Westbound Transpacific Stabilization Agreement - PowerPoint

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					Transportation
Industry News
 Prepared by: CPA International, Inc.

 December 2009
YRC Wins Debt Exchange
Agreement
   Trucker hails „major turning point‟ in repairing its troubled
    finances
   The agreement, which came after five extensions of the
    exchange offer deadline, from holders of bonds from the
    company‟s purchase of USF several years ago clears away
    hundreds of millions of dollars in debt and gives YRC the
    ability to make a payment to lenders due by 11:59 p.m. EST,
    Dec. 31.
   YRC now moves into 2010 with much of the huge debt that
    burdened the company removed. "The success of this note
    exchange marks a major turning point for YRC Worldwide --
    with our significantly restructured balance sheet and
    enhanced liquidity, we will move forward from a more solid
    financial foundation," Bill Zollars, chairman and CEO, said in
    a statement.
   The company now will try to win back shippers that industry
    observers say have shifted away from YRC because of fears
    of a potential bankruptcy filing or shutdown.
Recession, White House
Made for Year of Challenges
   Trucking fleets focused on survival in 2009 as freight
    haulers battled a widespread economic downturn and
    confronted the prospect of significant new safety and
    environmental regulations from the Obama
    administration.
   A continuing decline in truck tonnage forced many
    carriers to slash rates and shrink the size of their
    fleets, depressing profits and curbing demand for new
    and used tractors and trailers.
   Department of Transportation, Secretary Ray LaHood
    announced a plan to re-examine driver hours-of-
    service rules in effect since 2004 and sparred with
    congressional leaders over upcoming highway funding
    legislation, while The Environmental Protection
    Agency took the first steps toward regulating carbon
    emissions.
Expected Crackdown on
Distracted Driving
   Some of the year‟s most significant information
    technology developments came from Washington,
    D.C., where federal regulators planted the seeds for
    tighter industry oversight for years to come.
   Both the Department of Transportation and members
    of Congress came out against distracted driving,
    though no legislation appeared imminent at the end of
    2009.
   DOT, however, has promised a rulemaking that will
    address driver distraction, and legislators introduced
    bills that would, among other things, likely ban text
    messaging from commercial trucks.
   Sen. Jay Rockefeller (D-W.Va.) and Sen. Charles
    Schumer (D-N.Y.) introduced separate texting bans in
    the Senate, and American Trucking Associations threw
    its support behind Schumer‟s bill in October.
Workers Continue To Clear
I-40 Rock Slide
   Work crews struggling around the clock to clear a
    rockslide on Interstate 40 in western North
    Carolina to speed the clearance of boulders from
    the road, the Associated Press reported.
   The rockslide closed down a section of I-40 near
    the Tennessee line in late October and it has
    been closed since.
   Officials originally estimated the highway would
    reopen in January. They now say it could reopen
    in March but say snow and ice could slow
    workers down, making conditions hazardous on
    steep and rocky terrain.
Congress adds $40 Billion in
Highway funds
   In a flurry of activity before its holiday recess,
    Congress approved more than $40 billion in new
    highway spending for 2010, moved toward
    adding another $27 billion, approved a truck-
    weight exemption and quietly dropped a
    prohibition on a federal pilot program allowing
    trucking across the U.S.-Mexico border.
   The spending bill allows Maine and Vermont to
    conduct one-year pilot programs to test increased
    truck weights, and it omits a provision preventing
    DOT from spending money on a Mexican
    trucking pilot program that was in the previous
    appropriation.
Arrow Trucking Closes
   Flatbed and heavy specialized carrier Arrow Trucking
    has closed down, the Associated Press reported.
   The Tulsa, Okla.-based carrier suspended its
    operations and laid off all of its workers.
   In a brief statement Chief Executive Officer Doug
    Pielsticker said that it is negotiating with its principal
    lender, and that the lender wants to secure its
    collateral.
   Arrow‟s telephone lines have a recorded message
    telling drivers to take their trucks to the nearest
    Freightliner dealership and that Arrow would give
    drivers a bus ticket home.
   Arrow has 1,600 employees, 1,320 trucks and 2,400
    trailers, the company told TT earlier this year. In
    addition to truckload and less-than-truckload services,
    it also runs logistics operations.
Ocean Container Carrier
Losses Reach $11 Billion
   The world‟s top 22 ocean container carriers lost some
    $11 billion in the first nine months of the year and face
    further losses in 2010 as the industry digs out from the
    worst downturn in its 50-plus history.
   Sixteen of the carriers that have published third-
    quarter results reported cumulative operating losses of
    $9 billion in the first nine months of 2009, according to
    a survey by AXS-Alphaliner, the Paris-based shipping
    analyst and consultant. This compares with a
    combined operating profit of $5.3 billion in the
    corresponding period of 2008.
   The total shipping revenue of the 16 carriers publishing
    results — including Maersk Line, Hapag-Lloyd, China
    Shipping, “K” Line and NYK Line — plunged 40
    percent in the first nine months, to $56 billion from $94
    million a year earlier.
Ocean Container Carrier
Losses Reach $11 Billion
   The Transpacific Stabilization Agreement, a
