4/12/2007

Gasoline inventories fell for the ninth consecutive week, the U.S. Energy Information Administration reported April 11. On the same day, crude oil futures surged 19 cents to $62.08 per barrel on the New York Mercantile Exchange.

The amount of gasoline on hand fell 5.5 million barrels to 200 million barrels, EIA said, marking a 12 percent drop over the past nine weeks.

The price of crude oil is about 9.5 percent lower than in early April last year. Inventories of crude oil and of diesel increased during the past week. Crude inventories are up 700,000 barrels. Distillate inventories, including both diesel and heating oil, are up by 100,000 barrels, EIA said.

Transportation services declined in February for the second straight month, according to a government report. The Transportation Services Index fell 0.3 percent in February to 109.2, the U.S. Department of Transportation's Bureau of Transportation Statistics said April 11. TSI is a single seasonally adjusted index of the month-to-month changes in the output of services provided by the for-hire transportation industries, including railroad, air, truck, inland waterways, pipeline, and local transit.

The freight portion was not hit as hard as the passenger side. The freight index fell 0.2 percent in February to 107.7, down 1.8 percent from last February's level. Surges in September and December have kept the otherwise declining index just 0.1 percent below its level in August. The freight index is down 4.6 percent from its peak of 112.8 first achieved in January 2005, BTS said.

The major trade association representing Mexican motor carriers wants its government to cancel the controversial pilot program that would permit trucks and their drivers to deliver freight beyond the current north-of-the-border 25 mile limit.

An organization representing the interests of the Mexican trucking industry, CANACAR (Nacional del Autotransporte de Carga), appeared before the Communication and Transportation Committee of the Mexican Senate, requesting that is shelve the program that would permit 100 Mexican trucking firms open access to U.S. highways in a one year pilot project.  

The organization's national president, Tirso Martinez Angheben, notes that, “CANACAR has formally requested not to open the borders for trans-border services and to have the pilot program suspended until conditions for a fair competitive environment are existing and that the Mexican trucking industry has the guarantee of not being subject to unfair inequitable and discriminatory treatment by U.S. authorities.”   One major objection, according to CANACAR, focuses on what is sees as the U.S. government's lack of compliance with provisions in the North American Free Trade Agreement (NAFTA). On one hand, runs the arguments, Mexican trucking companies are not allowed to invest in U.S.-based trucking companies or to provide services within the country. On the other hand, U.S.-based trucking companies have invested in the Mexican infrastructure and have a commercial presence in the country.

Noting that transportation prices are lower in the country, Angheben adds that an open border lacks benefits for the nation because when ultimately U.S. trucks would be permitted into Mexico, the program, “will cause transportation prices in Mexico to increase; will not accelerate the border crossing process;  will generate strong pressure on salaries paid Mexican drivers, which in turn will increase the cost of domestic freight in Mexico, Further, the Mexican government lacks the capacity and infrastructure to supervise U.S. carriers entering Mexico and prevent foreign companies from providing domestic transportation  reserved solely for Mexican nationals.”

The carrier is joining with Tropical Shipping to expand its less than truckload (ltl) and less than container load (lcl) service territory.

Florida-headquartered Tropical Shipping offers fixed-day sailing schedules with fast transit times, full-container load, less than container load and consolidation among its other services. The ocean service provider calls at more than 30 ports and operates facilities at ports in the United States and Canada.

The new service is called Tropical Direct. In operation, Tropical Shipping's customer service personnel will be able to contact any of Con-Way Freight's 440 service centers to set up ground delivery of shipments to its warehouse receiving locations in Kearny, NJ, Miami and Riviera Beach, Fla. It will then handle the freight ocean movement to its final island destination.

The companies note that the new ltl/lcl service offers single-carrier control, door-to-port accountability and end-to-end shipment tracking, among other features. All necessary export documentation is provided. A single call to Tropical Shipping's (800) 874-3483 toll free line starts the shipping process.

Service is provided to ports in the Bahamas, Eastern Caribbean, the British Virgin Islands, the Turks and Caicos Islands, the U.S. Virgin Islands, the Cayman Islands and the Dominican Republic.

By Neil Abt,
News Editor, Transport Topics

Listening to Pam Hall describe her new building, you could mistake it for a cutting-edge technology company.

“It’s an all-wireless shop. We have a lot more computers. There are computer stations for drivers in the lounge,” she said.

The description might conjure up images of her working at Google or Microsoft, but Hall was discussing improvements at the new Hall Volvo GMC truck dealership, which opened in February in Tyler, Texas.

Hall, general manager of the dealership, was among the truck dealers who told Transport Topics they not only were prepared to withstand the drop in new sales this year but also saw the new vehicles with more expensive and cleaner-burning engines as providing additional revenue opportunities.

Many said they were investing in upgraded technology, equipment and amenities to meet the expectations of an increasingly sophisticated customer base.

Retail U.S. truck sales declined nearly 20% in February from a year earlier, after a 3.5% drop in January, Wards Communications reported. At the same time, truck orders were about 25,000 through the first two months of the year, compared with almost 90,000 last year, according to ACT Research.

Despite these declines, and predictions that sales could drop 40% for the year compared with record sales for 2006, Bob Mitchell, owner of Kenworth of Alabama and Mississippi, is more than upbeat: “From the dealers’ point of view, the prospects — especially with parts and service — are better than it has ever been.”

“The slowdown we have is not hitting us by surprise,” said George Grask, the owner of the Grask Truck Group, which includes Cedar Rapids Truck Center and Quad City Peterbilt in Iowa, and the chairman of the American Truck Dealers. “We have known for a number of years and planned accordingly for it.”

