Showing posts with label economic. Show all posts
Showing posts with label economic. Show all posts

Friday, July 24, 2009

Freight volume: Tough times may be receding

Though the slump in freight volume is expected to continue for the rest of the year, many transportation providers believe the toughest stretch may now be in the rearview mirror. And if the downturn removes weaker competitors from the playing field, some companies believe that may open up opportunities for growth and market share gains.

"I do not foresee a significant change in the current freight environment as we move through the third quarter. However, there has been a slight improvement in volume trends,” said Henry Gerkens, president & CEO of Landstar System in the carrier’s second quarter earnings report.

“In addition, some of the very difficult revenue comparisons experienced during the first half of 2009 begin to ease toward the end of the 2009 third quarter and into the 2009 fourth quarter,” he noted. “I believe the worst is over.”

That being said, however, Gerkens stressed that there continues to be some level of uncertainty in the marketplace. He noted Landstar’s revenue continued to be negatively impacted by the severe recession in the domestic and global economies during the second quarter, with earnings shrinking to $17.9 million on revenues of $491.2 million, compared to $29.8 million in earnings on revenues of $697.7 million in the same period last year.

Full Story........

Friday, January 30, 2009

YRC CEO: Volume May Be Bottoming; Rules Out Bankruptcy

Trucking giant YRC Worldwide Inc. weighed in on the steep slump in freight volumes Friday, with Chief Executive Bill Zollars voicing some optimism that the industry-wide trend at least may be bottoming.

"The percentage declines year-over-year have started to stabilize" in the early weeks of 2009, Zollars said in an interview. "Believe me, we're looking really hard for any sign of improvement."

Meanwhile, Zollars reiterated that bankruptcy isn't being considered as an option for debt-laden YRC. He said talks aimed at relaxing some debt covenants have been proceeding well with lenders and should be successfully completed by mid-February.

YRC shares were trading recently at $3.01, off 3.8%, after falling about 20% Thursday.

Shipping volumes have been on the wane for some time industry wide, but freight haulers - including fellow trucking companies J.B. Hunt Transport Services Inc. and Con-way Inc., as well as top U.S. railroads - have reported that the trend accelerated in the fourth quarter, in line with the deteriorating economy. Most have been hesitant to call a bottom.

Zollars concurred that the overall economy "definitely decelerated" in the fourth quarter, noting that YRC's freight volumes "progressively weakened" each month. Per-day tonnage for YRC's national segment dropped 15% in the quarter, with its regional business seeing a 14% drop when adjusted for network changes that took place early this year.

But Zollars said the trend "looks like it has stabilized" since the end of the year, particularly when adjusted for poorer weather conditions this winter.

Still, he said YRC isn't planning for an economic recovery in 2009 and still assumes freight volumes will be down overall from 2008 levels. YRC has been experiencing pricing pressure as well - with prices down an average 1.5% in the fourth quarter - although Zollars said he expects YRC to do better on pricing than the trucking sector overall this year.

Additional insight on the outlook for industry freight volumes likely will come Tuesday, when United Parcel Service Inc. (UPS), the largest U.S. package shipper, posts fourth-quarter earnings.

The UPS results are coming on the heels of a report Thursday indicating that international air cargo fell 23% in December from a year earlier, signaling a broader slump in global trade. The report from the International Air Transport Association includes freight on both passenger carriers and all-cargo carriers.

YRC, created through a 2003 combination of the Yellow and Roadway trucking brands, logged fourth-quarter results late Thursday, posting a narrower net loss on fewer write-downs.

The company's net loss came in at $244.4 million, or $4.14 a share, compared with a year-earlier net loss of $735.8 million, or $12.99 a share. Excluding write-downs, which in the latest quarter included charges related to the Roadway trade name, the loss was $1.63 a share.

Revenue dropped 18% to $1.93 billion.

On average, analysts surveyed by Thomson Reuters projected a 66-cent-a-share loss and revenue of $2.04 billion.

YRC has $1.36 billion in debt, a portion of which it has been struggling to refinance. But because of a sinking bottom line, the company is at risk of falling out of compliance with credit lines and has been working to renegotiate covenant

Wednesday, December 31, 2008

Shippers sailed rough seas in 2008 economic storm

They carry laptops and toys, cars and coal, but they're not Santa's elves, and they weren't very jolly this holiday season.

It's been a devastating year for the nation's railroads, trucking companies and package shippers - the companies on the "front lines" of the economic recession. Shipments have plunged as retailers pulled back on orders and consumers tied their purse strings tight in preparation for more hard times. Swiftly accelerating oil prices through the first seven months of the year crippled companies even more.

