Many of those trucks have been exported to Europe and the former Soviet Union and are not just sitting around waiting for that call to come back into action. In other words, our supply of trucks has diminished due to the past economic conditions."

Mr. Schilli went on to explain that while new trucks can be built, all business are facing a problem with business loans. "The only two types of companies that are going to be able to provide capital to purchase more equipment are the publicly held companies (they can acquire equity financing through stocks and other equity means) and companies that have stockpiled cash. The latter is going to be a little short in supply, again due to the economy."

The majority of trucking companies are going to be doing everything that they can to hold on to the assets that they have. The problem with this, of course, is trucks don't last forever. There are going to be more truck break downs and more possible service issues related to truck break downs.

Until our banking industry will take favor upon transportation companies once again, this is going to mean that the number of trucks is not going to be able to keep up with the demand that our economy is starting to produce.






What Does This Mean to Manufacturers and All Other Companies?

Be Prepared for upcoming price increases and difficulty of finding available trucks.

So what can the wise transporation manager do NOW to protect themselves??? Mr. Schilli recommends to all shippers that they may want to think twice about taking the lowest bidder and developing systems around the lowest-priced provider today. "That type of thought is likely to become extremely problematic in the very near future. It would be best for shippers to make deals with transportation companies now to lock in lower rates today and hedge their positions for the future." Mr. Schilli goes on, "Companies will end up negotiating higher rates than the last few months, but they will not only save money in the future, but they will also maintain their capacity".


Smart Transportation Managers should be thinking of their strategies now and making sure to take care of the carriers who they have been dealing with and would like to deal with, before those carriers start going where the trail of higher rates leads them in the months ahead!!

Monday, August 31, 2009

The Recession is Over! At least the Latest Survey of Professional Forecasters Thinks So...

"The Survey of Professional Forecasters is the oldest quarterly survey of macroeconomic forecasts in the United States. The survey began in 1968 and was conducted by the American Statistical Association and the National Bureau of Economic Research. The Federal Reserve Bank of Philadelphia took over the survey in 1990.

The Survey of Professional Forecasters' web page offers the actual releases, documentation, mean and median forecasts of all the respondents as well as the individual responses from each economist. The individual responses are kept confidential by using identification numbers." - quoted from the Federal Bank of Philadelphia


"From the forecasters' perception, it looks like the recession may be over" - Tom Starks, Manager of the Philadelphia Federal Reserve Research Department


* * * * * * * * * * * *

According to the survey results, here's what we can expect in the upcoming months:

1) Forecasters See Improved Prospects for Growth, But A More Sluggish Labor Market

They expect a jump in GDP% to go from .4% from last year 3rd quarter to 2.4% in 2009; Unemployment is expected to hold steady, and total payrolls will be down slightly representing lower pay per person due to salary cutbacks, etc.

2. Little Change in the Outlook for Inflation Beyond 2009

The forecasters are raised their estimates for headline and core inflation in 2009. Comparing 4th quarters, headline and core CPI inflation will average 0.7 percent and 1.7 percent, respectively, in 2009. These are up from the previous estimates of 0.4 percent and 1.3 percent in the last survey. Similarly, headline and core inflation in the price index for personal consumption expenditures (PCE) will average 0.9 percent and 1.4 percent, respectively, in 2009, marking upward revisions from 0.6 percent and 1.3 percent previously.

3. Lower Risk of a Downturn in the Current Quarter

According to Tom Stark, Manager of the Philadelphia Federal Reserve Research Department, the forecasters reduced their estimates of a downturn from 1 out of 2 times to 1 out of 4 times.

Other Key Notes from Survey

Job Losses are expected to "lag" behind the economic recovery. They are expected to fall from the current rate of 415,000 losses per month to 25,000 per month in 2010.


To view the entire report of the Survey of Professional Forecasters and to listen to Kathy Dibling and Tom Stark of the Philadelphia Federal Reserve explain the results of the "Survey of Professional Forecasters" - 3rd Quarter 2009.

Click Here for the brief interview and to see the entire report

Monday, August 24, 2009

Fed Officials Warned Against "Timidity"

Article found as reported by the Wall Street Journal's Blog:


By Maya Jackson-randall
JACKSON HOLE, Wyo. — While U.S. Federal Reserve officials will need to be careful not to raise interest rates too soon, the central bank can’t be timid once it actually moves into a tightening phase, according to University of California, Santa Cruz Professor Carl Walsh.

In a paper prepared for a two-day Fed conference here, Mr. Walsh argued that the U.S. must avoid the mistake of the Bank of Japan in lifting rates too soon. The way to do that is to keep rates low past the point at which the economy’s equilibrium, or natural, real rate of interest has risen above zero, he said.

However, once the Fed does start raising the federal-funds rate out of its current record-low range near zero, “it should be increased quickly,” Mr. Walsh argued. “There is no support for raising rates at a gradual pace once the zero rate policy is ended.”

Mr. Walsh is one of several key speakers at the Kansas City Fed’s two-day symposium in Wyoming. Central bankers and academics have gathered here from around the world to discuss monetary and fiscal policy this weekend. A common theme at Friday’s session was that while there are encouraging signs in the economy, the crisis is not over.

