Smaller Trucking

In 1934, Lex and B.D. Benton pooled their savings together to open a filling station off of Highway 78 in Atlanta, GA. The two brothers would sleep above the shop at night while pumping gas and serving barbecue during the day. Over the next few months they learned about the movie film distribution through an acquaintance that stopped at the station weekly. With a desire to make a better living, they investigated the idea further. The Benton boys then decided to buy a used Ford Panel Truck and started to sell the idea of delivering movie film reels from Atlanta to South Georgia by truck.

In those days, no film was transported by truck, only by rail. The theatre managers had to go to the rail depot to pick up their new film and return their old film. Benton’s service was new -”give us a key to your theatre and when you come to work tomorrow, your new film will be there and the old film returned.” Because of the new convenience created by Benton, the service quickly grew. But the Benton Brother’s real success came in 1948 when the union struck against the rail. Because of the strike, the theaters not using Benton by this point could not get their new movies.

Upon temporary request to the Interstate Commerce Commission, the film companies asked for Benton to begin covering the entire state of Florida and Georgia during the strike. After the strike was over, the film customers did not want to lose the new increased service levels gained by using Benton, so they convinced the government to grant the Benton Brothers permanent authority to transport film throughout both Georgia and Florida. This type of service and freight kept Benton Brothers Film Express going strong down the same road until 1980.
The Motor Carriers Act of 1980 essentially deregulated interstate freight making it easier for trucking companies. This ruling placed Benton Express in an excellent position to take advantage and move into the general commodities business. The leaders of Benton at this time said that if they could deliver film and newsprint in an expedited manner on time, then the service levels should be no different for general commodities.

A. Duie Pyle, a leading shipping logistics provider, was pleased to announce that two of the company’s drivers, Leo Flack and Brian Singelais placed second and third respectively in their divisions at the 2010 American Trucking Associations’ (ATA) National Truck Driving Championships.
ATA’s Truck Driving Championships include top professional truck drivers from around the nation. They must first qualify at the state level to order advance to the national competition each summer. A Duie Pyle sent four drivers to the national championships this year.

Leo Flack placed second in the tank truck division and Brian Singelais placed third in the three-axle division. Also competing for Pyle this year was Rick Sly in the straight truck division, and John Forgione in the four-axle division. Nearly 400 drivers from all 50 states competed in Columbus for four days, challenging their driving skills, and knowledge of safety, equipment and the industry.

DB Schenker Logistics has expanded its network in southeastern Europe, adding a new logistics center in Pardubice, Czech Republic. One of the center’s first customers is ESAB, an international provider of welding materials and accessories. The new 12,000 square meter facility in eastern Bohemia, not far from the Polish border, can hold 13,500 pallets. It has 15 hydraulic loading ramps, one of which can also be used for side loading and unloading which help their shipping service.

The new logistics center, owned by the Czech national company Schenker spol. s r.o., is located in an important economic region. “We were very deliberate in our selection of this new location,” explained Karl Nutzinger, Member of the Management Board of Schenker AG responsible for European Land Transport. “Pardubice is an important transport hub whose infrastructure is being expanded and it also has an excellent connection for trucking freight to the European rail network.”

In addition to the good transport connection, the facility also has a private siding. Six wagons can be unloaded on the covered ramp. The warehouse is equipped with state-of-the-art technology and is protected from intrusion by a surveillance system. A 400 square meter office building is located next door. According to current plans, 65 employees are expected to perform a variety of logistics services in Pardubice by the end of the year. The new facility is one of ESAB’s three distribution warehouses worldwide.

Grube announced that DB Schenker will launch a series of measures in the coming years to improve quality. He mentioned a specific example in Berlin: by the end of 2011 financial support from the government’s economic stimulus program will make it possible to install dynamic signage units at about 2,800 locations in stations across Germany. Located on train platforms, the units will provide information about changes in scheduled train services visually via an electronic ticker display, and audibly via loudspeakers. Within the framework of the Customer and Quality Initiative launched by DB Schenker, these information systems will additionally be installed in stations across Germany. This step represents an additional investment of $27.5 million. Grube further stated: “There is no question that we must improve our service and quality. The Management Board will present additional elements of our Customer and Quality Initiative in September.”

During the first half of 2010 net debt was further reduced by $198 million to currently $19.5 billion. Chief Financial Officer Dr. Richard Lutz stated: “Once again we were able to finance our capital expenditures from our cash flow and reduce our debt. This is a further example of the financial stability and performance that DB Schenker has stood for since years. And this reliability also creates maneuvering room to make future investments.” As of June 30, 2010 Deutsche Bahn AG had nearly 240,000 employees or almost 3,000 more than in the same-year period. Freight cargo is up.

