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July 23, 2010
Diesel Dips 0.4¢ to $2.899 a Gallon as Decline Slows Gas Takes 0.4¢ Uptick to $2.722 Transport Topics 7/19/10 Diesel fell for the fourth straight week and ninth in the past 10, dipping 0.4 cent to $2.899 a gallon, the smallest of its recent declines, the Department of Energy said Monday. The
price is the lowest since it registered $2.861 on March 1, but trucking's main fuel is now 40.3 cents over the same week last
year, according to DOE records. It was gasoline's third increase in the past 10 weeks and left the price 25.9 cents higher
than a year ago, DOE said following its weekly survey of filling stations. The declines came despite oil reaching a July high last Tuesday of over $77 a barrel, Bloomberg reported. Since then, oil has receded modestly to near $76 a barrel on the New York Mercantile Exchange, Bloomberg said. Each week, DOE surveys about 350 diesel filling stations to compile a national snapshot average price. Trucking Exec
Says Capacity to Stay Tight Don't expect economic growth to loosen tight truck capacity, a carrier executive warns. The shipping business in on the cusp of an extended period of tight truck capacity, said Clifton R. Beckham, president and CEO of USA Truck. A "considerable shortage of capacity" has been building since February, when freight demand began a "systematic improvement" driven by inventory restocking, Beckham said in a second quarter earnings report. His Van Buren, Ark.-based truckload carrier returned to profitability after five quarters of net losses. That "incremental" growth in demand revealed a "dramatic exodus" of capacity in recent years, he said. "The result is a tight capacity environment that we expect may only grow tighter when the world economy returns to normal growth rates." That means truck rates will rise, reversing what Beckham called several years of declining freight prices which he said "have taken their toll" on truckers. "We do not believe we are being adequately compensated for our services, particularly in the face of higher operating costs," he said. Other factors cutting into the number of available trucks include new safety regulations and demographic trends that may reduce the number of employable truck drivers and the low level of truck production during the recession, he said. USA Truck reduced its own capacity 8.8 percent over the past two and a half years, cutting its fleet to 2,331 tractors as of June 30. And although it plans to place 285 new tractors into service between July and October, and purchase an additional 300 to 500 tractors between November and next May, its fleet size will stay the same. "Each of these new tractors will be offset by the corresponding sale of an old truck from our active fleet," said Beckham. "The net result will be zero fleet growth." Covenant Turns First Profit Since Late
'07 Covenant Transportation Group said late Wednesday it turned a profit in the second quarter, posting its best performance in several years. Covenant earned $2.9 million, or 20 cents per share, compared with a loss of $3.1 million, or 22 cents, a year ago. It was the truckload carrier's first profit since the fourth quarter of 2007, Bloomberg reported. Revenue rose 17.3%, to $169 million, while freight revenue excluding fuel surcharges improved 9.4% to $141.4. "A favorable and strengthening freight market afforded us the opportunity to capitalize on our improved operations and increase equipment utilization," Chairman and Chief Executive Officer David Parker said. "In addition, we began to see the rate improvements that must come to sustain the long-term health of our industry," he said in a statement. Covenant Transportation Group is ranked No. 37 on the Transport Topics 100 listing of U.S. and Canadian for-hire carriers. Swift Transportation to Go Public Swift Transportation, the nation's second-largest privately owned trucking company, is going public for the second time in its history. A Swift-owned holding company filed plans for an initial public offering Wednesday with the federal Securities and Exchange Commission. Immediately prior to the IPO, Swift Corp., the parent of the trucking operator, will merge with the holding company. Swift Transportation had about $2.6 billion in revenue in 2009, according to estimates provided by SJ Consulting Group of Pittsburgh. Money from the transaction would be used to expand the business and pay down corporate debt, the Phoenix-based company said. It operates approximately 12,500 company-owned tractors and contracts with 3,700 owner-operators, the company said in its SEC filing. The trucking giant is owned by founder, Chairman and CEO Jerry Moyes, who first took the company public in 1990 and then took it private again in 2007. Podcast: Q&A: The Future of LTL Pricing To access podcast visit: http://www.joc.com/trucking/qa-future-ltl-pricing China Overtakes U.S. as World's Largest Energy Consumer Oil held over $76 a barrel Monday following three straight declines, and the Wall Street Journal reported that China has overtaken the United States as the world's largest energy consumer. China consumed 2.25 billion tons of oil equivalent last year - about 4% more than the 2.17 billion by the U.S., the Journal reported, citing the International Energy Agency. The oil-equivalent metric represents all forms of energy consumed, including crude oil, nuclear, coal, natural gas and renewable sources such as hydropower, the paper reported on its Web site. Crude futures, meanwhile, held just over $76 a barrel in early Monday trading on the New York Mercantile Exchange, following modest declines in the past three trading days, Bloomberg reported. Oil finished the trading day last Tuesday at $77.15 a barrel on the Nymex, the high for the month of July. Import Container Volume Rises at Major U.S. Ports July import cargo volume at the nation's major container ports will be about 16% higher than same month last year, according to a National Retail Federation report. But the double-digit increases seen in recent months should taper offer this fall as retailers more cautiously manage their inventories, according to the monthly Global Port Tracker report released earlier this month by the NRF and Hackett Associates. "We are still seeing increases in imports, partly because last year's volumes made for easy comparisons and partly because of real improvements in the economy and consumer spending," said Jonathan Gold, NRF's vice president for supply chain and customs policy. "Retailers are being cautious as they look at numbers for employment, housing and the availability of credit. There clearly can't be consistent growth in consumer spending when customers don't have jobs," he said. Container Ship Deliveries Hit Record 200,000 TEUs Deliveries of new container ships will hit a record monthly high of 200,000 20-foot equivalent units in July, extending a year long influx of capacity that may stall the recent rise in ocean freight rates, a leading analyst said. The previous record was set
