Executive Briefing - March 15
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Compaq to Fire 5,000
Compaq Computer Corp. plans to fire 5,000 employees, or 7% of its workforce, and will cut its earnings estimate for the first quarter, news services re-ported.This is the latest in a string of recent layoffs or production cuts by various types of manufacturers, which imply lower freight volume ahead for trucks to haul.
The Houston-based also said its earnings will be 12 to 14 cents a share for the quar-ter, rather than the 19 cents analysts had been expecting.
Fleetwood Enterprises to Close More Stores
Fleetwood Enterprises, which makes recreational vehicles and manufactured housing, said this week that it plans to close or sell 22 of its retail stores by the end of April, Bloomberg reported.The Riverside, Calif-based company has already closed 47 stores since April 2000.
On March 1, Fleetwood had reported a loss of $205 million for its fiscal third quarter ended Jan. 28, compared with a profit of $15.9 million a year earlier. Tranpsort Topics
ProLogis Building Mack Parts Center Near Baltimore
Distribution facility provider ProLogis said it is building a facility slated to become the largest North American parts distribution center for heavy truck manufacturer Mack Trucks.The 314,025-square-foot facility is under construction at the intersection of Interstate 95 and Maryland Route 100, near Elkridge. Steve Cloud of ProLogis told Transport Topics that it should be finished in June.
Mack said it will ship more than 175 tons of products daily from the new center to destinations around the world.Transport Topics
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for the full press release.)
Hayes Lemmerz Reports 4Q Loss
Vehicle parts Hayes Lemmerz International () said Thursday that it lost $16.5 million or 58 cents per share for its fourth quarter ended Jan. 31, and noted that severe cutbacks in heavy truck and light-vehicle production were among the factors hurting its results.
The loss for the latest quarter compared with earnings of $15.6 million or 51 cents per share during the same period last year.
The Northville, Mich.-based company supplies commercial highway wheels, brakes, suspensions and other lightweight components. Transport Topics
( for the full press release.)
Heinz, Jostens to Cut Jobs
Food-maker H.J. Heinz said Thursday that it plans to slash 1,900 jobs, in both manufacturing and other areas of the company.Cutbacks in manufacturing hurt trucking by curbing the volume of freight shipments.
Also this week, Jostens Inc., maker of class rings and other commemorative products, said it would eliminate roughly 138 jobs and consolidate three plants. Transport Topics
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for the full press release from Heinz.)( for the full press release.)
Roadway Warns on 1Q Earnings
Roadway Express (), a large trucking carrier specializing in less-than-truckload shipments, said it will miss first-quarter estimates because of bad weather and the slowing economy.
The Akron-Ohio based company also said its tonnage levels are at least 10% below the first quarter of 2000, and that this will hurts its financial results.
Roadway also said it had a one-time operating charge related to litigation that will reduce its net income by $3.5 million.
According to Reuters, analysts surveyed by First Call/Thomson Financial had been expecting Roadway to earn 56 cents per share. Transport Topics
( for the full press release.)
US&T Gets Midwest Routes for SmartMail
Same-day delivery company United Shipping & Technology () said it will provide scheduled package delivery in several key Midwest markets for SmartMail Services.
The agreement expands US&T's logistics services to five of mail expeditor SmartMail's 13 service areas.
The new contract awards US&T's subsidiaries, Velocity Express and VXP, shuttle routes between Cincinnati and Indianapolis, and between Detroit and Cleveland on a daily basis.
Minneapolis-based US&T is ranked number No. 46 in the Transport Topics 100 list of U.S. trucking companies, based on 1999 data. Transport Topics
( for the full press release.)
U.S. 4-Week Jobless Claims Highest Since July '98
In another sign of how company layoffs have affected the broader economy, the four-week moving average for the number of U.S. workers claiming first-tme unemployment benefits rose to the highest level since July 11, 1998, the Associated Press reported Thursday based on a Labor Department report.The rise in unemployment claims reflects the sharp slowdown of the U.S. economy, especially in manufacturing. And when the factory sector declines, the amount of freight available to be carried on trucks also declines.
Layoff announcements have continued to pile up in recent weeks and some of those would not yet be reflected in the latest data on jobless benefits claims. This week, for instance, Motorola said it would cut another 7,000 jobs from its cell-phone operations. Transport Topics
Fed Rate Cut Expected at 0.75%
The U.S. futures market for so-called federal funds - the money loaned overnight between commercial banks - is now pricing in an interest rate cut next week by the Federal Reserve of 0.75%, CNBC reported early Thursday.That would be good news for trucking for two reason. First, it could rapidly cut debt-service costs for companies and individuals with floating-rate debt on their equipment. Also, cuts in interest rates should eventually perk up the economy enough to strengthen freight shipments that have been weak for months.
Until the past week's big declines in the stock market, analysts had generally predicted the Fed would make another half-point cut when its policy board meets on Tuesday. It cut rates in two half-point moves during the month of January.
Meanwhile, various trucking companies continue to warn about their earnings outlook for the first quarter. On Wednesday, warnings came from freight-hauling conglomerate CNF, plus trucking companies Swift and M.S. Carriers. Transport Topics
Fuel Costs, Business Travel Slump Hurt UAL
Citing high fuel costs and a reduction in business travel, United Airlines parent UAL Corp. United Airlines () said Thursday that it expects first-quarter results to be substantially lower than the current estimate of a $2.82 loss per share.
Although the company did not mention freight transportation in its press release, passenger planes do carry 60% of air cargo so airlines all handle air cargo that uses trucking for ground deliveries.
When passenger business slides, that sometimes curbs the number of flights available to handle freight, but could also spur airlines to boost their cargo operations to strengthen that revenue source.
The Chicago-based company said it was taking steps to reduce costs by $200 million, but did not elaborate. Transport Topics
( for the full press release.)
Mexican Trucks' U.S. Access Could Change Laredo
If U.S. roads open to Mexican trucks, the key border town of Laredo, Texas, will play a different role and people there fear being bypassed, the New York Times reported Thursday.Currently, the town serves as the major hub for transferring truck freight between the United States, Canada and Mexico.
Since U.S. laws bar Mexican trucks beyond designated areas near the border, freight going to and from Mexico is processed and handed off in Laredo. In fact, the high volume of freight has added roughly 1 million square feet of new warehouse space per month in the city, the Times said.
However, if as expected the U.S. ban on Mexican truck operations is lifted, Laredo's role as a transfer station would no longer be as significant. Instead of stopping and unloading goods, long-haul trucks could pass right through town and skip much of the warehousing operations there.Transport Topics
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