Traffic Summary

Traffic Newsletter

Monthly news digest of important developments in the field of transportation affecting all industries.

To receive this publication, you must be a member of the International Furniture Transportation and Logistics Council. For more information, contact Ray Bohman at (508) 945-2272

Sample

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Traffic Newsletter

APRIL, 2004

FIRST 2004 MOTOR CARRIER GENERAL RATE INCREASES ARE IN THE OFFING - The Southern Motor Carriers Rate Conference (SMC3), headquartered in Peachtree City, Georgia, has scheduled a meeting of its General Rate Committee on April 14. The purpose of the meeting will be to consider a proposal to go forward with a general rate increase. It is expected that a vote will be taken at that meeting to approve a general rate increase. At this time, it is still too early to tell what percentage increases may be approved, but it is expected to be in the neighborhood of 6 percent on LTL traffic.

YELLOW ROADWAY CORP. MAY CLOSE A NUMBER OF TERMINALS - Sometime this month, newly formed Yellow Roadway Corp., parent of Yellow Transportation and Roadway Express, is expected to decide whether to shutdown duplicate terminals the two LTL carriers operate in as many as 37 cities. Operations of both carriers would be housed in a single terminal, with each carrier continuing to operate separately. No jobs are expected to be cut. It’s all part of a plan by Yellow Roadway Corp. to eliminate $30 million in costs during 2004. The decision on the city has already been made. Yellow’s terminal in Chattanooga, Tenn. will be closed and its operations will be moved to Roadway’s terminal, a larger facility. The Teamsters union is going along with these moves to improve efficiency.

CANADIAN NATIONAL STRIKE IS OVER - A month-long strike by more than 5,000 clerical and mechanical workers - members of the Canadian Auto Workers union - ended on March 20 after members of the union voted to approve a new three-year agreement with the Canadian National Railway. The new contract is retroactive to the first of this year. It provides for annual wage increases of 3% and the scrapping of the railroad’s new disciplinary system. The strike forced many shippers to turn to more expensive truck service as rail container yards created bottlenecks by striking workers. During the first week of the strike that began on February 20, overall traffic was off by 14%.

OVERNITE OFFERS FASTER SERVICE FROM TWO MIDWEST SERVICE CENTERS - Overnite Transportation Co., one of the nation’s largest non-union LTL carriers, has enhanced its service on over 70 lanes from its service centers in Evansville, Indiana, and Mount Vernon, Illinois. >From Evansville it is offering two-day service throughout the New England and Middle Atlantic states. And its two-day service from Mount Vernon has been extended to a number of markets including New York City, Philadelphia, San Antonia and Tampa. Four-day service is now available to Las Vegas and Southern California.

BROKERS SAY TRUCKLOAD RATES ARE GOING UP -At a meeting of the Transportation Intermediaries Association held in New Orleans last month, brokers said truckload rates are between 3% and 5% higher than they were a year ago and are expected to increase by another 6% to 8% this year. The rate hikes are coming in the wake of not enough carrier capacity to meet rising demand - a problem expected to get worse in the months ahead; a shortage of drivers; new driver hours-of-service rules and sky-rocketing fuel costs. A record number of postings of loads seeking trucks appeared on one broker's website on February 26 - 120,000 loads - was double the volume last year. Higher stop-off charges are also being implemented by many truckload carriers, with one company seeking charges of $100 to $150 per stop versus $30 to $50 last year.

VIRGINIA DELAYS ENFORCEMENT OF HOS RULES - Last month, the Virginia State Police said they would not begin "hard enforcement" of the new commercial driver hours-of-service rules until mid-April. Up to now, since the rules took effect on January 4, many states observed a 60-day "soft enforcement" period. State police said that while they have been taking note of violations, they have not issued any court summonses. The Virginia Trucking Association said it agrees with the delay as more time was needed to better educate both the trucking industry and law enforcement officers of the new rules.

UPS MAIL INNOVATIONS CONTINUES TO EXPAND - The latest facility - its second new mail facility since it opened one four months earlier in Chicago - is located in Hartford, Conn. UPS now has 11 Mail Innovation processing facilities designed to handle more mail volume and have more flexibility to process larger mail volumes in any given location. The program "aims to improve delivery of standard U.S. mail by participating in the work-share program of the U.S. Postal Service.

TRAFFIC TIP

NEW CLASSIFICATION COMMITTEE PROCEDURES REQUIRE

SUBMISSION OF ALL UNDERLYING STUDIES OF SUPPORTING

DATA BY INTERESTED PARTIES AT LEAST 30 DAYS PRIOR

TO AN NCC CLASSIFICATION PANEL PUBLIC MEETING

While it is now becoming widely known that the trucking industry's National Classification Committee is issuing its quarterly dockets or proposals for changes in descriptions, ratings, rules and packaging requirements at least 60 days prior to an NCC Classification Panel public meeting, what is not as yet widely known is the fact that interested parties "may submit new or additional information, including underlying studies or supporting data" at least 30 days before an NCC Panel meets. "No new facts, data or evidence submitted after 'that date' can be accepted or considered on any docketed proposal" . . . . . "although interested persons may submit statements or analyses based on the information in the public file" until two weeks before the Panel meeting. After that, "the public docket files will be closed, and no statements or analyses submitted thereafter can be accepted or considered."