The Dow Jones Transportation Average, which incorporates railroads, shippers, airlines and logistics companies, lost a quarter of its value in 2008 and fell more drastically - by about a third - in the last three months of the year. That compares with a 40 percent decline for the Dow Jones Total Market index and a drop of 39 percent for the Standard & Poor's 500 index in 2008. Full Story......

Thursday, December 11, 2008

Obama: Transportation can get economy moving

When President-elect Barack Obama says he wants to get the economy moving again, he means it quite literally.

Transportation will play a central role in Obama's first months in office, not just for policy changes aimed at improving highway, air and rail travel, but as a road toward economic recovery, energy independence and environmental protection.

Solve road congestion, Obama's reasoning goes, and you put people to work.

Use less gasoline and help clean the air.

Build better trains and move goods more efficiently.

Get people out of their cars and reduce greenhouse gas emissions.

"We will create millions of jobs," he said recently, "by making the single largest new investment in our national infrastructure since the creation of the federal highway system in the 1950s."

This expansive approach contrasts with the Bush administration's policy that transportation - like other government functions - works best when it is in private hands, or at least in a public-private partnership.

Adopting a libertarian, smaller-government-is-better approach to repairing and modernizing the nation's transportation systems, Bush sought to shift more responsibility to state and local governments and encouraged the use of tolls and private enterprise to pay for it.

Obama is not necessarily against such arrangements. He just thinks the national government should play the leading role in a transportation network on which the country and its economy depends.

"Now is the time to invest in our future and strengthen our core infrastructure," Obama said in an October letter to a coalition of groups interested in transportation and environmental issues. "With unemployment rising, these investments are even more important."

Obama takes office as many critical transportation issues are coming to the fore, creating what some experts see as a once-in-a-generation opportunity to remake national policy.

"What's very hopeful about this president, when it comes to infrastructure, is he's prepared to think big," said Janet Kavinoky, chief transportation lobbyist for the U.S. Chamber of Commerce. She said there is broad political support for major changes in transportation policy.

Obama's transition team is working with congressional Democrats on an economic aid bill that could total as much as $500 billion. The hope is to have it ready for the new president to sign when he takes office Jan. 20.

While details have not been finalized, the bill is expected to include tens of billions of dollars for highway, mass transit, airport, and intercity passenger and freight rail improvements.

Bush's transportation philosophy "seemed to be, `This is what the federal government should be responsible for and nothing else.' And the `nothing else' category was public transportation," said William Millar, executive director of the American Public Transportation Association, whose members include transit agencies.

Obama, on the other hand, has described himself as a strong advocate of mass transit.

While Bush proposed what some lawmakers described as "starvation budgets" for Amtrak, Obama has pledged support for the passenger rail carrier and for developing a national network of high-speed passenger trains.

The Bush administration has feuded bitterly with air traffic controllers since the Federal Aviation Administration imposed a contract in 2006. Obama has promised to appoint an FAA administrator who will work cooperatively with controllers.

Bush tried to ease cross-border trucking between the U.S. and Mexico, angering domestic truckers who fear the competition and say safety would be compromised. Obama promised the International Brotherhood of Teamsters to aggressively inspect cross-border trucks and buses and enforce safety regulations.

Obama's transportation goals face several potential roadblocks.

The federal program that provides aid to states for highway construction and transit expenses expires on Sept. 30, 2009. The current program was funded at $286 billion over five years. Its cost is mainly underwritten by the federal 18.4 cents-per-gallon gas tax, but revenues have failed to keep up with obligations.

Last January, a blue-ribbon transportation commission recommended increasing the gas tax as much as 40 cents a gallon over five years. The additional money would to help cover the federal share of an estimated $225 billion the commission says is needed each year to upgrade transportation systems.

Boosting the gas tax carries political risks. The last time it was raised, a backlash against Democrats in the 1994 elections helped Republicans capture control of the House and Senate. Obama has expressed concern about raising taxes in the current economic climate.

Even without an increase, Obama will have to deal with environmentalists who want to undo a bargain struck during the Reagan administration that funnels roughly 80 percent of gas tax revenue to highway projects and 15 percent to transit. They want to redirect money away from highways to alternatives such as transit and intercity passenger trains.

Obama's energy plan calls for saving as much oil as the U.S. currently imports from the Middle East and Venezuela within 10 years, which is about 3.5 million barrels a day.

"That's going to require a pretty robust program to save oil, which means not just better vehicle technology and not just alternative fuels. ... Something will have to be done about transportation policy," said Deron Lovaas of the Natural Resources Defense Council.

"The question is, does it make sense if energy security is an overarching national commitment to stick to ... a 25-year-old deal?" Lovaas said. "I think the answer is, `No.' That's going to be an enormous fight."

Tuesday, December 09, 2008

Drivers consider wage cut to aid trucking company

About 80 members of Teamsters Local 397 will be among union members nationwide who will vote on a 10 percent wage reduction as part of economic relief plan for YRC Worldwide Inc., a trucking company.