Mr. Walsh wrote about a variety of hot-button economic issues in his paper, intended for presentation to a group of academics and international finance officials, and at points criticized the Fed. For instance, Mr. Walsh noted that the Fed has promised to keep rates low for an extended period while also promising to keep inflation stable. That policy seems to be the wrong approach when rates are in a range near zero, Mr. Walsh argued.

He also criticized the Fed’s move to purchase long-term U.S. debt, a unique program the Fed announced earlier this year as a way to help bring down borrowing costs amid signs the economy was deteriorating further.

“If purchases of long-term debt are effective in stimulating aggregate demand, there remains the question of why they should be carried out by the central bank,” he said. “These operations shorten the maturity structure of the Treasury’s outstanding debt.”

He added that the Treasury Department itself can alter the composition of outstanding publicly held debt. “There is no reason this should be done by the central bank,” he said.

Additionally, Mr. Walsh voiced concerns about the Fed’s plans for withdrawing from its costly programs to stem the financial crisis. He noted that one of the ways the Fed plans to tighten is by raising the interest rate paid on bank reserves. In principle, the Fed could drop using a target federal-funds rate as a policy instrument and replace it with a policy that focuses on the rate paid on reserves — something that may be less politically supportable, according to Mr. Walsh. If the Fed plans to make such a change, it will need to communicate it clearly, he added.

“Markets, and the public, appear to understand monetary policy decisions under a regime of targeting the funds rate,” Mr. Walsh wrote. “While a channel system may allow better control of the funds rate, there are potential pitfalls in using the rate paid on reserves as the main instrument and the focus of communications.”

Mr. Walsh also touched on the issue of whether the Fed should be in the business of popping asset-price bubbles such as the recent real-estate bubble and the technology stock boom years prior. While these distortions generate economic inefficiencies, it doesn’t mean that its best to use monetary policy to address them, said Mr. Walsh.

“Ideally, a time varying fiscal tax/subsidy scheme would be a more appropriate policy,” he said. Still, if regulations or subsidies are not enough to mitigate troubles, “central banks cannot ignore financial frictions and financial stability,” he said.

There is little doubt that the U.S. made a mistake by allowing the bubble in housing prices to continue, Mr. Walsh said.

“Monetary policy may also be a blunt instrument for dealing with asset price bubbles, but allowing bubbles to continue and then to burst imposes a tremendous cost on the economy,” he said. “Undoubtedly, future policy makers will be more willing to risk undertaking policies to deflate incipient bubbles, through the difficulty of identifying them with certainty will always remain.”

For a link to the Wall Street Journal's Blog, click here.

Monday, August 10, 2009

Shaquille O'Neal Helps to Debut the World's First E-Fuel MicroFueler


Written by Joanna Schroeder

Published on July 30th, 2009


Who needs a gas station to fill your tank with ethanol? Not you. GreenHouse has just announced the E-Fuel MicroFueler, a portable in-home micro-refinery system that turns organic waste into ethanol. The first installation of the E-Fuel MicroFueler was in the home of none other than basketball great Shaquille O’Neal, who lives in Pacific Palisades a subdivision in LA.

The E-Fuel MicroFueler coverts the organic waste into ethanol for about two-thirds the cost of gasoline. The final product is E100 (100 percent ethanol) which burns cleaner emitting significantly less emissions into the air. The only vehicles designed to run on E100 are the IndyCars which in 2007 became the first motorsports league to sanction a renewable fuel.

» See also: The Petri Dish Overfloweth with Algae Advancements
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So how does it work? The size of an appliance, it produces the ethanol by converting carbohydrate waste products into sugar. You can use spent beer yeast, algae and non-food based cellulose feedstocks. Once the conversion to ethanol is complete, the system pumps it directly into your car while your car is sitting in the driveway. Not sure where to get your raw material to produce ethanol? No worries. The GreenHouse team delivers raw material and maintains the home-based unit as part of its service package. Whew. And I thought I was going to have to start brewing beer at home to get the bi-products I needed to make ethanol.

For people afraid that it is too “toxic” for your home, GreenHouse claims it is completely safe to produce and pump at home and the only bi-product in distilled water.

It should be noted that O’Neal is an investor in GreenHouse. “Once I saw the GreenHouse business plan, I was committed to GreenHouse and the E-Fuel solution,” he said.

Now, let’s take a moment to reflect on producing E100. In the states, it is not a legal fuel nor are there any cars that can run on E100 (unless you converted your car yourself). The closest you get is a flex fuel vehicle which can run on E85, straight gasoline or any blend in between. So I wonder what vehicle you are to put the fuel in….

Greenhouse’s mission is to bring green technology to peoples’ home and to businesses and is the exclusive distributor of the MicroFueler in Southern California and Arizona.The company is gearing up for commercial distribution by the end of 2009 and is already taking orders.

“With the launch of the first operational MicroFueler in Los Angeles, GreenHouse is making consumer-use of E-Fuel 100 an option for people who want to gain control over vehicle fuel costs and take active steps towards improving the environment,” said GreenHouse CEO, Chris Ursitti.

