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Industry News
 Prepared by: CPA International, Inc.

 February 2008
ODFL to Increase Rates 5.6%

   LTL carrier Old Dominion Freight Line said it will
    increase its base rates by an average 5.6%,
    beginning Monday February 16th.
    The increases will be based on the length of a
    haul, Rick Keeler, senior vice president of pricing
    and strategic development at the Thomasville,
    N.C.-based carrier, said in a statement.
   “The increase is necessary to offset higher costs
    as a result of new equipment, new service
    centers, state-of-the-art technology, insurance
    costs as well as wages and benefits,” he said.
   ODFL is ranked No. 20 on the Transport Topics
    100 listing of U.S. and Canadian for-hire carriers.
Hub Group’s Fourth-
Quarter Profit Declines
   Intermodal firm Hub Group Inc.’s fourth-quarter
    net income fell 20% to $14.2 million, or 38 cents
    a share, from $18 million, or 47 cents, a year
    Revenue fell 3% to $430.5 million from $445.5
    million, the company said. Hub Group also does
    third-party logistics and freight brokerage.
   “Intermodal and truck brokerage volume has
    been lower than expected due to the rapid
    downturn in the economy,” Hub Group said in a
   For the full year, it earned $59.2 million, or $1.58
    per share, compared with $59.8 million, or $1.53,
    in 2007. Revenue rose 12% to $1.86 billion.
   The company said in December it expected to
    earn $1.56 to $1.61 per share for 2008, down
    from its previous forecast of $1.65 to $1.70 per
   For 2009, Hub Group said it expects to earn
    $1.40 to $1.65 per share
UPS to Deliver for L.L.Bean
   UPS has been selected as the primary package
    delivery carrier for L.L.Bean, the 97-year-old
    outdoor apparel and equipment company.

    The move, effective Feb. 23, follows a lengthy
    evaluation process. UPS will provide both
    ground and air service to deliver the orders of
    L.L.Bean customers shopping through the famed
    retailer’s catalogs as well as online.