Clearly this is a major change from the past where shippers could present facts, data or evidence at Panel public meetings.

COALITION SEEKS HOS RULES CHANGES -Congress is being asked by a coalition of shippers, led by Wal-Mart, to make two changes to the newly revised federal driver hours-of-service (HOS) rules. They are:

to allow drivers to stop the 14 hour clock, by "logging off and logging on" when they pull off the highway for meals or to wait out congestion, and

to let short-haul truck drivers operate under the old rules.

Representative, John Boozman (R.-Ark.), will attempt to get these rule changes added as an amendment to the pending federal highway bill. Highway safety officials and the American Trucking Associations are opposed to these rules changes.

TARGET TO MANDATE USE OF RFID TAGS - Following the lead of the nation's largest U.S. retailer - Wal-Mart - Target, this country's fourth largest American retailer, has announced it will require its vendors to tag pallets and cases with radio frequency identification tags moving to select regional distribution centers starting in the spring of 2005. And by 2007, those vendors will be required to accept RFID as a barcode supplement at the carton and pallet level. Wal-Mart wants its 10,000 suppliers to use RFID tags by the end of 2006, while the Department of Defense, which is also going the RFID route, could ultimately affect its 43,000 shippers. Clearly, these developments are putting more pressure on shippers, logistics companies and transportation operators to join the movement toward this new technology.

CLAIM TIP

REGULATIONS GOVERNING THE RECEIPT, PROCESSING AND SETTLEMENT OF CLAIMS

FOR LOSS OR DAMAGE ARE STILL VERY MUCH IN FORCE

Although the Interstate Commerce Commission no longer exists, the regulations it established on February 27, 1972 in Ex Parte No. 263 - "Rules, Regulations and Practices of Regulated Carriers with respect to the Processing of Loss and Damage Claims", are still in effect.

These rules apply to all regulated interstate carriers - railroads, motor carriers and freight forwarders - and govern how they must handle the receipt, processing and settlement of claims for loss or damage - a total of 14 rules. The rules cover such aspects of claims as to how soon a carrier must acknowledge a claim after its receipt as well as how soon it must be settled; reporting of concealed damage, inspection by carrier; failure to inspect, etc.

These rules can be found in many individual carrier rules tariffs, or for carriers party to NATIONAL MOTOR CARRIER CLASSIFICATION 100-D, on pages 750-752.

UPDATE - COMPLETE EARNINGS FOR ROADWAY EXPRESS AND NEW PENN MOTOR EXPRESS WERE NOT SHOWN IN OUR MARCH, 2004 ISSUE - As a result of the merger on December 11, 2003 of Yellow Corp. and Roadway Corp., which created Yellow Roadway Corp., our report on Page 5 only showed the revenues and earnings of Roadway Express and New Penn Motor Express for the few days they were part of the new Yellow Roadway Corp.

Many of these operating losses were associated with merger related expenses. Both carriers, which are still operating independently, are expected to show positive operating incomes.

DIESEL FUEL PRICES WERE MIXED IN MARCH - Although the national average price for a gallon of diesel fuel tacked on another 2.3 cents in March, closing on March 29 at $1.642 per gallon, prices in some regions and subregions rose, and fell in others. It was a real mixed bag. Prices fell in the New England, Central Atlantic and California sub-regions, as well as in the West Coast region, but in other regions and sub-regions of the country, they rose.

On the spot market, prices for April and May contracts of benchmark West Texas Intermediate Crush began the month closing at $36.33 a barrel, and closed on March 29 at $35.44 a barrel - a drop of 89 cents a barrel. During the month, prices hit a high of $38.18 a barrel on March 18. It was the highest closing price since October 17, 1990, following the invasion of Kuwait by Iraq. A number of analysts believe the pricing outlook is still very volatile.

SWIFT TRANSPORTATION HURT BY LACK OF DRIVERS - The Phoenix, Arizona-based truckload carrier, the largest publicly traded truckload carrier in the U.S., has predicted its first quarter 2004 earnings will be "significantly less" than the same period last year, in part due to a lack of drivers. The company said it had to park, on average, approximately 600 trucks because it didn't have enough drivers to man them. Harsh weather, loss of productivity caused by the new drivers hours-of-service (HOS) rules, expenses for early retirement packages and higher fuel prices are other factors it says will contribute to lower earnings during the 1st quarter of 2004.

CANADIAN PACIFIC IS NO LONGER IN TOFC BUSINESS - The Canadian Pacific Railway officially exited the trailer-on-flat-car business on March 1, and is now concentrating on far more profitable container business. The CP, like some other railroads that want to make piggyback trailers a smaller part of their service, is replacing trailers with containers it can transport in greater volume with less equipment. The idea is moving freight in double stack (container) trains. The company said it will continue to offer specifically designed articulated platform cars, through its "Expressway" service, to move truck trailers between its hub in Montreal, Toronto and Detroit for shippers that can provide sufficient density on those lanes.