GreenHoue has partnered with notable companies including Karl Strauss Brewing Company, Gordon Biersch Brewing Company, and Sunny Delight to convert 29,000 tons of liquid waste into fuel using the MicroFueler process.

In a nutshell, this process turns beer into fuel. So now what am I going to drink when I watch the Laker’s game?


Check out the video of the World's First Home User



Monday, August 3, 2009

Land Trade with Mexico and Canada Down 35%

Land transportation trade between the U.S., Canada and Mexico in May was down 35.4 percent from May 2008, the largest decline from the same month of the previous year on record, according to the Bureau of Transportation Statistics of the U.S. Department of Transportation.

Surface transportation trade landed at $47.9 billion, making May the fifth consecutive month with a year-to-year decline greater than 27 percent. May imports from Canada and Mexico to the U.S. dropped 38.1 percent from May 2008, while exports from the U.S. slipped 32 percent.

The value of U.S. surface transportation trade with Canada and Mexico decreased 3.7 percent in May 2009 from April 2009.

Surface transportation consists largely of freight movements by truck, rail and pipeline. About 88 percent of U.S. trade by value with Canada and Mexico moves on land.

The value of U.S. surface transportation trade with Canada and Mexico in May was down 9.9 percent compared to May 2004, a period of five years, and up 16.1 percent compared to May 1999, a period of 10 years. Imports in May were up 12 percent compared to May 1999, while exports were up 21.2 percent.

U.S.-Canada surface transportation trade totaled $29.2 billion in May, down 40.3 percent compared to May 2008. The value of imports carried by truck was 35.7 percent lower in May 2009 compared to May 2008, while the value of exports carried by truck was 33.4 percent lower during this period.

U.S.-Mexico surface transportation trade totaled $18.6 billion in May, down 26 percent compared to May 2008. The value of imports carried by truck was 23.4 percent lower in May 2009 than May 2008 while the value of exports carried by truck was 21.1 percent lower.

Monday, July 27, 2009

Manufacturers Expect Business to Improve By the End of This Year

Manufacturers and distributors are battling through the toughest recession in decades, but a new survey finds some are predicting improvement.

The study, commissioned by RSM McGladrey, found that while 40 percent of the respondents said business was declining, 46 percent said they were expecting a rebound by the end of the year — and 44 percent said they expect it next year.

“In some cases, we have clients reporting things are better,” said Tom Murphy, RSM McGladrey’s executive vice president for manufacturing and wholesale distribution.

The Minneapolis-based consulting firm, which has offices in Phoenix, polls manufacturing and distribution leaders every year. More than 920 executives responded this year.

Manufacturing has taken heavy losses during the recession, and the Valley is no exception. Several semiconductor manufacturers, including Phoenix-based ON Semiconductor Inc., have announced plant closings and layoffs.

Still, the survey finds the mood in the sector is much the same as that displayed by companies around the Valley: that the bottom is near and things likely will start to improve, said Marc Osborn, a lobbyist with the Arizona Manufacturers Council.

“I get the sense that everyone in the AMC is tightening their belt, but it’s not in a crisis kind of mode,” he said.

While some industries have struggled, others have fared well. The state’s unemployment rate in June hit 8.7 percent, and the Valley is doing slightly better at 8.0 percent, according to the Arizona Department of Commerce.

The state still is losing manufacturing jobs, with close to 12,000 cut from June 2008 to June 2009. The state’s aerospace industry bucked that trend, adding about 800 jobs in the past year, according to the department’s most recent statistics.

In the Valley, manufacturers shed about 8,300 jobs during the period, but aerospace again was a bright spot, picking up 400 jobs.

Murphy said some sectors, such as medical devices and the food and beverage industry, have fared well nationally.

Job growth still may be months off. High unemployment figures typically linger following recessions, according to analysis of rates going back through the past several cycles. Manufacturers likely aren’t going to start hiring again until they are confident their businesses are growing, which likely will be in 2010 and beyond, Murphy said.

By the time they begin hiring, they believe they will have trouble finding employees who have skills they require.

“That’s the challenge we have — that soon we won’t have the workers capable of filling those spots,” Murphy said.

Arizona is in the same position, with high-tech manufacturers constantly scouring the horizon for potential employees, Osborn said.

“I don’t know a high-tech company that isn’t concerned about work force development and what’s coming in the pipeline,” he said.

The biggest question will be whether the state is poised to take advantage of a recovering economy, Osborn said.

“I think the interesting thing is whether we’ll be positioned to take off once the economy starts, or whether we’ll be one of the ones that lags behind,” he said.

Get Connected

RSM McGladrey: www.rsmmcgladrey.com
Arizona Manufacturers Council: www.azchamber.com/amc

Monday, July 20, 2009

Wabash Valley Named as Smartway Partner

Wabash Valley Transportation, the flatbed affiliate company of Schilli Transportation Services, Inc., has been honored as a "Smartway Partner".