With back-to-school activities in full swing, the service professionals at USF Holland are giving a whole new meaning to the term honor roll.

For the 5th time this year, the company has received the highest honor awarded by a customer. ChemTreat, one of the largest and fastest growing specialty chemical companies dedicated to industrial water treatment, recently named Holland its LTL Carrier of the Year.

To determine rankings, ChemTreat rated shipping LTL carriers on service quality in a number of categories including on-time delivery, lost and damaged product, and billing accuracy. In addition, carriers were evaluated by ChemTreat traffic, shipping and receiving department employees.

“The service professionals at Holland work tirelessly to provide an exceptional customer experience,” said Jeff Rogers, president–USF Holland. “We are honored to call ChemTreat a valued partner and to be recognized so prominently for our daily efforts.”

Eldridge, Iowa ChemTreat plant manager, Chris Carter visited our Holland Rock Island facility to thank Holland employees and present the 2009 Carrier of the Year award to Rock Island account executive Chuck Thieme (right). Chris also presented a special gift to ChemTreat’s regular Holland driver Bob Reynolds (left). Said Chris, “Chuck Thieme, Jerry Kramer, Bob Reynolds and the entire Rock Island team have done a great job along with the rest of the Holland network.”

The company also has secured a 2009 Supplier Excellence Award for the fourth consecutive year from Eastman Chemical Company; a 2009 Regional Carrier of the Year Award from Echo Global Logistics; a 2009 Carrier of the Year award from Hamilton Sundstrand Logistics Council; and a 2009 LTL Carrier of the Year award from TTS, LLC.

Over the past decade, an increasing number of shippers–big and small–have discovered value in using third party logistics providers (3PLs). At the same time, 3PLs have discovered the value of using the world-class assets of YRC Worldwide.

“I’ve been in the transportation industry for more than 25 years, and I understand the reluctance some providers have toward the 3PL industry,” says Bill Crowe, vice president of indirect sales for YRC Worldwide. “However, by redefining our approach and working with the 3PLs, we’ve created a mutually beneficial relationship that helps everyone involved–the shipping customer, the 3PL and YRC Worldwide.”

Crowe says recent moves to more closely align sales and operations at YRC Worldwide make it easier for 3PLs to “access our assets and provide the best solutions and best price for their customers.”

“The 3PLs we partner with gain easy access to all our assets,” Crowe says. “Working with their data, we can quickly optimize a solution using all the YRC Worldwide operating companies. For example, we might determine that USF Reddaway would be their best choice for regional shipments in the Northeast, while YRC makes more sense for the long haul.”

YRC Worldwide works with a variety of 3PLs, notably fully supply chain managers and those that largely focus on requests for proposals (RFPs).

“By embracing the 3PL sector and changing our culture to better serve 3PL clients, we’ve also found a way to improve service to the shipping customer,” says Crowe. “As we move forward, I expect the benefits to expand for all of us.”

The figures on factory production probably come as no surprise, given the numerous positive manufacturing and general economic reports that continue to be issued. One of the trends that analysts will be watching is the proposed sustainability of this improvement in production. The Federal Reserve released these figures nearly 2 full months after the fact, and they came at a time when there was much rebuilding of inventory and freight shipping.

There was a bit of bad news for the labor market as claims for weekly jobless benefits moved upward more than expected, coming in at 484,000–a full 44,000 more than expected. Analysts, including government sources, have told the market to take these figures with some skepticism: there are administrative reasons for the unexpected increase and weekly figures can tend to be volatile. Even economists not connected with the US government are suggesting that this is a small bump in the road for employment; the general economic trends support job growth and an increase in shipping logistics.

One factor to watch in the labor markets is the role of technology in improving productivity. According to the latest earnings reports by technology firms, there is significant positive activity in the high-tech sector. Much of this activity is being driven by corporate spending on upgrades to productivity software and systems. Companies are using this period to improve worker productivity without hiring back to levels that existed in the pre-recession era. This happens in every major recessionary downturn.

If current trends hold, this could continue to help productivity rates and production grow, while the labor markets continue to struggle in finding momentum.

A good gauge of manufacturing in the country is the Institute for Supply Management’s Report on Business. The Purchaser Manufacturing Index  (PMI) was created to monitor the growth and contraction of the manufacturing sector through various economic cycles. The PMI has proven to be an accurate gauge of broader economic activity because of the critical importance of the sector on the broader U.S. economy.

