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Shippers seeking to use third-party consultants for contract talks with FedEx, UPS may find the going rough.

By Mark B. Solomon

Article source: http://www.dcvelocity.com/articles/20110720hostilities_escalate_in_parcel_wards/?referrer=rss

Senate transport reauthorization proposal would create national program to fund freight projects.

By Mark B. Solomon

A leading freight advocacy group Wednesday praised a proposal introduced in the Senate to fund the nation’s transportation programs, saying the proposal gives freight a place at the table. The group, the Coalition for America’s Gateways and Trade Corridors, had slammed a version unveiled in the House of Representatives two weeks ago for its failure to address freight-related issues and to provide adequate funding.

The Senate proposal, jointly introduced by Sen. Barbara Boxer (D-Calif.), chair of the Senate Environment and Public Works Committee, and Sen. James Inhofe (R-Okla.), the committee’s ranking minority member, calls for a two-year reauthorization of the nation’s surface transportation program at current funding levels, which are about $42 billion a year. The last multiyear reauthorization bill was signed into law in 2005. It expires on Sept. 30.

By contrast, a proposal announced July 7 by Rep. John L. Mica (R-Fla.), chairman of the House Transportation and Infrastructure Committee, calls for $230 billion in funding over six years, a figure that represents a 35-percent reduction from current funding levels and which has been criticized by various groups, including the U.S. Chamber of Commerce, as inadequate to support the nation’s future infrastructure needs.

Boxer said in a statement that her approach is a “clear rejection” of the funding levels in the House proposal, which she warned would result in the loss of 630,000 jobs in the highway and mass transit sectors in 2012.

More significant for the freight sector is that the Boxer-Inhofe proposal creates a National Freight Program that establishes a funding formula to states for freight-dedicated highway projects, including the development of freight intermodal connectors. The proposal did not go into details on the program.

Push for a multimodal approach
Leslie Blakey, executive director of the Coalition for America’s Gateways and Trade Corridors, called the Senate proposal an “essential starting point toward a comprehensive multimodal approach to our national network for moving goods.” Blakey’s group has argued that the total funding amount of the Mica initiative is insufficient, and criticized the plan for being virtually silent on freight-related issues or funding.

Blakey said Congress needs to appropriate between $7 billion and $10 billion a year just for dedicated freight initiatives, should identify freight projects of “national significance” that would ensure an adequate funding stream, and should create an Office of Multimodal Freight within the Department of Transportation that would coordinate with the various modal agencies on freight issues and funding efforts.

The U.S. Chamber of Commerce, which had labeled as “unacceptable” the funding levels in the Mica proposal, was unavailable to comment on the Senate version. The Chamber, which represents 3 million business members, said the Mica proposal fails to provide sufficient investment to repair and maintain the nation’s crumbling infrastructure, and would devastate employment in the already-battered construction industry and damage related industries like basic materials, engineering, and design.

Cap on spending
Mica

Article source: http://www.dcvelocity.com/articles/20110721freight_group_applauds_senate_highway_plan/?referrer=rss

After weak start, TL prices and demand gained steam in late May, according to TransCore.

By Mark B. Solomon

After a slow start to the second quarter due to economic weakness and heavy flooding, truckload prices and demand gained steam toward the end of May and into June, signaling positive trends through the rest of the summer and early fall.

Data from TransCore, a Portland, Ore.-based load-matching network that tracks freight activity on 64 U.S. traffic lanes, showed an increase in “spot market” rates—non-contract rates charged for goods that must be moved quickly—over year-earlier levels. In June and through the first week of July, the average spot market rate for freight moving in dry vans, the most frequently utilized trailer type, rose 3.6 percent over prior-year levels to $1.43 per mile. Rates for goods in moving in refrigerated vans rose 2.4 percent to $1.72 per mile. Both increases represent the biggest gains in the past 12 months, according to TransCore.

Perhaps more significant from a macroeconomic standpoint, rates for freight moving on flatbed trucks have increased 16 cents a mile from year-earlier levels, an increase of 10 percent. In addition, flatbed rates, which usually peak in March or April, have remained strong through mid-July. Dry van and “reefer” pricing, by contrast, probably peaked last month, the firm said.

Mark Montague, an industry rate analyst for TransCore, said the resilience in flatbed rates reflects continued demand for industrial plant and construction equipment that normally moves on those trucks. Montague said it would be a positive sign for the broader economy if flatbed pricing can hold firm through the end of July.

TransCore expects a strong third quarter because shippers normally spend down their capital expenditure budgets during the quarter in preparation for fourth-quarter planning for their 2012 budgets. Business will also be stimulated by generous depreciation allowances on capital equipment permitted under federal tax laws, Montague said.

“We are poised to have a pretty good third quarter,” he said.

Montague said the Port of Savannah is currently the strongest market in TransCore’s universe for flatbed activity. It is followed by the ports of Charleston, S.C., and Houston, and then Joliet and Rock Island, Ill. Montague also noted that flatbed activity had been strong on the West Coast of late, particularly in outbound moves originating in California.