The Smartway Transport Program is an innovative collaboration between EPA and the freight sector designed to improve energy efficiency, reduce greenhouse gas and air pollutant emissions, and improve energy security. Companies that participate in SmartWay Transport programs save money, reduce fuel consumption and are recognized for their social responsibility and leadership.

For more information regarding the Smartway Partnership, visit

http://www.epa.gov/smartway/transport/index.htm

The video below, also explains what the program is all about.

Monday, July 13, 2009

Survey Results Show 3PLs Optimistic For Remainder Of 2009

In a survey conducted at the recent "Eyefortransport 7th 3PL Summit", more than 60 percent respondents said they believed that, from now to the end of 2009, the overall health of their company would be "better or much better". Just fewer than 30 percent said they expected their business to be the "same."

The survey, conducted by Transite Technology, was a random sample of the more than 300 attendees of the conference representing 3PLs, shippers, carriers, and vendors.

Some additional comments:
32 percent of respondents said they believed the health of today's U.S. economy was "better" than at the end of last year. 29 percent said that they felt it was the "same."

42 percent of respondents said that their overall business was currently performing "better or much better" than at the end of last year with 45 percent indicating that their current performance was the "same."
Of the 3PLs surveyed, 70 percent said that attracting new customers has been their top challenge over the last 12 months, followed by retaining existing customers and managing overall profitability.

Source of this article is from TIA Logistics Weekly

Tuesday, June 30, 2009

Are Lower Fuel Prices Really Helping Trucking Companies?

This is the question that everyone wants to know. The video below interviews company drivers, independant drivers, and owner operators to let you get a feel of what is really going on in the world of the trucking industry.

Monday, June 22, 2009

How Does Rising Diesel Costs Affect Trucking and Manufacturing??

This week's article talks about the rising price of Diesel and how it is affecting and how it is anticipated to affect trucking and manufacturing.

This article is from the Wall Street Journal.


By ANA CAMPOY
Diesel prices are rising again after having fallen below those of gasoline in recent weeks, piling more financial pressure on recession-stricken manufacturers and truckers.

Prices for crude oil and the gamut of petroleum products have been rising, in part because traders expect an economic recovery to boost demand and in part because fuels look like a good hedge against widely expected monetary inflation and a weak dollar.

Oil prices rose 0.8% Wednesday to $71.03 a barrel as new federal data showed demand for gasoline rising. Gasoline prices have risen for seven weeks in a row, further squeezing cash-strapped consumers.

Long-haul truckers and others who use diesel are benefiting from a slight price advantage over gasoline, largely because diesel demand is at a nine-year low. U.S. consumption of diesel and similar fuels plunged 17% last week from the same period last year, weekly government data show. Supplies are at a historic high.

Retail diesel prices have climbed more than 14% over the past month to a national average of $2.61 a gallon, according to the auto club AAA. That still trails gasoline prices, which jumped 16% in the same period to an average $2.68 for a gallon of regular unleaded.

In many parts of the world, diesel is used to fuel manufacturing plants and the trucks that transport their products. Its prices are mostly tied to the fate of the global economy, currently in a severe downturn. In the U.S., the number of tons hauled by trucking companies dropped 13% in April from the same month last year to its lowest level since November 2001, according to an index compiled by the American Trucking Associations, an industry trade group.

If the economy strengthens, fuel prices will likely continue to climb in coming months, analysts say, potentially stalling out a budding recovery. That is what Freeport, Ohio, truck driver Lewie Pugh fears. Mr. Pugh said activity at many of his usual delivery spots -- chemical plants and paper and steel mills -- is at a virtual standstill. His business is half what it was last year.

"I don't see anything picking up, and fuel prices are just going to make it worse," said Mr. Pugh as he drove a load of water-treatment chemicals to an oil refinery near Philadelphia.

One consolation for truckers is that diesel prices remain considerably lower than last year. Diesel hit an all-time high of $4.85 a gallon last July as refiners struggled to keep up with brisk global demand for the fuel. Gasoline prices topped out at $4.11 a gallon the same month.

In China, diesel consumption grew slightly in April compared with a double-digit drop at the end of 2008, said Paul Ting, whose research firm Paul Ting Energy Vision LLC specializes in tracking Chinese energy consumption.

But even if rapid demand growth in developing countries resumes, analysts say it is unlikely diesel prices will shoot up to last year's levels because refiners have added capacity to produce larger amounts of the fuel since then.

—Russell Gold contributed to this article.
Write to Ana Campoy at ana.campoy@dowjones.com

For a link to this Wall Street Journal Article, go to http://online.wsj.com/article/SB124527903046125013.html?mod=googlenews_wsj

Monday, June 15, 2009

Trucking Manufacturer Shows Signs of Trucking Industry

Volvo Sales Are Indicative of What's Going on in the Economy

But the slide in truck deliveries eased up in May.

Volvo seems to be stuck in reverse. May marked the ninth consecutive month of sales declines for the Swedish truck maker as demand continued to crumble. Volvo said it delivered 9,446 trucks in the month, down 57% from 22,128 in May last year, but the decline at least marked an easing up from the 62% drop for deliveries in April.

The truck maker's deliveries have been continuously dropping since September last year, when they dropped by a far narrower 8%, year-on-year.


