Economic damage from Ike less than it could have been

A small change in Hurricane Ike’s course just before it crashed into the Texas coast may have spared the state and the nation from significantly worse economic damage.

The center of the storm appeared to miss the vital concentration of oil and petrochemical refineries in the Houston area, and the surge of water rolling into the nation’s second-largest port was also weaker than predicted.

“If the eye of that storm had been as much as 20 miles east, we would have a lot more havoc and damage than we did,” said Chris Johnson, a senior vice president at commercial property insurer FM Global.

Much of the region’s industrial recovery will depend on how quickly power companies can restore electricity; that, in turn, will depend on how quickly the utilities can get employees back to work.

“I received a call from one of my employees, who was evacuated to San Antonio. He was just informed that his house was totally destroyed,” said Bill Reid, the CEO of Ohmstede, which builds and repairs refineries. Reid, who lives in Kemah, Texas, about 35 miles south of Houston, said his town was without power and water, and still had 15 feet of flooding.

The port of Houston, the nation’s second-largest, was without power Saturday but expects to reopen Monday morning if the Coast Guard finds no obstacles in the shipping lanes. Some empty cargo containers were blown about, but not too far.

“All the terminals did very well and we had only very minor damage, like fencing being blown down,” said port spokeswoman Argentina James.

Refineries as far east as Louisiana were affected by the storm, however. The tourist island town of Galveston was flooded and office buildings in downtown Houston were damaged, but it could have been worse.

“It appears that, at least from our facility and operations standpoint, the impact is a little less than we did anticipate,” said Mike Smid, chief executive of trucking company YRC North America, which runs Yellow and Roadway lines. The company evacuated its 900 employees ahead of the storm.

Preliminary estimates put the damage at $8 billion or more, but a precise accounting of the storm’s wrath was far from complete.

Travelers Insurance had teams of adjusters, claims agents and logistics people with laptops and ladders in San Antonio who are planning to leave for Houston Sunday, said spokesman Matthew S. Bordonaro.

“It will be some time before we have any damage estimates,” said Mike Siemienas, a spokesman for Allstate Corp. “Our focus right now is to get into the hardest-hit areas once it is safe to do so.”

Retail sales unexpectedly drop in August

Rising unemployment, falling home prices are making shoppers cautious

Frugal shoppers cut back again in August, driving down sales at the nation’s retailers for the second month in a row, further proof the economy is losing traction.

The Commerce Department reported Friday that retail sales dropped by 0.3 percent last month. Economists expected sales to rise by 0.3 percent.

Sales in July also turned out to be even weaker than previously thought, falling by 0.5 percent, the worst showing in five months.
Rising unemployment, strained household budgets and falling home prices — which make homeowners feel less wealthy — are making shoppers more cautious.

Stripping out auto sales, which were strong in August, sales at all other merchants fell by 0.7 percent, the worst showing since December. That figure also was sure to disappoint economists, who were calling for a smaller, 0.2 percent dip.

Cutbacks were widespread.

Sales fell at electronics and appliance stores, clothing shops, building and garden stores, and department stores. Gasoline sales also dipped as prices retreated. Sales at furniture and home furnishing stores were flat. Those losses swamped gains elsewhere, including auto dealers, sporting goods, books and music stores, grocery stores and health and beauty shops.

Removing sales at gasoline stations, all other sales would have been flat in August.

Last week, many stores reported weak sales for August. The few bright spots: Wal-Mart Stores Inc., the world’s largest retailer, and Costco Wholesale Corp., where shoppers focused on low prices.

Many analysts predict shoppers will lose steam in the months ahead, slowing overall economic activity.

Full Story.....

Thursday, shareholders of transportation service provider FedEx Corporation were recommended by RiskMetrics group-institutional shareholder services to vote in favour of Teamsters' proposal calling for an independent board chairman. The FedEx's annual meeting is scheduled on September 29, 2008.

RiskMetrics, the leading independent proxy voting advisory and corporate governance services firm supported the Teamsters' proposal for an independent chairman at FedEx for the second consecutive year. In 2007, approximately 27 percent of the votes cast by FedEx investors was in favor of the union's proposal.

RiskMetrics released an analysis report saying that FedEx's poor financial performance relative to peers in the transportation industry is of concern along with the S&P 500, coupled with an executive pay system that does not hold management accountable for their performance. The analysis also cited that FedEx Board lacks an effective independent director leadership structure to counterbalance the power of a combined Chairman of the Board/CEO role.

Teamsters General Secretary-Treasurer, Thomas Keegel said that an independent FedEx chairman is necessary to ensure that the board serves as an effective and independent check on management and shareholders can no longer afford for FedEx's board to be dominated by founder and CEO Frederick Smith. Keegel also added that Teamsters is pleased to know that RiskMetrics is supporting the call for independent board leadership at FedEx.