Truckload capacity in general fluctuated within a narrow range during the second quarter, Montague said. Freight brokers, who are engaged by shippers to build and market loads for transport, have been able to obtain equipment fairly easily. At the same time, carriers and brokers are relying more on spot rates as truckers, confronting the specter of higher fuel prices and a slew of government mandates likely to drive up costs, shy away from locking themselves into contractual arrangement for fear their revenues will not keep pace with their expenses.

Spot rates currently exceed contract rates on 23 percent of the lanes that TransCore monitors. That is roughly in line with the ratio reported in the first

Article source: http://www.dcvelocity.com/articles/20110721truckload_rates_edge_up_in_q2/?referrer=rss

New appointee served as president and CEO of Yellow Transportation from 2000 to 2007.

By Mark B. Solomon

Less-than-truckload (LTL) carrier YRC Worldwide Inc. will name trucking executive James L. Welch, head of Dallas-based Dynamex Inc. and a familiar name around YRC, to be the company’s next CEO, according to industry sources. A formal announcement is expected tomorrow.

Welch, 55, will succeed William D. Zollars, YRC’s chairman, president, and CEO, when Zollars retires following the completion of the company’s current restructuring efforts, scheduled for July 22. It was unclear if Welch will also assume the mantles of chairman and president. Word had leaked out about Welch’s appointment on July 12, but a call to Welch requesting comment that day was never returned. Dynamex confirmed that Welch will leave the company on July 22 but did not say where he was headed.

Welch began his career in 1978 with Yellow Transportation, which has since been incorporated into the company’s long-haul LTL network, known as YRC National. In 2000, Welch was named Yellow’s president and CEO, a position he held until 2007.

In November 2008, Welch was named president and CEO of Dynamex, which specializes in expedited transportation services. After Dynamex was acquired in February by Canadian transport firm Transforce Inc. for $248 million, Welch was named the new company’s CEO. Prior to joining Dynamex, Welch served as interim CEO of automotive transportation concern JHT Holdings Inc. and as an independent consultant.

The choice of Welch had to pass muster with the Teamsters, which represents about 25,000 YRC employees and has been deeply involved in YRC’s ongoing financial restructuring efforts as well as the search for a new CEO.

In a June 29 statement to Teamster members, Tyson Johnson, head of the union’s freight division, said YRC would formally name a new CEO and chief financial officer on July 22, the deadline for YRC to complete its long-planned financial restructuring. At the time, the company will announce a new eight-person board of directors, of which two members will be chosen by the Teamsters, according to Johnson’s statement.

Johnson did not identify the new CEO but said he had significant freight experience and a thorough understanding of issues impacting unionized LTL carriers. Indeed, Welch is highly regarded within the industry and by organized labor.

Zollars, who has run the Overland Park, Kan.-based company since 1999, has said repeatedly that he would retire once the company completed its financial restructuring and had named a new CEO.

YRC completed a step in its restructuring plan earlier this month when it announced it received commitments for a three-year, $400 million asset-based loan program to replace its existing asset-based securitization structure. The move is designed to provide YRC with more financial flexibility and enhanced liquidity, especially during periods of seasonal traffic weakness, the company said.

The new loan program “provides the financial flexibility and run room we need to grow the business” and to give the company “more financial breathing

Article source: http://www.dcvelocity.com/articles/20110721yrc_names_new_ceo/?referrer=rss

The Industrial Truck Association (ITA) said Wednesday that William J. Montwieler, the group’s executive director for 28 years, will retire on Dec. 31.

Montwieler will be succeeded by Brian Feehan, vice president of the Propane Education Research Council, ITA said in a statement. Feehan will join ITA this fall and take over on Jan. 1.

“Bill’s 28 years of service to the association have been marked by major changes to and improvement in the services that ITA offers its members. The association’s statistics program, its engineering practices, the work with the Occupational Safety and Health Administration (OSHA), the establishment of the Industrial Truck Standards Development Foundation, [and] the enhancement of our contacts with our sister associations abroad through the Alliance of Industrial Truck Organizations, all came about under Bill’s leadership,” said Jeff Rufener, president of ITA.

Rufener also lauded Feehan’s commitment to ITA, saying he has attended every association meeting for the past six years and has been a key contributor to advancing ITA’s air quality agenda.

Montwieler said, “I have had the pleasure of working with Brian over the course of the last several years and I am convinced that he has the experience, the ability and the desire to help lead the membership towards greater profitability.”

Montwieler called the adoption of sweeping OSHA regulations improving the safety of industrial truck operations his “crowning achievement” over the past 25 years at ITA.

“Those regulations wouldn’t have happened without ITA,” he said. “Every member can be proud that, thanks mainly to the association’s efforts, the lives”

Article source: http://www.dcvelocity.com/articles/20110721it_head_to_retire/?referrer=rss

Plan would impose ad velorem tax at production during price increases and a levy at retail level during price declines.