   L.L.Bean has been a trusted source for quality
    apparel, reliable outdoor equipment and expert
    advice since 1912. The company is well known
    for its world-class customer service.
Vitran Lost $3M
   Vitran lost $3.2 million in the fourth quarter as
    integration and operating costs mounted and
    shipments crumbled in the face of the recession.
   With an 8.7 percent decline in less-than-truckload
    shipments, total revenue fell 11.5 percent to
    $154.2 million. The LTL segment lost $4.7
    million, which was partly offset by gains in the
    truckload and logistics segments.
   The company also announced in December a
    one-time non-cash, $900,000 write-off of
    previously capitalized syndication costs. In the
    comparable 2007 quarter, Vitran recorded net
    income of $1.7 million.
   Looking forward, Gaetz cited cost cutting
    measures including downsizing the labor force
    and selling some redundant facilities. But the
    logistics segment seems to be a positive
    influence and added a dedicated distribution
    facility in California this month.
FedEx Freight Cutting 900
   FedEx Freight, the less-than-truckload unit of
    FedEx Corp., will cut 900 jobs because of
    declining demand and aggressive pricing by
    competitors, Bloomberg reported.
    The cuts, about 2.6% of the LTL unit’s 35,000
    employees, are in addition to 540 jobs trimmed at
    FedEx Freight late last year and 650 at FedEx’s
    Office division.
   FedEx said in December that it would cut its
    executives’ and salaried employees’ pay,
    suspend its matching contributions for
    employees’ 401(k) retirement plans for a
    minimum of a year and cut expenses by $200
    million this fiscal year and $600 million next year.
   FedEx Corp. is ranked No. 2 on the Transport
    Topics 100 listing of U.S. and Canadian for-hire
Shipment Index Hits 18-year
   The closely watched Freight Index of domestic
    shipping fell at its sharpest rate ever in January,
    reaching its lowest point since the key measure
    was launched 18 years ago.
   The shipment index, down at a double-digit rate
    since last summer, dropped 24.6 percent in
    January, exceeding the 23.1 percent drop
    reported in December. The index fell 5.7 percent
    from December to January, adding new evidence
    the staggering American economy is getting
    worse in 2009.
   Shippers also cut back spending at a record
    pace, reducing freight expenditures 22.8 percent
    compared to the same month last year.
Shipment Index Hits 18-year
   Shippers also cut back spending at a
    record pace, reducing freight
    expenditures 22.8 percent compared to
    the same month last year.
   The spending decline likely included
    some reduced costs from falling fuel
    prices. But the measure of expenditures
    also fell 12 percent from December to
    January, a signal that industrial
    production and manufacturing remain in
    steep decline.
Postal Service to Hike
Prices May 11
   The Governors of the U.S. Postal Service
    approved new prices for mailing services,
    including a 2-cent increase in the price of a First-
    Class Mail stamp to 44 cents.
   Prices for mailing services are reviewed annually
    and adjusted each May. The new prices, which
    go into effect Monday, May 11, are available now
   Rising operational costs made the price
    adjustments necessary, said the USPS, but the
    postal service must index its increases to the rate
    of inflation.
   "The Postal Service is not immune to rising costs
    which are affecting homes and businesses
    across America today," said Postmaster General
    John Potter. "Even with the increases, the Postal
    Service continues to offer some of the lowest
    postage prices in the world."
    DOE Holds ’09 Diesel
    Forecast at $2.28 a Gallon
   The Energy Department held its projection for
    diesel prices from a previous forecast, saying
    trucking’s main fuel would average $2.28 per
    gallon this year and $2.55 in 2010. Last month’s
    forecast was just a penny lower the current
    monthly short-term energy outlook, which DOE
    released Tuesday.
   Trucking’s main fuel averaged $3.79 at the pump
    last year, and the national average price in
    DOE’s weekly survey released Monday was
    $2.219 — a 2.7-cent decline from last week and
    down more than $2.54 from the record $4.764 set
    last July.
   Regular gasoline will average $1.95 this year and
    $2.19 in 2010, DOE said—up from last month’s
    $1.87 and $2.18 forecasts, respectively.
DOE Holds ’09 Diesel
Forecast at $2.28 a Gallon
   DOE’s weekly gasoline survey
    released Monday put the price at
    $1.926 — up 3.4 cents from last
    week but down almost $2.20 from
    the $4.114 record set in July.
   Having fallen from record highs
    about $145 last year to below $40
    per barrel, crude oil — which
    averaged $100 a barrel in 2008 —
    will average $43 a barrel this and
    $55 in 2010, down slightly from the
    $43.25 $54.50 respective forecasts
    of last month.
States Look Toward More
Toll Roads For Revenue
   More and more, states are making toll roads a
    permanent part of the nation’s highway system and
    eyeing toll dollars as a way to plug gaping budget
    deficits. This is a growing concern that has been top-
    of-mind the last few years for NASSTRAC shippers
    and carriers as they look for ways to keep their
    transportation costs down.
   This concern is underscored when you consider
    increasing toll road development. In fact, between
    1992 and 2006, new toll road development increased
    to 75 miles a year from 50 miles, and over the next
    decade is likely to reach more than 180 miles annually,
    according to a report from the Federal Highway
    Administration. The state of Texas leads the country in
    developing toll roads, with 78 projects either completed
    or in development, according to the report. California
    follows Texas, and Florida is third. According to the
    report, although toll revenues are currently a relatively
    small part of overall highway revenues ($8 billion out of
    $165 nationally), tolls are an essential source of
    income for some states.
States Look Toward More
Toll Roads For Revenue
   Some toll projects focus on entirely new
    highways. According to the report, most of the
    new toll development is happening in states with
    new, fast-growing urban centers, such as
    Colorado, and in states that have had toll roads
    for decades, such as Illinois and Pennsylvania.
    Other projects consist of such features as high-
    occupancy toll lanes added to existing highways
    in congested urban areas, such as Northern
    Virginia, around Washington, D.C. The report
    also found that, while most of the new toll
    facilities are developed by public agencies, more
    than 20% of them now involve public-private
    partnerships. As tolls on existing roads are rising,
    states also are exploring opportunities to add
    tolls to free interstates.
Southern California Ports -
Clean Truck Fee Collection
Begins Feb. 18th
   Effective February 18, 2009, marine
    container terminals will begin electronic
    gate access at the Ports of Los Angeles
    and Long Beach. Electronic gate access
    will determine whether a truck entering
    the marine container terminal is
    operating under a valid port concession
    and allowed entry or if the truck is
    prohibited by the Clean Trucks
    Program’s progressive truck ban. Trucks
    without a Radio Frequency Identification
    (RFID) tag, which identifies the vehicle