Volvo, which has been trying to wring out cost-savings by cutting around 21,000 jobs since the start of last year, also said shipments fell 64% year-on-year in Europe, its biggest market, and by 62% in North America.

"It is hard to spot a trend with just these figures," said Alexis Albert, an analyst with Natixis Securities in Paris. "The recovery in sales will be related to the recovery of the economy and visibility is very, very low."

Hundreds of trucking companies have been going bankrupt, said Albert, and the remaining firms are buying fleets of slightly-used trucks at cheap prices from their insolvent competitors.

In the U.S. alone, bankruptcies among truck makers more than doubled in the second half of last year, soaring 118%, according to Donald Broughton, an auto analyst with Avondale Partners. Broughton estimated that bankruptcies took about 88,000 trucks off the road in the first half of 2008.

To deal with the slump, Volvo said in April that it was cutting 1,543 jobs, and added that it would continue to implement cost-cutting measures."

What Does This Mean to You (and your company)?

What you (and your company) can possibly deduce from this is that the supply of trucks has dropped. When the economy comes back, there could be an increase in difficulty of finding truck capacity - be prepared for rates to start coming up as suppliers need to do what it takes to get their product to their customers.

Monday, June 8, 2009

China's Manufacturing Jobs Surged As American Jobs Disappeared

While the United States was losing 1.4 million manufacturing jobs from 2002 to 2006, China was substantially increasing the number of workers in its manufacturing sector, according to a new report on Chinese manufacturing employment and compensation costs from the Bureau of Labor Statistics. Manufacturing employment in China during those five years increased by 10 percent to 112 million, about 100 million more than the number of manufacturing workers in the United States.

Manufacturing employment in China bottomed out in 2002 at 100.7 million, down from a high of 126 million in 1996. "In the late 1990s, privatization of China's manufacturing establishments and intense global competition brought increases in labor productivity accompanied by a drop in manufacturing employment," says the new BLS study. But things started to turn around in 2002, with foreign demand for Chinese-manufactured goods growing by 25 percent per year. "By the end of 2006, China's manufacturing employment had increased once again to 112.63 million, nearly eight times the level of manufacturing employment in the United States (14.16 million)."

Average compensation for Chinese manufacturing workers increased by more than 40 percent from 2002 to 2006 to $0.81 per hour, or $162 per month (and $1,939 per year). Total compensation cost for a manufacturing worker in China is only 2.7 percent of the average hourly compensation cost of a manufacturing employee in the United States. "Because hourly compensation costs in China have grown at an annual rate three times that of the United States during the five years covered in this series (9 percent and 3 percent, respectively), this percentage has edged higher, starting from 2.1 percent of U.S. compensation costs in 2002 and increasing slightly each year," notes the study.

But Chinese manufacturing employees located in rural areas make far less than the average. Total compensation for a rural manufacturing employee is only 53 cents per hour. In urban areas, the average is $1.47 per hour. Total compensation costs include wages, employer payments for social benefits such as workers' compensation, unemployment insurance, health insurance and pension funds. It includes sick leave, income guarantee insurance, life and accident insurance, illness compensation and family allowances.

Not only are there a lot more manufacturing employees in China, but the amount of hours they are working also increased substantially during the 2002 to 2006 period. "The published data on weekly hours worked in urban China showed a sharp increase from the 2003 to 2004 period to the 2005 to 2006 period, not only in manufacturing, which exhibited a sudden 9 percent increase but in most other economic sectors as well," says the study. This big increase in hours worked "is unusual from an international perspective," says the BLS report. The report, "China's Manufacturing Employment and Compensations Costs: 2002 - 2006," is located at http://www.bls.gov/opub/mlr/2009/04/art3full.pdf

Monday, June 1, 2009

How Will the GM Bankruptcy Affect YOUR business? (or will it?)

There are numerous articles floating around the news today about the impending GM Bankruptcy. Here are some of the headlines that I found

“GM bankruptcy: How will it impact the US?” – Christian Science Monitor

"GM bandruptcy could drive up interest rates for everyone" - autonews.com

“Economic optimism may trump GM Bankruptcy” - Reuters

“What General Motors’ Bankruptcy Means for You” – Consumerism Commentary.com

“GM Begins Bankruptcy Process With Filing for Affiliate” – Bloomberg


There is a lot of anticipation about the GM crisis. Let’s face it – GM has been a big part of America since “Hot Apple Pie and ….. oh, yes, Chevrolet!!” We grew up watching the Detroit car maker get bigger and bigger, then complacent and even more complacent. We also watched as competition began pouring in.


I’m not an economist, nor do I pretend to be one. There are a lot of manufacturers out there who are directly impacted by the top 3 automakers. I recently went on a trip to Northern Indiana, where it appeared that about 1 out of every 10 plants that I saw were closed – most plants were on shortened work days – almost all were at reduced capacity. Most of these companies that were struggling were automotive based.

So what WILL this mean to your manufacturing business??? That’s the magical question that we are all waiting to see. I’ll leave you be the judge of this. Below are the links to the articles above – maybe you can make more sense out of the varied opinions of the “experts”! When you get it figured out, please let me know.