Keegel, in a letter dated 2nd September expressed his disappointment over controlling influence of Smith on board which passed unlawful and unsustainable business model that could ultimately cost billions for the company, and pointed that FedEx's board has presided over poor corporate performance and excessive CEO pay.

DHL, UPS won't honor request

Both DHL and UPS say they will not honor a request by the chairman of the U.S. House Judiciary Committee that the companies voluntarily not seal a deal at least until the congressional committee holds a second information-gathering hearing.

In DHL’s reply to a News Journal email inquiry, the corporate press office referred the paper to DHL CEO John Mullen’s testimony on Tuesday before the committee, especially where Mullen said, “With projected operating losses of $1.3 billion in 2008, decisive action is now required.” Mullen’s quoted words following the comma were in bold font in the DHL email.

The DHL reply also used the following excerpt from Mullen’s testimony — testimony prepared prior to Judiciary Committee Chairman John Conyers Jr. making his request. “If and when the agreement is concluded, we will provide a copy to the Department of Justice and will cooperate fully with any review of the contract that the Department chooses to undertake.”

Norman Black, a spokesman for UPS at corporate headquarters in Atlanta, said by phone Wednesday that lawyers for both companies “are continuing to work on finalizing the contract as quickly as possible.”

Pressure Building On DHL To Suspend UPS deal

Community leaders in Wilmington found a powerful new friend in the nation’s capitol Tuesday.

After taking testimony on DHL’s plan to outsource work to UPS and eliminate more than 8,000 jobs in Wilmington, House Judiciary Committee Chairman Rep. John Conyers called upon DHL executives to suspend talks with UPS.

Rep. Mike Turner, R- Centerville, who was instrumental in making the hearings possible, said Conyers now agrees with him that there are problems with the DHL deal.

“There are serious issues that go right to the heart of anti-trust. He (Conyers) indicated that he will have additional hearings to get to the bottom of what the impact will be upon the U.S. economy. And we certainly gave him enough information on what will happen with southwest Ohio,” Turner said.

Turner said Conyers does not have the power to enforce his call for suspension of talks between DHL and UPS.

Still, Turner views the call from the chairman as an important development.
“It’s a pretty strong signal from the committee chair that he will continue to investigate this transaction and he has asked them to suspend the transaction while they go forward. That could have a big impact,” Turner said.

Wilmington Mayor David Raizk echoed comments from Turner.

“We had the best possible outcome we could have had from that type of hearing,” Raizk said.

DHL and UPS executives made no commitment on the request for suspension of the talks between the companies.

They testified that DHL is losing $5 million a day and the contract with UPS is necessary to return to profitability. Both companies denied a contract between them would be a merger.

Turner and other critics called it a “de facto merger.”

David Ross, President of the Airline Professional Association / Teamsters Local 1224 in Wilmington, said he believes the case against the DHL plan is finding increased support in Washington.

He is hoping the Judiciary Committee continues to hold hearings and brings in the Justice Department to determine if there are potential anti-trust violations.
Ross said action needs to be taken sooner, rather than later.

“If it’s not anti-trust, then let it go. But if it’s anti-trust and they allow this process and start to shift all of the freight over to UPS, once that process starts, it is going to hard to stop, “ Ross said.

Raizk said the next step in the process in Washington will be a hearing before the House Transportation Committee, scheduled for next Tuesday.

Company executives and community representatives, including Raizk, are expected to testify.

Teamsters Praise House for Voting to Ban Unsafe Mexican Trucks

Members Vote Overwhelmingly To Stop Cross-Border Trucking Pilot Program

Teamsters General President Jim Hoffa commended the 395 members of Congress who voted today to close the border to dangerous trucks from Mexico.

The House of Representatives passed a bill to end the cross-border trucking program by a vote of 395 - 18. The bill, sponsored by Rep. Peter DeFazio, D-Ore., also prohibits the transportation secretary from granting authority to any Mexican trucks beyond the commercial zone, unless specifically authorized by Congress. The bill passed committee in July unanimously by a voice vote.

"This bill makes it very clear that Congress wants the border closed," Hoffa said. "This time, the Bush administration can't pretend it doesn't understand what Congress means."

Congress passed a law last year that cut off funds for opening the border. The Bush administration claimed the law was ambiguous and kept the border open. The Teamsters challenged the Bush administration in the 9th Circuit Court of Appeals in San Francisco and is awaiting a decision.

"We know the Bush administration can't guarantee that trucks and drivers from Mexico are safe," Hoffa said. "We know there aren't any certified drug testing labs in Mexico. We know the database for Mexican driver traffic violations is inadequate. We know Mexico doesn't enforce hours-of-service violations."

Despite the bipartisan opposition to opening the border to dangerous trucks from Mexico, the Transportation Department said it will extend the program for another two years.

