The Week

The Week

Copyright 2004, Traffic World, Inc.

Quote of the week: "It obviously hit more than a speed bump. It hit a flat tire." -- BB&T trucking analyst Thom Albrecht on financial woes at Waco, Texas-based LTL trucker Central Freight Lines.

Nearly a billion dollars worth of mergers in one week points to a resurgence in world logistics activity and underscores the potential for a new wave of mergers and acquisitions. Transport experts are asking who''s next after Exel''s and TNT Post Group''s respective buys of Tibbett & Britten and Wilson Logistics. The price of consolidation may be the loss of mid-tier logistics players but the result will be more and better services for shippers.

The House''s $1.1 billion rail security bill is running into stiff opposition from Democrats who say they were locked out of the drafting process. The bill, favored by the rail industry and Republicans, would require federal agencies to coordinate rail security efforts and make security grants available to railroads. Chances for passage are dim but for the rail industry it sets the terms for debate on what rail security may look like.

The United States needs to redirect its resources to protect ports and other critical transport facilities from terrorist attack, says Stephen Flynn, an expert in transport security and senior fellow with the Council on Foreign Relations. Flynn said the private sector needs to say more and pay more to ensure "market sustainable" transportation security regulations.

How does a shipper become a carrier''s customer of choice? It''s a critical question in these days of strained freight capacity in which carriers can pick and choose their customers. Owens Corning''s answer has been to become a sort of virtual carrier, engineering its own operations to meet carrier needs and providing them with the tools they need to work with the $5 billion building materials company. It has just completed a Web portal that seeks to put all of its shipping information on the Internet.

The peak season in trans-Pacific trade ain''t what it used to be. That doesn''t mean intermodal gridlock, equipment shortages and port congestion on the West Coast aren''t part of the current picture. They are. But experts say that the shift of manufacturing to China and the Far East means that many goods are shipped year round, that planning and supply chain efficiencies have allowed shippers to ship later, all acting to shorten and level the peak season.

"It''s almost incomprehensible how far off the mark they are right now." That assessment by BB&T trucking analyst Thom Albrecht was a common view after Central Freight Lines announced it expected to miss its already lowered second quarter earnings forecast. Central is expanding from its Texas base and late last year purchased Eastern Oregon Fast Freight. Is it going too far too fast? Central President and CEO Bob Fasso acknowledged "disappointment in our current progress" but said "our expanded footprint is strategic to our future."

Watkins Associated Industries, parent of nationwide LTL carrier Watkins Motor Lines, bought Toronto-based Fairway Canadian Express for an undisclosed amount, another step in its move to broaden coverage and speed service in North America. Fairway provides nationwide LTL service within Canada, same-day LTL service in Ontario and Quebec and international service between Canada, the United States and Mexico.

The fight over who''s responsible for intermodal chassis maintenance and repair took an unexpected turn when the American Trucking Associations walked out on an inter-industry group attempting to develop a private sector solution. Equally interesting was the site of ATA announcement - the Teamster''s union headquarters in Washington. The union and ATA announced a joint study that attacked railroad and ocean carrier claims of the high cost of a legislative solution.

A North American rail summit is taking form and is tentatively scheduled for Chicago in May 2005. The summit, first publicly broached in a June 3 speech by Canadian Pacific Railway President and CEO Rob Ritchie, is expected to include representatives of major railroads from the United States, Canada and Mexico and their government. By the way, Mexican railroads could be represented by their own trade association. Industry sources say a Mexican railway association should be up and running in two months.

A new "gold rush" by U.S. air cargo carriers is expected as they vie for new flight opportunities to China contained in a new aviation services agreement between the China and the United States. It calls for far more new freighter operations than passenger flights - 111 new weekly frequencies for American and Chinese all-cargo flights out of a total of 195 - and gives express carriers critical new rights to run operations in the growing world economic power.

FedEx saw profits soar 47 percent in the final quarter of its fiscal year, with average daily package volume growing 7 percent. Ground and international lead the way. The company reported $412 million in profit for the quarter and $838 million for the year ending May 31.