For Hall, whose husband, Gerry, is a former ATD chairman, that planning included building “a dealership that would match the technology of these trucks.”

She called her old facility “a dark building with bad lighting” that was “not good for the employees or the customers.”

Besides improved lighting, the new location has larger doors and more service bays. Technology upgrades include increased electronic tracking for technicians, allowing them to input or retrieve customer histories more quickly and to better track parts, which has reduced traditional paperwork.

“We won’t sell as many [trucks], but with the increased capacity in parts and service, we are pretty comfortable with 2007,” Hall said.

Tom Thayer, the dealer principal of International Truck Sales of Richmond, Va., said he had previously considered upgrades for his dealership, which was in a 1954 “vintage” building downtown. However, he found “it wasn’t worth the investment because we couldn’t get everything out of it.”

His viewpoint changed after moving the main dealership into a larger building north of Richmond in 2005 and opening a parts-and-service unit to the south to complement its leasing operations, still located in the “vintage” downtown building.

Previously, customers would have to find a place to park and then come inside, Thayer explained. Now, a better-designed building with covered bays allows technicians to come to the customer, equipped with better software and computers to begin immediately diagnosing the problem and to give price and time estimates.

Awaiting the drivers inside are a large-screen television, wireless computer access and showers.

He added he was using the technology for a more personal reason.

“I used to be right on top of everything,” he said, “but the new building is so big and spread out, it’s a lot harder to do.”

During a presentation at a recent BB&T investors’ conference, W.M. “Rusty” Rush, chief executive officer of publicly traded Rush Enterprises outlined how technology was helping to strengthen North America’s largest heavy-duty truck dealer.

“Most dealership owners . . . can’t cover a . . . customer that has a large base across a large network,” he said.

“Anyone who gets work done with us . . . you’re a Rush customer. If you have a problem anywhere on the road, our people can automatically punch it in, see what we’ve got and take care of that problem on the spot.”

Last month, the company an-nounced Martin Naegelin Jr., its chief financial officer for 10 years, was promoted to executive vice president and would oversee the installation of a new software operating system linking the company and its network of truck dealerships.

Mitchell, the Kenworth dealer, said his company’s expansion plans for the past decade were developed “with the idea in mind that more and more customers wanted out of the maintenance business.”

“It is hard for dealers to keep up [with the new engine technology], making it almost impossible for anyone but the very large fleets to keep up,” he said.

He told TT that customers were telling him that if his dealerships could “take care of their needs with modern, updated facilities . . . [these fleets] would likely get out of the [maintenance] business.”

Mitchell opened a dealership in Birmingham, Ala., earlier this decade and is building another in Mobile, Ala.

Mitchell said he is adding scanners at his dealerships to cut down on paperwork from repairs and orders.

“It is a pretty tough thing to do,” Mitchell said of that continuing transition.

Ronald Remp, third-generation owner of Wheeling Truck Center, a Volvo heavy-duty and GMC medium-duty truck dealership in Wheeling, W.Va., said cyberspace has become an important part of his company’s strategy.

He said the number of serious sales inquiries through his dealership’s online advertising and through its Web site has started to rival those made to its toll-free telephone number.

This discovery was among the reasons the dealership earlier this year launched VolvoChrome.com, a Web site devoted to chrome and truck accessories.

Remp said it was already generating “a lot of business,” even though at the time, the company was still improving the site’s search functionality and overall appearance.

“The customer base is become more sophisticated,” and this site was part of a “new thought process on how we can generate more accessory sales,” he said.

Meanwhile, Frank Ellett of Virginia Truck Center, composed of four Freightliner dealerships, said his immediate focus has been on training and education, rather than additional technology.

He said his salespeople have been receiving extensive training on the new models and that his technicians had been working with 2007 engines for many months.

“A one-on-one talk with a salesman is much better than what [customers] can get on the Internet,” he said. “They need to talk with people who have been there and done it.”

At the same time, Ellett’s company Web site has extensive inventory listings. He said most of his dealerships’ operations have been electronic for several years.

ATD Chairman Grask shared similar sentiments, saying that communication with customers remains a key to dealers’ success and that they “do not need a different game plan” to be successful in 2007.

But he also cited reasons why he believed dealers should review their operations.

“A dealer’s need to invest in technology is not only an investment in its customer base, it is also an investment for the very real shortage of technicians,” Grask said.

He said dealers have to do a better job “selling the industry as exciting and high tech. It is clean — it’s not as greasy as it is thought to be.”

Looking beyond 2007, Grask said he expects more choices of Web-based applications tailored for dealers “that make things easier and quicker, and offer real-time savings to truckers.”

For example, Grask said, more advanced bar coding could make buying trucks and parts “like going to the grocery store.” 

4/11/2007

Tonnage declines and adverse weather resulted in lower margins and a more dismal outlook from Wall Street for ABF Freight Systems.

Lower expectations in the LTL sector are in line with predictions made earlier this year that a weakening economy would put a dent in prices. According to investment firm Stephens, tonnage at ABF has declined 5.5 percent and weight per shipment has dropped 2.6 percent so far in 2007 compared to a year ago. In addition to weather-related service problems, rollout of ABF's regional service was expected to affect operations.

While ABF has little direct exposure to automotive and housing freight, "between those two sectors and other industrial corners of the U.S. economy, longer-haul LTL carriers are experiencing the equivalent of a 'freight recession,'" Stephens said. "It is also our sense that pricing has become more competitive since the beginning of March."