Local 397 President Ronald Gibbs said union leadership is recommending approval of the plan because of the financial problems faced by YRC Worldwide during the current economic downtown.

The company has lost about 80 percent of its stock market value over the past year. As a result, banks have mandated virtually all of its assets be pledged to cover current debt. That means the company can't borrow more and could face a liquidity crisis in 2009, the union said.

About 40,000 Teamster members are employed at the affected YRC Worldwide units -- Yellow Transportation, Roadway, Holland and New Penn. About 80 truck drivers from Erie and Crawford counties are represented by Local 397.

If approved, the wage reductions will remain in effect until the current Teamsters contract expires in 2013.

In return for the wage concessions, Gibbs said Teamsters members will receive an equity stake in the company. Nonunion employees would receive the same or greater percent reduction in total compensation.

The estimated savings is $220 million to $250 million a year.

Ballots are now being mailed to union members and are to be counted on Dec. 30. The reductions are expected to go into effect Jan. 1.

Wednesday, November 26, 2008

Teamsters - YRC negotiations could affect hundreds of local workers

One of the largest shipping companies in the country is at the negotiation table with the Teamsters, and hundreds of Michiana workers could be affected by what comes out of the talks.

About 350 Michiana workers are employed by YRC Worldwide, which you likely know as the three shipping companies they own: Yellow Transportation, USF Holland, and Roadway.

YRC's CEO Bob Zollars says they're exploring their options with the teamsters, to see how they can help the company through this tough economic time.

“We approached the Teamsters in an effort to explore all available options under the National Master Freight Agreement to ensure competitiveness and preserve the benefits and jobs of our union employees,” Zollars said Tuesday, according to the Kansas City Star.

In a memo sent to local Teamster members yesterday, the organization says, "It is questionable if the company can generate enough money to prevent a prolonged downturn," as the struggling economy may affect their ability to borrow money to pay down debts.

The company is trying to re-negotiate the contract they signed 9 months ago, that gave workers a raise.

The teamsters say they're not negotiating the parts of their contract that include benefits; they're really only talking about the possibility of decreasing their pay.

Local teamsters say some sort of agreement is in everyone's best interest.

“We hope we can keep jobs we just want to come to work every day and take a paycheck so we can feed our families just like you and everybody else,” said Dennis Switzer, a Yellow employee who has worked at the terminal in South Bend for 13 years.

“We're in the middle of a recession. We're in the middle of a huge economic downturn and (YRC), like everyone else, is having some struggles. But they’re working through those struggles and they're going to be fine. They’re going to survive and be competitive,” said Bob Warnock III, President of the Local Teamsters #364.

Meanwhile, investment experts don't expect YRC to go out of business over the next few months.

But they do expect its stock to remain volatile, and it's dropped by about 80% over the last year.

These contract negotiations have been going on since Monday.

YRC is the second largest employer of Teamster employees in the country, and there are about 40,000 union employees nationwide at YRC.

YRC could not be reached for comment Wednesday.

Tuesday, November 25, 2008

YRC Worldwide will spend as much as $100M to buy back senior notes

YRC Worldwide Inc. will offer starting Tuesday to buy back senior debt for as much as $100 million in cash.

In a release after the market closed on Monday, the Overland Park, Kan.-based company said it will offer to buy back its 5 percent and 3.375 percent contingent convertible senior notes due in 2023 and its 8.5 percent senior notes due in 2010. The company said it had drawn on its senior credit facility to finance the purchases.

YRC said it expects to buy at least $230 million of the notes, which would reduce its debt by at least $130 million. To the extent the principal amount of the purchased notes exceeds the amount paid, the company said it will recognize the difference as a gain on extinguishment of debt and include it in the company’s earnings before interest, taxes, depreciation and amortization under the debt-to-EBITDA leverage ratio in the company’s credit agreement.

“This is another proactive measure that we are taking to reduce our debt and improve our earnings,” Chairman and CEO Bill Zollars said in the release. “Given the deteriorating economic environment, we have implemented a comprehensive program to improve our competitive position, increase our profitability and enhance our financial condition.”

YRC Seeks Economic Relief

The following is a statement from the International Brotherhood of Teamsters, Freight Division:

YRC Worldwide Inc. management has been seeking economic relief in the National Master Freight Agreement for several weeks. Following the recent downgrading of its debt rating by both Standard and Poor’s and Moody’s Investors Service and its impact on the company’s ability to maintain a line of credit, the Teamsters General Executive Board today unanimously agreed to permit representatives from the Teamsters National Freight Industry Negotiating Committee to enter into discussions with YRC immediately to determine how to best preserve Teamsters jobs and protect benefits.

Please go to www.teamster.org for the latest updates on discussions with YRC.