“GM bankruptcy: How will it impact the US?” – Christian Science Monitor

“Economic optimism may trump GM Bankruptcy” - Reuters

"GM bankruptcy could drive up interest rates for everyone - autonews.com

“What General Motors’ Bankruptcy Means for You” – Consumerism Commentary.com

“GM Begins Bankruptcy Process With Filing for Affiliate” – Bloomberg


- Article written by Brad Stoller, Account Executive at Schilli Transportation Services

Tuesday, May 26, 2009

Pallet Buyers Need to be Aware of "Voodoo" Environmental Claims

VINELAND, N.J., May 20 (SEND2PRESS NEWSWIRE) -- The pallet industry has begun to promote green and with that, environmental claims are sprouting up everywhere, cautions PALNET. A 2008 study conducted by Price Waterhouse found that consumers only believe 16 percent of environmental claims. There's a good reason why. Of 1,753 environmental claims researched last year, all but one were either false or misleading, according to the State of Green Business report.

Similar practices seem to be taking place in the pallet industry. Last month, a supplier of plastic pallets made an environmental claim based on the 100 percent recyclability of the plastic used in their pallets.

According to Michael Smith, C.O.O. of PALNET, a national supplier of pallets, "That claim didn't take into account that plastic begins its life in an oil well, gets transported in an oil tanker like the Exxon Valdez; and, according to the EPA, plastic production plants have a heavy carbon footprint." Smith adds, "It's true that plastic can be recycled, but it rarely is. That's why so much of it is growing old in landfills all across America.

"What's more, to make plastic pallets meet necessary fire retardant standards, a chemical called deca-bromine is used. The FDA recently issued a warning that this chemical can leach into the food supply it's carrying.

Other pallet companies have raised their green flag as well. One website features a carbon footprint calculator where you can input facts and figures to determine your carbon footprint -- including how many dump trucks of waste are saved when measured against one-way pallets.

"What's a one-way pallet?" asks Smith, a 30-year veteran of the pallet industry, "There's no such thing." A one-way pallet would have to be a pallet that gets delivered, used just once, never reclaimed, repaired or recycled and gets unloaded and tossed into a landfill. Wooden pallets almost never make one-way trips. They get delivered, picked up, inspected, repaired, reused, and when no longer viable, get ground up into garden mulch or stove pellets.

Smith concludes, "Companies that are striving to be environmental need to be able to rely on the claims their suppliers make to be true and accurate. If not, everyone suffers, the environment included."

For more information on PALNET and its environmentally-friendly pallets and services, visit www.PALNETUSA.com or call 1-877-PALNET-1.

All trademarks and service marks are the property of the respective parties.

Tuesday, May 19, 2009

As Trucking Goes, So Goes the Economy


As trucking goes, so goes the economy
Roads less active during downturn
By Samantha Bomkamp, Associated Press
Sunday, May 17, 2009

NEW YORK -- Looking for signs of economic recovery? Try counting the number of trucks on the road.

Trucks carry almost all the manufactured and retail goods in the country -- from refrigerators to lumber, detergents to toys. Many economists gauge how fast assembly lines are running, and how much consumers are buying, by the volume of goods hauled by trucks. But the most recent earnings reports show trucks are not carrying enough yet to indicate recovery is near.

Slow consumer spending and stalled manufacturing activity took its toll on truckers in the first three months of the year. Nearly all major trucking companies reported lower first-quarter revenue and falling profits as the recession continued and shipping demand slid. Many cut back their fleets because of soft demand. Werner Enterprises Inc., for example, said it trimmed an additional 4 percent of its fleet of over 8,000 trucks in the first quarter. Many companies said more cuts will come.

In the first quarter of 2009, about 480 trucking companies went under. That's less than 1 percent of the nation's total freight capacity, which still leaves too many trucks competing for fewer shipments, according to analyst Donald Broughton of investment bank Avondale Partners. More than 3,000 trucking companies went out of business last year -- taking seven of every 100 trucks off the road.

Broughton said that more trucking companies will inevitably fail if the economy remains weak. But the pace of closures needs to speed up, he said, to allow other trucking companies to get a bigger slice of shipments and to raise prices again.

Analysts think that the number of trucks on U.S. highways will continue to slide until supply is more aligned with demand. When the trucking business starts to pick up again, they say, other economic factors -- from the employment rate to the gross domestic product -- will eventually follow.

Tavio Headley, an economist with the American Trucking Associations, believes that trucking industry business will pick up as early as next quarter, and the broader economy will show some minor improvements beginning in the last three months of the year. That is slightly earlier than previous estimates by the ATA, but Headley emphasizes that the economy will probably stay weak for some time.

"We do expect the economy to continue to contract, but at a slower pace over the next few quarters," he said. "And the reason we're not optimistic? A huge reduction in business investment and the housing market continues to be a huge drag on the overall economy."
Some data may indicate the nation's economic tailspin is beginning to level off.
The Institute for Supply Management, a trade group of purchasing executives, said earlier this month that manufacturing activity contracted at a slower-than-expected pace in April, as new orders to factories rose.