The Transportation Department has shown it is incapable of reviewing the safety records of Mexican carriers that want to participate in the pilot program. The agency approved Trinity Enterprises as a participant, though its own database indicated the company had more than 1,200 safety violations, or about 100 per truck.

Acting Together, Trucking Can Make a Difference

The below op-ed from Mr. Robert Davidson, CEO of ABF Freight System, is available for immediate publication and distribution.

Everyone in North America is feeling the pinch at the pump and at the supermarket checkout as skyrocketing fuel prices drive up the cost of everyday living. Although we need to develop larger, more secure, economically viable sources of energy, those steps will take time to mature, and we need action today.

It is imperative for all of us to act intelligently, to act boldly, and to act quickly by cutting our consumption of fuel and reducing the emissions that we release into the atmosphere.

At ABF, we are no stranger to the need to minimize the fuel consumption of our fleet of trucks. It's something we have been focused on for more than 30 years.

Since 1976, ABF has voluntarily limited the maximum speed of its trucks. This reduces fuel consumption and emissions, partially offsets fuel economy degradation of the newer low-emission engines, and contributes to our impressive safety record. We are also proud members of the Environmental Protection Agency's SmartWay(3M) program that promotes fuel efficiency across the freight transport sector.

While we are proud of our record, we recognize the need to do more and to work together with the rest of the trucking industry to bring about sustainable results.
As part of this effort, ABF is making a new commitment to support an industry-wide sustainability program developed by the American Trucking Associations (ATA) to reduce both fuel consumption and emissions.

This ATA initiative makes six recommendations - to establish a national speed limit of 65 miles per hour and require new trucks to be speed governed at 68 mph, reduce truck idling, increase participation in SmartWay(3M), reduce traffic congestion, use longer and larger trucks (to reduce the number of vehicles on the road), and support national fuel economy standards.

Together, these measures can reduce fuel consumption by 86 billion gallons and exhaust emissions of all vehicles by 900 million tons in the next 10 years.
ABF is leading the industry by going even further. Through the use of technology, we have been able to reduce transit times for our customers while voluntarily limiting the maximum speed of our fleet to 62 mph.

We also have a strict equipment maintenance schedule and an aggressive equipment replacement program. The average age of our road tractors is one and a half years, which means they are cleaner for the environment and use fuel more efficiently.

ABF is playing a leading role on these important issues as a company. Now, the industry is coming together to launch an unprecedented bold initiative on fuel and emissions.

It is now time for all of us to urge politicians in Washington, D.C., to help us implement this ambitious program by taking action on federal speed limits for all vehicles, fixing the nation's congestion bottlenecks, continuing to support the highway trust fund, and easing restrictions on the size and weight of trucks.

We can all do our own part as citizens to reduce the demand for fuel while our country develops additional supplies. These cost-effective steps will save you money and help the environment where we all live. Just as trucks are slowing down, so should you. Just as trucking companies are using cleaner vehicles, so should you. Just as truck drivers are driving sensibly rather than aggressively, so should you.

If we all work together, then we have the opportunity to make a real and lasting impact on our nation's fuel consumption and our contribution to environmental sustainability.

Teamsters Urge House to Pass Bill Banning Unsafe Mexican Trucks

Vote Scheduled for Today on Bill to Stop Cross-Border Trucking Pilot Program

Teamsters General President Jim Hoffa said he hopes Congress will vote today to close the border to dangerous trucks from Mexico.

Last year Congress voted overwhelmingly to ban the cross-border trucking pilot program, but the Bush administration ignored the law. Even though there is strong bipartisan support in Congress for closing the border, the Transportation Department announced it is extending the program for another two years.

"There are many, many unanswered questions about the safety of Mexican trucks and their drivers," Hoffa said. "It's flat-out reckless to let them drive on our highways and endanger American families."

The bill, sponsored by Rep. Peter DeFazio, D-Ore., ends the pilot program. It also prohibits the transportation secretary from granting authority to any Mexican trucks beyond the commercial zone, unless specifically authorized by Congress. The bill passed committee in July, unanimously by a voice vote.

The Teamsters oppose the pilot program because Mexican trucks and drivers do not have to meet the same safety standards as their American counterparts. There are no certified drug testing labs in Mexico. The database for Mexican driver traffic violations is inadequate. Mexico doesn't enforce hours-of-service regulations.

The Transportation Department has also shown it is incapable of reviewing the safety records of Mexican carriers that want to participate in the pilot program. The agency approved Trinity Enterprises as a participant, though its own database indicated the company had more than 1,200 safety violations.

Weakness For YRC Worldwide

YRC Worldwide expects doom and gloom for the U.S. economy in the near term.

On Monday, the trucking giant said it expects to post a third-quarter loss from core operations as further economic weakness drags down volume and prices.