A coalition led by three prominent Americans has crafted a mechanism it believes will offer a
politically palatable approach to raising fuel taxes. The proceeds from these tax would help pay to
repair and rebuild the nation’s aging infrastructure.

The proposal, laid out on Monday by the Leadership Initiative for Transportation Solvency, would
assess a 5-percent ad velorem tax at the production or importation level should world oil
prices increase. It would also levy a variable tax of as much as 43 cents per gallon on gasoline
and diesel purchases at the pump should world oil prices decline. Proceeds from the levies would
be earmarked for infrastructure improvements.

The proposal is the collective brainchild of former U.S. Senator Bill Bradley; former
Pennsylvania Governor and Secretary of Homeland Security Tom Ridge; and former U.S. Comptroller
General David Walker. It is aimed at curtailing the demand for oil when prices are rising in order
to avoid the damaging economic impact of a price spike. At the same time, the tax at the retail
level would help stabilize prices and offset revenue reductions if oil prices decline.

In a 129-page

report, prepared in conjunction with The Carnegie Endowment for International Peace, the
coalition said that in the event of extreme oil price fluctuations, the ad velorem tax could be
recalibrated to stabilize transportation fuel costs while continuing to fund needed transportation
initiatives. The retail levy, as well, would be adjusted depending on the direction of oil prices
at a given point in time.

The retail levy would be reduced or even eliminated during periods of rising prices, thus
sparing American consumers and businesses—notably truckers—further pain at the pump.
At the same time, a reduction in the tax at the pump would be offset by the 5-percent levy at the
production or importation stages, the coalition said.

“Benefits of this strategy include distributing revenue responsibilities along the oil value
chain from production to consumption; buffering the impact of external events and oil supplies
over which the United States has no control; and stabilizing fuel prices for both producers and
consumers for long-term market equilibrium,” the coalition said.

The coalition’s proposal came just days after House Republicans led by Rep. John L. Mica
(R-Fla.), chairman of the House Transportation and Infrastructure Committee, unveiled a six-year,
$230 billion proposal to re-authorize funding for the nation’s transportation programs. The Mica
proposal, which is being crated in legislative form as of this writing, does not call for fuel tax
increases because Congress will not support it.

The federal tax on motor fuels has not been raised since 1993.

Article source: http://www.dcvelocity.com/articles/20110714_coalition_proposes_fuel_tax_plan/?referrer=rss

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Post office unveils service designed to compete with FedEx Ground and UPS standard ground service.

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The U.S. Postal Service has rolled out a shipping service it hopes will help it make inroads in markets where its presence up until now has been virtually non-existent.

The service, called “Priority Mail Regional Rate Box,” is patterned after the USPS’s Priority Mail flat rate offering that lets mailers pay the same rate regardless of how much material they stuff into the box. The new service is geared toward businesses shipping packages weighing between five and 15 pounds for short distances (up to 700 miles) and that need to arrive in two to three days.

The service, which was rolled out Jan. 2, takes USPS out of its comfort zone. Traditionally, USPS is competitive for shipments weighing one to five pounds and moving relatively long distances. By contrast, it is invisible in the shorter-distance lanes where nearly half of all parcels move.

Parcel-shipping distances in the United States are divided into eight “zones,” based on the distance between origin and destination points. For example, a zone 1 shipment would be destined for a neighboring city from the origin point, such as a shipment originating in Los Angeles and bound for San Diego. A coast-to-coast shipment would be classified as zone 8.

Within the zone 1–4 matrix that the new USPS service will attempt to penetrate, the average length of haul is 200 miles.

The service will be available to USPS’s “Commercial Base” customers that book shipments online and to its “Commercial Plus” customers that ship at least 75,000 pieces a year with USPS. The service is targeted to the business-to-consumer market and will not be available at retail post offices. It comes with a delivery confirmation feature at no charge, USPS said.

The post office has set two pricing tiers for the service: One, with a 15-pound weight limit, starts at $4.97 per box. The other, with a 20-pound weight limit, starts at $5.31 per box. Very few shipments will come close to either weight limit, however.

According to USPS, “Commercial Base” prices are, on average, 6.6 percent lower than retail postal prices. “Commercial Plus” prices average about 13.6 percent below comparable retail rates, USPS said.

Gary Reblin, vice president, shipping services, said the new service will compete with FedEx Ground, the ground-parcel unit of FedEx Corp., and UPS Inc.’s standard ground service. Both competitors offer significant discounts for high-volume customers shipping in the short zones.

Reblin said the new service will be priced competitively with FedEx and UPS. “We did a lot of research to come up with the price that we put in the market,” he said.

The USPS executive said the new service gives shippers a viable third service option in the concentrated shorter-distance market. “It puts us in the five- to 15-pound category, and it puts us in the closer zones,” Reblin said.

Jerry Hempstead, a

Article source: http://www.dcvelocity.com/articles/20110129_usps_unveils_priority_mail_regional_rate_box/?referrer=rss