Less encouraging, the government also said that the nation's gross domestic product contracted at an annual rate of 6.1 percent during the first three months of the year. But the GDP numbers also showed a rise in consumer spending and a decline in inventories, which suggests manufacturers and retailers may have to increase new orders soon.
But "soon" doesn't seem soon enough for the trucking industry, which is anxiously waiting for calls from manufacturers and retailers who need deliveries. The ATA's Headley said that although inventories are falling, sales are dropping at an even steeper rate.

Trucking companies usually see shipments increase in number and weight three months to a year before the broader economy picks up.

In the recession in 2001, freight shipments improved a full year before the broader economy.
But there is no sign of that yet in the current recession.

Monday, May 18, 2009

When's A Trucker Too Tired to Drive?

When's a trucker too tired to drive?
JIM FOTI, Star Tribune

How should a state trooper decide that a trucker is too tired to drive?

That's the question at the heart of a federal lawsuit filed by a national truckers association, which contends that the Minnesota State Patrol has illegally kept trucks off the road by using a lengthy "fatigued driving" checklist. On the list are such items as whether the driver seems dirty, disheveled, unshaven, irritable or overly agreeable, and whether his sleeping berth is "obviously unused" or has a video game system.

The lawsuit, filed Wednesday in Minneapolis by the Owner-Operator Independent Drivers Association Inc., on behalf of two out-of-state drivers, points out the tricky business of regulating drowsiness on the road.

"We consider this ... an outrageous abuse of police power and an intolerable violation of the civil and constitutional rights of professional truckers," said Jim Johnston, president of the association, the largest in the nation representing professional truckers. "We see no justification for this conduct either scientifically or in rational, legitimate law enforcement."

A State Patrol spokesman said the agency wouldn't comment on pending litigation. The defendants are the patrol's chief, the commander of its commercial vehicle division, and a handful of officers.

The suit says that the checklist was created by Capt. Ken Urquhart, the commercial vehicle commander, and that officers were "strongly urged" in an internal memo to use it when stopping truckers. However, the suit says, it "does not define fatigue, nor does it incorporate any medically or clinically tested and approved methods for measuring fatigue.

"The suit comes as fatigue's role in crashes is coming under scrutiny both regionally and nationally. The same day the suit was filed, the National Transportation Safety Board questioned the sleep habits of the two pilots of the Continental Connection flight that crashed in upstate New York in February and killed 50 people. The NTSB says the copilot apparently pulled an all-nighter before the flight, and both pilots can be heard yawning on the cockpit voice recorder.

Also Wednesday, the lawyer for the truck driver blamed for a fatal bus crash on Interstate 94 east of Eau Claire, Wis., in 2005 indicated that the driver will appeal federal convictions on five counts of falsifying his driving log. The NTSB ruled that Indiana driver Michael Kozlowski had fallen asleep at the wheel of his truck, causing the crash of the bus, which was returning to Chippewa Falls, Wis., after a band field trip.

In 2007, Kozlowski was found not guilty of other charges in the crash, which killed five people and injured 28.

'Difficult to define'

Fatigue may be gaining attention as a safety issue, but enforcement is more complicated than it is for seat belt use or drunken driving, two frequent subjects of special patrols and public education efforts.

"With blood alcohol, there's a concentration that you can measure, and there now is a consensus that at a certain level, people are undoubtedly impaired," said Dr. Elisa Braver, senior epidemiologist with the Insurance Institute for Highway Safety. "There isn't any argument about whether this individual or that individual is impaired.

"Fatigue is much more difficult to define," she said. "This is why the federal government has set limits on the work hours of drivers.

"The problems, Braver said, are that widely used handwritten log books are easy to falsify, and that drivers can become fatigued even if they are within the legal limits.

Hence the roadside examinations -- and Minnesota's unusual checklist.

The suit alleges that the patrol had failed to make the checklist public and used it to remove Stephen K. House of Springdale, Wash., and Gary B. Page, of Spencer, Wis., from behind the wheel in incidents in 2006 and 2008 at a weigh station on Interstate 94 near Moorhead, Minn.

The suit describes interactions that the two men had with members of the State Patrol. House was asked about his "purportedly red" eyes (he said he had allergies) and whether he was able to sleep in his berth, which he often shared with his wife and young son.

The two men said they had no prior knowledge of the checklist and say they each sustained in excess of $75,000 in damages.

'Loopy'-sounding, but ...

The Minnesota Trucking Association doesn't have a position on the checklist, said its president, John Hausladen, but as it gets more attention nationwide, his organization is receiving calls from concerned truckers.

"We are not getting complaints from Minnesota-based carriers being put out of service," he said. His group held a phone-in seminar titled "How Law Enforcement Recognizes Fatigue at the Roadside" in February, and a copy of the checklist can be found on its website.

"If you look at the checklist in isolation, some of the questions just look really loopy," but the overall process to assess fatigue has merit, he said.

Other states have taken an interest in Minnesota's approach. In Iowa, 12 officers have received training from members of the Minnesota patrol as part of a pilot program, said David Lorenzen, chief of Iowa's motor vehicle enforcement office.