YRC Worldwide also expects to incur reorganization costs of about 6 cents to 8 cents per share, primarily related to employee severance. It will also declare a one-time gain of 70 cents per share related to a streamlining of nonunion employees retirement plans.

Nonetheless, YRC Worldwide said it expects to be in full compliance with all terms of its credit agreement and to have borrowing capacity in excess of $600 million.

"The economy has softened further impacting both volume levels and pricing across our operating companies," said Chairman Bill Zollars. "After a solid second quarter, the third quarter started slowly and has progressively weakened."

YRC said its earnings have also been impacted by investments in combining its national companies, Yellow Transportation and Roadway. In 2003, Yellow acquired Roadway Express to become Yellow Roadway. Then in 2005, Yellow roadway purchased USF and in 2006 became YRC Worldwide.

"We do not see signs of the economy improving in the near term, but as we merge Yellow and Roadway, we expect operating results to show meaningful improvement," said Zollars.

As the U.S. economy has softened so has consumer demand, which translates to less goods being purchased and in turn transported by trucking companies. In addition, the trucking companies get hit by the double whammy of high oil prices, which have forced a large number of retailers to switch to transporting goods by train--another hit to trucking companies.

Total goods carried by trucks in the U.S. fell in July compared with the previous month, marking the first month-over-month decline since April. The trucking industry hauls about 70.0% of manufactured and retail goods in the U.S.

YRC had said in July it expected to earn from $1.05 to $1.15 per share in the third quarter, which includes the retirement plan gain and a charge of 10 to 15 cents related to health and pension costs.

The American Trucking Association's seasonally adjusted tonnage index, which measures the weight of freight hauled by U.S. truckers based on membership surveys, fell 0.3% in July.

ATA Chief Economist Bob Costello predicted that truck tonnage could be volatile in the next few months, as the economy is expected to weaken further, but lower fuel prices and capacity might boost demand.

YRCW rolls out plan to spur integration between Yellow Transportation and Roadway

In an announcement that can be viewed as a response to difficult market conditions in the trucking market, less-than-truckload transportation services provider YRC Worldwide announced today it plans to hasten the integration strategy of its two largest subsidiaries—Yellow Transportation and Roadway.

Yellow Corporation acquired Roadway for $1.1 billion in 2003. YRCW officials said that since that time the company has “reduced duplicate back-office functions, shared technology applications, formed common management teams, and combined corporate sales operations.

With today’s news, YRCW explained it is bringing together its local sales teams and will provide shippers with a comprehensive portfolio of services through one operating network entitled Yellow Roadway, with the Yellow Transportation and Roadway brands maintaining their own brands and presence in the LTL sector, represented by a joint sales team of more than 1,000 account executives. And by operating one national network, YRCW said it expects to increase its network density with the result being lower-fixed costs and service improvements. It added that it expects the integration effort to last through 2008 and result in more than $200 million in annual operating savings.

"Given the positive customer response from our recent combination of the corporate sales teams and the increasingly dynamic operating environment, we believe now is the right time to take such significant action," said Bill Zollars, Chairman, President and CEO, in a statement. "The economic downturn has created the capacity in our networks needed to effectively integrate our operations, while improving service reliability and speed. By offering a comprehensive service portfolio through one unified network, we can more effectively serve our customers and simplify their experience."

Other reasons cited for the change, according to YRCW, are positive customer response from combined corporate sales and the competitive opportunity to leverage scale for a broader array of services. And some of the benefits it highlighted included: a comprehensive service portfolio across all brands, simplified customer experience, further growth opportunities, and increased network scale and efficiencies.

Complete Story..........

Teamsters To Review And Monitor YRC Plans To Combine Yellow And Roadway Operations

The International Brotherhood of Teamsters will closely review today's announcement by Yellow Worldwide Inc. that it will combine its Yellow and Roadway freight operations over the next 18 months.

“The Teamsters Union will closely review the potential impact of today’s announcement on the jobs and conditions of our members,” said Tyson Johnson, International Vice President and National Freight Director. “There is a process outlined in the National Master Freight Agreement that the union will utilize to ensure that our member’s are treated fairly throughout what will inevitably be a very difficult process.”

The economy in the past two years has not been supportive of growth in the freight industry. In 2007, it was the third year of flat or negative demand for freight transportation services of all modes. Record fuel costs continue to negatively impact margins. The housing and auto slump have reduced the demand for freight shipments as has the manufacturing turndown and rising unemployment. These are trends that are not likely to see substantial improvement in the remainder of the year.

While we recognize that the Bush administration’s economic policies have had a dramatic negative effect on freight and the entire transportation sector with high fuel prices and reduced economic activity, the Teamsters Union will fight to preserve our members’ jobs and benefits in this restructuring through vigorous enforcement of the freight contract negotiated earlier this year.