    as working under a valid port
    concessionaire, will not be allowed entry
    into the ports’ container terminals.
Southern California Ports -
Clean Truck Fee Collection
Begins Feb. 18th
   Also beginning February 18, 2009, the Ports of Long
    Beach and Los Angeles will require that marine
    container terminal operators collect the Clean Trucks
    Fee (CTF). The $35/20 FOOT AND $70/40 FOOT fee
    will be assessed on every loaded container move
    performed by trucks that are not fully or partially
    exempt from the CTF.
   In order to enter the ports’ marine container terminals
    on and after February 18th, all trucks operating for a
    Licensed Motor Carrier (LMC) with a valid port
    concession are required to be registered in the
    Drayage Truck Registry (DTR), have paid the
    $100/truck DTR registration fee, and have obtained
    and mounted a working RFID tag. Trucks that do not
    meet these requirements will not be permitted into the
    ports’ marine container terminals. The Licensed Motor
    Carrier is responsible for assuring that the information
    on each truck is correct in the DTR. If you have
    recently replaced a defective RFID tag please make
    sure that the new RFID number is recorded in the
Manufacturers Push
Infrastructure Agenda
   The National Association of Manufacturers warns
    that deteriorating roads and rails pose a "serious
    threat" to the competitiveness of the U.S.
    economy and manufacturing.
   That warning was stressed within NAM's
    "Legislative Agenda for Economic Recovery and
    Job Creation" for the 111th Congress.
   NAM said several issues will likely influence the
    highway bill reauthorization, which expires Sept.
    30. Among them are a proposed federal bonding
    program to infuse states with additional funds for
    infrastructure projects, the use of public-private
    partnerships, and a federal effort to reduce
    transportation bottlenecks.
   NAM also recommends Congress and the
    Obama Administration create a federal capital
    budget modeled after corporate and state
    budgets to improve planning and financing of
    infrastructure projects.
    Senate Takes Aim at Cross
    border Trucking
   Senate Democrats once again are trying to kill
    the Department of Transportation's cross border
    trucking pilot project with Mexico.
   Language in the 2009 Omnibus Appropriations
    Act released Feb. 23 would eliminate the
    controversial program, which since 2007 has
    allowed a small number of Mexican trucking
    companies to operate in the United States
    beyond the 20-mile border commercial zone.
   The project came under fire by labor and
    consumer safety groups when it was introduced
    in 2007, in particular from the Teamsters union,
    the Owner-Operator Independent Drivers
    Association and Public Citizen, which sued the
    DOT in federal court.
Senate Takes Aim at Cross
border Trucking
   The cross border program was slated to end last
    September, but the DOT extended it for two
    years to collect more data.
   In December 2007, Congress passed a spending
    bill that prohibited the DOT from spending money
    "to establish a cross border motor carrier
    demonstration program."
   The language in the latest Senate bill is "clear,
    strong, and leaves absolutely no wiggle room,"
    said Sen. Byron Dorgan, D-N.D., who introduced
    the measure.
   The DOT funding measure states that no money
    may be used "directly or indirectly" to "establish,
    implement, continue, promote or in any way
    permit," a cross border trucking program that
    gives Mexican truckers access to the U.S.
Schneider National
Freezes Pay
   Truckload carrier and third-party logistics
    company Schneider National said it is freezing its
    employees’ pay this year, the Associated Press
    reported Tuesday.
   The Green Bay, Wis., company said the pay
    freeze is in response to one of the most difficult
    freight markets in decades. Schneider, which
    employs 21,400 people, will also defer funding
    for retirement plans and 401(k) matches, AP
   Schneider, which also has intermodal operations,
    is ranked No. 9 on the Transport Topics 100
    listing of U.S. and Canadian for-hire carriers.
P.A.M. Reports Loss for
4Q, Year
   Truckload carrier P.A.M. Transportation Services
    reported a fourth-quarter loss of $11.4 million, or
    $1.19 per share, compared with a loss of
    $840,000, or 8 cents, a year ago.
    Operating revenue fell 17.8% to $84 million,
    P.A.M. said late Friday. The loss included non-
    cash charges triggered by the current equity
    market, P.A.M. said in a statement.
   For the full year, the company lost $18.8 million,
    or $1.94 per share, compared with a profit of $2.7
    million, or 26 cents, in 2007.
   P.A.M. is ranked No. 62 on the Transport Topics
    100 listing of U.S. and Canadian for-hire carriers.
Deteriorating environment
taking a toll on pricing.
   Historically there has been a strong correlation
    between our TL Freight Index and TL pricing,
    which implies that TL rates should come under
    pressure. Many carriers have argued that
    several years of sustained weakness in freight
    markets, thin operating margins, and shipper
    concerns about carrier viability and capacity
    should help limit price discounting going forward.
    However, even with large capacity reductions,
    these factors haven’t prevented significant pricing
    pressure in the current downturn. Struggling
    carriers continue to discount in a fight for survival,
    and we think shippers no longer have the luxury
    of not worrying about carrier viability in their effort
    to cut costs.
ATA’S Outlook
   Freight volume hauled by the nation’s
    largest in December fell to its lowest
    point in 15 years, confirming that “the
    country is in the thick of a recession”
    according to The American Trucking
   The 11.1% drop in the ATA’s for-hire
    truck index was the largest month-to-
    month decrease since April 1994 in the
    midst of a nationwide LTL strike.
   The index declined 14.1% compared to
    December 2007, the biggest year-over-
    year decrease since February 1996.
    Tonnage was down 6% compared to the
    same period a year earlier.
ATA’S Outlook
   “we expect freight demand to continue to
    decline sequentially, likely resulting in
    the worst truck load environment that
    truck load carriers have experienced
    since the industry’s inception in the
   Freight demand is falling so fast that
    carriers are not likely to reap the benefits
    of plummeting fuel prices, “and we still
    have concerns about negative pricing
    trends in 2009.”
ATA’S Outlook
   “Until freight volumes demonstrate some stability
    and or we signs of an acceleration in capacity
    tightening, we remain cautious on the near term
    involvement of our carriers.”
   Those who take full advantage of decreasing
    rates should be leery that those carriers will be
    there for them in the not so distant future.
   Weak fleets have survived longer than expected
    as lower fuel prices have reduced receivables as
    reduced the need for borrowing, but due to rate
    decreases and supply, it will be only a matter of
    time before supply declines rapidly.
   This will require shippers to walk a fine line
    between reduced cost and stability of their
Transportation Industry
   For specific questions regarding
    these topics, please contact
    CPA International toll free at
    888-684-4288 or via Email for details.

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