CENTRAL FREIGHT LINES EXPANDS IN PACIFIC NORTHWEST - On March 16, Central Freight Lines, Inc., announced it accelerated its expansion into the Pacific Northwest through the purchase of selected terminal network and rolling stock of Eastern Oregon Fast Freight, Inc., for $10 million. Eastern Oregon is a non-union regional less-than-truckload (LTL) carrier serving the states of Idaho, Oregon and Washington. The purchase gives Central an added network of 21 terminals, six of which were owned by EOFF.

USF CORP. IS PLANNING TO INTEGRATE ITS UNITS -USF Corp., one of the nation's largest motor carrier holding companies, is going through the strategic planning process that will ultimately lead to an integration of all of its eight operating companies, which include:

USF Holland USF Red Star

USF Bestway USF Reddaway

USF Dugan

Central to the plan is to make USF more of a company of one as opposed to eight autonomous operating units. The company wants to instill a stronger budgetary discipline, increased customer focus and a sharing of best practices.

RAILROAD INTERMODAL TRAFFIC CONTINUES TO INCREASE - During the five-week period between January 31 and February 28, intermodal traffic handled by the nation's Class I railroads was higher than the same weeks last year. The only exception was a 2.3% decline in containerized cargo transported during the week ending February 21 due to a federal holiday. While the growth of intermodal container traffic was more modest than trailer traffic, it is still about three times higher than trailer traffic. Once again, the growth of trailer traffic was substantially higher than during the same weeks in 2003, with percentage increases ranging from 11.9% to 21.6%. Listed below is the week-by-week breakdown of volumes handled and percentage change over the same week last year:

PUBLICATIONS YOU MAY WANT

EDITION 2 OF GLOSSARY OF SUPPLY CHAIN TERMINOLOGY FOR LOGISTICS,

WAREHOUSING, MANUFACTURING, DISTRIBUTION & TECHNOLOGY

The new second edition of this 420-page glossary, written by Philip Obal of IDII, an independent software research consulting group, is for "experienced and new professionals in supply chain software, operations, logistics or warehousing. It contains thousands of acronyms ("industry buzz words") that exist today. This handbook takes the mystery out of those and explains what they mean!" It contains sections on business, computer, conveyor, government, manufacturing, pallet, purchasing, transportation and warehouse words - 12 different areas. Priced at $49.95. For information on free Super Saving Shipping, go to www.idii.com, and then click Super Saving Shipping. You can also order by writing to Industrial Data & Information, Route 1, Box 580, Webber Falls, OK 74470, or by calling (918) 464-2222 or by faxing your order to (918) 464-2221. MasterCard, VISA, American Express and Discover cards are accepted.

FEDEX EARNINGS ROSE 41% IN LATEST QUARTER - FedEx Corp. released its fiscal 3rd Quarter financial results last month, for the quarter ending February 29. Net income for the period increased by 41%, up from $147 million in 2003's quarter to $207 million this year. Revenue rose from $5.545 billion. Here is the breakdown of revenue and operating income for its three major divisions:

NCC DOCKET HAS NEW ADDITION - The trucking industry's National Classification Committee released its quarterly docket - NCC DOCKET 2004-2 - on March 4, some two months before its open meeting to be held on Tuesday, May 4, 2004, in Alexandria, Virginia. The 35-page docket, which lists proposals of changes in descriptions, ratings (classes), rules and packaging requirements published in the NATIONAL MOTOR FREIGHT CLASSIFICATION has 12 proposals affecting specifically named commodities. Also included is a list of 17 Review Matters - reports by the NCC staff on the results of research projects they have been conducting that will be presented to and voted on by the NCC Classification Panel that will be meeting on that day. New, for the first time, is a 59-page Appendix to Docket 2004-2, giving the staff analyses for each of the 12 proposals included in the docket. Each analysis identified the proponent of the proposal and the staff contact, along with supporting data and other relevant data. Some reports include photos or charts. Interested parties now have access to such information well before the open meeting where the proposals will be considered and voted on.

CANADA PLANS TO IMPROVE CROSSING BETWEEN WINDSOR-DETROIT - In an effort to improve the flow of traffic between the U.S. and Canada through the connection between Windsor, Ontario, and Detroit, Michigan - the busiest border crossing between the two countries - the Canadian government and Ontario's provincial government will provide $230 million to accomplish:

revamping the Canada-U.S. tunnel plaza

helping to implement a special electronic-card program, called Nexus, which is already in place at the Niagara Falls crossing. It will enable frequent cross-border travelers to gain speedier access to the border crossing.

upgrading of rail systems and highways leading to the crossing points

Cross border trade through the Windsor-Detroit gateway amounts to $106 billion annually.

MID-STATES EXPRESS HAS PURCHASED A LARGER TERMINAL IN TOLEDO - Chicago, Ill.-based Mid-States Express, a regional LTL carrier serving 11 Midwestern states, has purchased a 49-door terminal in Toledo, Ohio, replacing its older 26-door facility that has served the area since 1994. The company currently provides overnight and second-day LTL service using a network of 26 service centers. Mid-States has over 850 employees and operates 440 tractors and 960 trailers.