in April 2008 when deliveries totaled 156,000 TEUs, according to Alphaliner, the Paris-based container shipping research consultancy. This will take deliveries for the first seven months to 950,000 TEUs, or 7.3 percent of the current fleet, according to Alphaliner figures. The new deliveries include a number of ships which had already been completed in 2009, but were mothballed at shipyards. Alphaliner estimates deliveries will reach 1.45 million TEUs in 2010, with slippage and cancellations
limited to only a small part of the container ship order book. The record July deliveries will include at least eight vessels of over 10,000 TEUs, compared to only seven similar sized ships delivered in the first six months of the year. The high rate of deliveries will continue through the summer with 12 more ships of over 10,000 TEUs scheduled to be handed over to ocean carriers in August and September. Four carriers account for the dozen large vessels coming on stream in the next two months - CMA CGM of France, Maersk Line, Geneva-based MSC and Israel's Zim Integrated Container Services, which will charter one of the vessels to Taiwan's Evergreen. These deliveries bring the average size of new ships delivered in July to more than 6,000 TEUs. This compares with an average size of only 3,700 TEUs in the previous record month of April 2008. The active capacity of the world fleet will have increased by 16 percent in the January-July period as the high level of deliveries is bloated by the reactivation of 1.2 million TEUs of idle tonnage. The idled fleet has fallen to just 2 percent of total capacity, down from a record 11.7 percent in late 2009. For the full year, Alphaliner expects capacity to increase by 9.6 percent. LA-Long
Beach Employers Seek Substantive Proposals Frustrated by a lack of progress in contract negotiations with office clerical workers, the head of the group representing waterfront employers in Los Angeles-Long Beach urged the union to bring substantive proposals to the bargaining table. "There has been zero progress on core issues," said Stephen Berry, the attorney representing 14 shipping lines and marine terminal operators in negotiations with the Office Clerical Unit of International Longshore and Warehouse Union Local 63. The employers group released a statement late Thursday saying the OCU's "defiant stance" threatens the wider port community as the ports enter the busy peak-shipping season in the trans-Pacific trade. Office clerical workers have been working without a contract since midnight on June 30. The OCU picketed several terminals on two different occasions, but the waterfront arbitrator in each case ruled that the union was not bargaining in good faith and ordered ILWU dockworkers not to honor the pickets. The pickets have been down for two weeks now and the ports have been operating without interruptions. Negotiators the past week have addressed, and made progress on, smaller issues specific to each of the 14 OCU contracts in the harbor, but Berry said negotiations have stalled on the core issues. Those issues revolve primarily around the use of technology and its impact on OCU work opportunities. Berry said employers have addressed the union's concerns with a guaranteed work week for OCU members, absolute protection against layoffs due to the implementation of technology and increased protection against layoffs for any other reason. Most of the progress recorded over the past week was due to compromises from the employers' original contract demands, Berry said. However, employers can not accept OCU's "regressive technology and featherbedding demands," including insisting that workers be deployed even when there is no work to do, Berry said. Also, the union insists on dismantling a technology framework that was negotiated in the 2004 and 2007 contracts, he added. The average annual OCU wage today is almost $100,000, with another $65,000 in benefits. The $165,000 package "makes them the highest paid clerical workers in America," Berry said. Montreal Port Lockout Ends The Port of Montreal, shut down since Monday morning by an employer lockout of longshoremen, will reopen for work at 8 a.m. Saturday following a compromise agreement reached Thursday evening. The union for the 850-plus longshore workers agreed to stop their no-overtime and work-to-rule stances, and the employers agreed to withdraw their refusal to guarantee job security and pay for 107 of the workers identified in the expired 2005 employer-union labor contract. The two sides had met in morning and afternoon sessions with a federal mediator. The agreement still must be approved by a general assembly called for Friday morning, but union spokesman Sebastien Goulet told The Journal of Commerce there was no doubt it would be ratified. In an interview, Gilles Corriveau, a spokesman for the Montreal branch of the Maritime Employers Association, said the two sides agreed "there will be no pressure tactics by either side." The agreement, he said, will last until a mid-October target date for the Syndicat des debardeurs, local 375 of the Canadian Union of Public Employees and the MEA to reach a new labor contract. The previous contract signed in 2005 expired at the end of 2008. Corriveau said each side had agreed to withdraw "pressure tactics" during contract talks that will resume Monday morning, aided by a federal negotiator. Goulet said details of Thursday's agreement would be disclosed after union members voted on them, but he agreed there had been "compromise on both sides." The standout issue between them is the job security and pay guarantee program for the 107 workers, Corriveau said. He said both parties agree that the program itself is worth keeping to ensure loading and unloading of ships round-the-clock, but the MEA wants to cut the numbers radically. The program currently costs the employers about C$12 million (US$11.6 million) a year, Corriveau said. The union countered by offering to cut the current overall 850- to 900-strong longshore work force by 50, through attrition. The MEA on July 9 stopped adhering to clauses of the old contract that provided job security and guaranteed pay for 107 of the longshore work force, The union responded with its own pressure tactics, banning overtime work and starting a work-to-rule slowdown. CMA CGM earlier Thursday said it was "open for export bookings to all destinations without any restrictions, using the other ports," but additional charges would apply. Export containers already filled before the lockout could be kept in their yard free of demurrage for the duration of the lockout or rebooked to Halifax by rail upon payment of rail charges. Import containers stuck at Cast Terminal in Montreal would stay there demurrage-free during the lockout. News Courtesy of: LMS
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