The index, based on a baseline point of 50 with anything above a 50 showing growth, came in at 59.7–a strong showing for the month. However, it was down just slightly from the 60.4 reading from April. That may have more analysts scratching their heads than anything else in the report. Several significant economists had predicted that the U.S. would see this odd softening in the broader economy in the middle of the second quarter, and this index may be another proof point that this was occurring.

Almost every metric in the report was positive. Perhaps one of the most promising metrics from the report was the outlook for New Orders. The metric for New Orders stayed consistent at a robust 65.7. This shows that even though the significant strength of pending demand in the manufacturing sector was at its 36-month high in April, it continued that pending demand in May. That bodes well for future shipping logistics needs of the manufacturing sector and for carriers like Old Dominion Freight and Vitran.

Sixteen of eighteen categories tracked by the PMI were reporting growth in May. The only two that showed any signs of weakness were in the petroleum and coal sectors. Much of that weakness was seasonal, coming out of the higher demand winter months. One item to watch in the report is the notion that commodities continue to increase as a result of increased global manufacturing activity. Prices will start to ease up on individual products as raw material costs increase as well.

The Federal Reserve’s Beige Book for the month of June showed that several regions are seeing some near-term weakness in business activity.

What does this hold for the economy and trucking freight?

Our take:

Federal Reserve Chairman Bernanke provided comments during Congressional testimony two weeks ago that foreshadowed what the Fed Beige Book reports said last week. In his testimony, the chairman said that the economy faced “unusual uncertainty” in the face of several different economy headwinds.

Following on those comments a week later, the Federal Reserve’s regional banks reported on the nation’s economy and reiterated that there is uncertainty in specific markets. More regions around the country are reporting slowing activity with the cause being given that “high unemployment, cautious consumers and businesses, an ailing housing market and an edgy Wall Street have kept the recovery from gaining strength.” In addition, discussions last week about the potential elimination of Bush-era tax cuts could put more pressure on small businesses that could see taxes increase by four percent or more next year.

At the crux of the debate over economic softness is the role that the consumer will play in the recovery and whether the U.S. is facing a prolonged recovery period. Consumer spending accounts for more than 70 percent of U.S. GDP activity and is highly susceptible to the pressure from high unemployment levels and tightening credit. As businesses built up inventory earlier in 2010, analysts believe this may just be a breather until the consumer can eliminate some of that excess inventory sitting on retailer shelves since the build-up. Once inventory begins to move again, manufacturing will pick up momentum and the broader economy can take several more steps forward.

But for now, and taking an excerpt from the Beige Book, CNBC described current activity as such: “Retailers reported sales gains, although merchants in some places said shoppers focused on buying ‘necessities.’ Sales of big-ticket goods were slower. In fact, YRC reports across most regions found that auto sales had declined.” Durable goods orders corroborated the report from the Fed, showing weakness in June.

Not surprisingly, maritime container volumes were up in July on a significant rise in imports. What lies ahead for the maritime sector and freight transport?

YRC: Their take:

Container volumes were up more than 15% in July largely on the basis of increased imports into the country. One of the questions being asked of the forecasting community is: What is driving current activity outside of normal peak season volumes, and what does the fall season hold for the sector?

July was largely an inventory-building month, as we would typically see in a traditional peak season run-up to the holiday shopping season. With back-to-school inventories largely in place prior to July, much of the increase in volume is anticipatory for a busy peak season, if consumer demand can find solid footing. With increases in automotive imports, high tech, and basic consumer goods, there is some optimism in the shipping industry that the economic recovery will continue to slowly grow throughout the year.

But looking ahead, there are a couple of speed-bumps to watch–and ultimately get over. Retail sales were reportedly weaker in July than expected. This could have an impact on the willingness of retailers to build more inventory in the fall until sales volumes increase and it appears the consumer is willing to spend once again. In addition, the U.S. dollar is dropping against a basket of foreign currencies and could continue to do so–which would make importing more expensive. This might both increase product costs and consumer prices and ultimately slow consumption.

On the positive side, there is an important role that optimism can play in consumer spending patterns. Therefore, another area to watch is the last period of the back-to-school season. If sales volumes increase enough in August to deplete inventory without too much discounting, this could fuel confidence in the recovery and anticipation of a better holiday shopping season. That could create a scramble for merchandise, fuel manufacturing, and increase seasonal job hiring. All of this would create an environment of improved consumer discretionary income and potentially help to increase overall consumer spending. With consumer spending accounting for 70 percent of U.S. GDP, any increase in activity is a sign of a more positive environment for recovery.