    discussion agreement of carriers that control 90
    percent of U.S. containerized imports from Asia,
    last week predicted losses in that trade would hit
    $20 billion this year, and recommended an
    “emergency revenue program” involving a rate
    hike of $400 per 40-foot container on Jan. 15.
    The Westbound Transpacific Stabilization
    Agreement, representing carriers in the U.S.-to-
    Asia trade, on Monday followed with its own
    recommendation for similar hikes.
   Most ocean carriers surveyed by Alphaliner
    expect cargo volume and rates to recover in
    2010, but most also expect to lose money next
    year.
Retailers Forecast Strong
Import Growth
   Containerized imports at 10 major U.S. ports are expected to
    rise in three consecutive months starting in February,
    breaking a 31-month streak of year-to-year declines, the
    National Retail Federation and IHS Global Insight said in their
    monthly Port Tracker report.
   “We‟ve been seeing hints of a turnaround in our past few
    reports but this is starting to look like a clear trend,” said
    Jonathan Gold, the NRF‟s vice president for supply chain and
    customs policy. “If retailers are starting to import more
    merchandise, it‟s because they expect to be able to sell more,
    and that‟s a good sign for our industry and the overall
    economy.”
   Ports surveyed handled 1.18 million TEUs in October, the
    most recent month for which actual numbers are available.
    That was up 4 percent from September but was down 14
    percent from October 2008. November was estimated at 1.09
    million TEUs, down 12 percent from last year, and December
    is forecast at 1.05 million TEUs, down 1 percent.
Saia Selling Stock to Pay Debt
   Regional trucker Saia, seeking to restructure
    debt obligations amid falling demand and high
    costs, said Tuesday it will sell 2.3 million shares
    to institutional investors as part of a plan to make
    impending payments.
   Saia said it expects to raise $25.1 million in the
    offering, which is expected to close Dec. 29, and
    that it will use the money to pay off some debt.
    Lenders in the agreement would ease some
    terms of covenants through the first quarter of
    2011.
   The Georgia-based less-than-truckload carrier
    also will reduce its borrowing capability under a
    revolving credit line from $160 million to $120
    million.
FedEx’s Quarterly Profits
Drop
   Net income and revenue declined at FedEx Corp. for its fiscal
    second quarter ended Nov. 30, but executives said
    improvements in recent volume trends and the global
    economy are reasons for optimism.
   The second-largest corporation in North American freight
    transportation earned $345 million, or $1.10 a share, on
    revenue of $8.6 billion. In the same quarter last year, it had
    net income of $493 million, or $1.58 a share, on revenue of
    $9.54 billion.
   We believe the U.S. economy reached a turning point year-
    over-year during our second fiscal quarter, with the one-year
    anniversary of the financial collapse. Several economic
    indicators related to industrial demand turned positive,
    compared to the same time last year,” Chairman and CEO
    Frederick Smith said during the call.
   Smith said FedEx has now weathered “the worst economic
    downturn in its history.”
MOL to Raise Asia-U.S. Rates
   MOL said Thursday it will increase ocean freight rates
    for all cargo originating in Asia and imported into the
    United States, effective Jan. 15.
   The move by the Japanese liner follows an
    announcement Dec. 16 by other major ocean carriers
    that they will seek compensation for rising operating
    costs as the container transport industry begins a
    modest recovery.
   The general rate increase for MOL will be $320 per 20-
    foot equivalent unit, $400 per 40-foot equivalent unit,
    $450 per 40-foot high cube container, and $505 per
    45-foot standard containers from Asia, the Middle
    East, Australia and New Zealand to all destinations in
    the United States and Mexico (excluding Puerto Rico
    and Virgin Islands).
Trucking Bankruptcies,
Pricing Edge Up
   Trucking bankruptcies are beginning to climb again,
    putting upward pressure on rates just as shippers
    prepare contracts for bidding in the first quarter of
    2010.
   The number of motor carrier bankruptcies rose 8.6
    percent from the second quarter to the third as 405
    companies shut down, said investment banking firm
    Avondale Partners.
   The number of trucks pulled out of service more than
    doubled from quarter to quarter, rising from 6,725 to
    14,135, Avondale said. The average fleet size of the
    carriers that closed rose from 18 to 35 trucks.
   That hardly put a dent in the glut of excess capacity,
    however, taking only 0.7 percent of the nation‟s heavy
    truck capacity off the highways, the firm said.
FedEx rate increase for 2010
   FedEx said late Thursday it will raise its standard
    list rates for its FedEx Ground and FedEx Home
    Delivery units by an average of 4.9%, effective
    Jan. 4.
   FedEx Corp. previously announced that it would
    increase shipping rates for FedEx Express by an
    average of 5.9% for U.S. domestic and U.S.
    export services, also effective Jan. 4.
   The FedEx Express rate increase will be partially
    offset by adjusting the fuel price at which the fuel
    surcharge begins, reducing the fuel surcharge by
    2%.
   Competitor UPS Inc. said last month it would also
    raise its 2010 rates by an average 4.9%
Transportation Industry
News
   For specific questions regarding
    these topics, please contact
    CPA International toll free at
    888-684-4288 or via Email
    cpa.intl@snet.net for details.

				
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