The pilot will run until Aug. 1 and then be evaluated, said Lorenzen, who cited the recession as a factor fueling driver fatigue. "People are going to take second jobs and work longer hours, and the economy makes things tougher for everyone.

"Truck drivers are "kind of like the last cowboy," said Capt. Wayne Andrews, a former over-the-road driver who now works for the state police in Indiana, which has had several high-profile fatal crashes tied to fatigue. Indiana troopers used the Minnesota checklist for a time, then received complaints from the state trucking association and ultimately decided the list wasn't necessary.

Monday, May 11, 2009

Trucking Industry Group Wants Bigger, Heavier Rigs

Greater efficiency cited with higher weight limit, but opponents worry about safety

Sunday, May 10, 2009
by Jon Schmitz, Pittsburgh Post-Gazette

To the alarm of some safety advocates, the trucking industry is asking Congress to allow heavier tractor-trailers to ply the nation's highways. The industry contends that an increase of the federal maximum weight from the current 80,000 pounds to 97,000 pounds would promote efficiency and reduce congestion and pollution without compromising safety.

Several families of truck crash victims held a news conference in Washington, D.C., last week to decry the proposal. "If the big truck companies have their way, more families will have to suffer what ours did and always will. There will be more truck crash-related deaths, more debilitating injuries and more roadway damage and destruction," said Frank and Marchelle Wood, of Falls Church, Va., in a statement. Their daughter, a college student, died in a 2002 crash with a truck.
"They want bigger, heavier, longer and more dangerous trucks," Jackie Gillan, of Silver Spring, Md., a longtime highway safety advocate, said in an interview. "They are asking the American public to pay for this with their lives and their wallets."

The higher limits are supported by the 37,000-member American Trucking Associations, the trade association of the trucking industry. But not all truckers are on board -- the Teamsters union and the Owner-Operator Independent Drivers Association are opposed to the increase.
"Large trucks are more dangerous to drive and damage highways and bridges; the safety, highway design and operating issues involved in allowing bigger trucks are not worth the negligible gains in productivity they might realize," said LaMont Byrd, Teamsters safety and health department director, at a news conference last month. He was speaking in support of a bill introduced by U.S. Rep. James McGovern, D-Mass., to freeze weight and size limits and extend them beyond the 40,000-mile interstate highway system to 161,000 miles of U.S. highways.

That bill is co-sponsored by U.S. Reps. Mike Doyle, D-Forest Hills, and John Murtha, D-Johnstown. A different measure introduced by Rep. Michael Michaud, D-Maine, would allow states to increase the weight limit to 97,000 pounds and impose higher fees to compensate for bridge damage from the heavier trucks.

The issue may come to a head during debate this summer on a new multiyear highway funding authorization bill. The current legislation -- the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users -- expires Sept. 30. Clayton Boyce, spokesman for the American Trucking Associations, said the higher weight limit has been adopted in Canada and Europe and "it has proven to be safe there."

The principal benefits of heavier trucks are more efficient shipping of freight, which translates to lower consumer costs, and the need for fewer trucks on the highways, which reduces congestion and pollution, he said. The proposal would require heavier trucks to have an additional axle, giving them extra braking power and enabling them to stop in the same distance as tractor-trailers carrying the current maximum, he said. "There's no degradation of safety, so you have to look to the benefits of it," Mr. Boyce said.

The Truck Safety Coalition, a leading foe of higher weight limits, disputes the industry's claim that heavier trucks would mean fewer of them on the roads. "Even after several increases to the sizes and weights of large trucks, the number of trucks on U.S. highways has consistently grown over the past few decades," the coalition said in a statement. The mileage logged by large trucks doubled from 1982 to 2002 and continues to grow, it said. "Every time Congress has increased truck weights, there has been an explosion in trucks. That is a completely bogus argument," said Ms. Gillan, vice president of Advocates for Highway and Auto Safety.

Some 4,808 people were killed in crashes involving large trucks in 2007 -- "the equivalent of 52 major airline crashes ... one crash every week resulting in 95 deaths," the coalition said. That represents a decrease of 590 deaths annually compared with a decade ago. Pennsylvania ranked 28th among states in truck crash deaths per 100,000 people in 2007, the most recent year for which statistics were available. It had 194 deaths that year, down from 224 in 2003.
Mr. Boyce said the leading cause of accidents attributable to trucks is speeding and reckless driving, not vehicle weight. He said his organization has supported -- to no avail so far -- mandatory use of governor devices that limit truck speeds to 65 mph and a requirement that companies with poor safety records install data recorders, similar to those deployed on airliners, in their trucks.

Mr. Boyce said some of the groups opposing higher weight limits were fronting for the railroad industry. "Railroads want government action to make trucks less competitive," he said. "Safety has been our most important issue. We are working to improve safety." "We've never gotten a single dollar from the railroad industry," said Ms. Gillan, who said 50 relatives of crash victims paid their way to Washington to attend the news conference and meet with lawmakers.

Jon Schmitz can be reached at jschmitz@post-gazette.com or 412-263-1868.