Executive Briefing - May 10
- Senate Approves Budget Plan for Tax Cuts
- Customers Objecting As Railroads Raise Rates
- NATSO Sets Out Legislative Agenda
- O’Neill Confident Economy Will Bounce Back
- Navistar’s Ratings Cut by Moody's
- Don’t Re-regulate, Rail Chiefs Urge Congress
- ECB Unexpectedly Cut Rates
- Express Mail Dispute Rages in China
- Record Revenues for Mullen Transportation
Senate Approves Budget Plan for Tax Cuts
The Senate gave final approval on Thursday to a budget plan that lays the foundation for $1.35 trillion in tax cuts, news services reported.The $1.97 trillion fiscal 2002 budget plan sets up 11 years of tax cuts -- the biggest in 20 years -- but falls short of the $1.6 trillion in 10-year cuts President Bush originally sought.
The House of Representatives passed the budget on Wednesday on an almost straight party-line vote. It passed 53-47 in the Senate, with five Democrats voting for the budget and two Republicans opposing it.
The budget is not binding law, but protects the legislation from filibusters. That means the bill only needs a simple majority to pass.
Customers Objecting As Railroads Raise Rates
Saying their service has improved, U.S. railroads are raising their freight rates to just below those of trucking, Reuters reported.However, many of their biggest customers say the railroads could price themselves out of business. The reason trucks are able to charge more is because they are faster and more flexible in scheduling.
So far this year, Burlington Northern and Norfolk Southern have raised certain rates, and Burlington is now offering a money-back, on-time guarantee for its intermodal service on some lines. Transport Topics
NATSO Sets Out Legislative Agenda
Tax-free fuel sales at duty-free shops along the United States borders was one of the items topping the list as the National Association of Truck Stop Operators laid out its legislative agenda before the Congress Wednesday.Also high on the list for NATSO, which represents owners, operators and employees of truck stops and travel plazas, were issues including rest area parking and environmental regulations.
NATSO is opposed to the government taking action to increase parking spaces, maintaining that the private sector can do a better job.
And the organization opposes a phase-in of ultra-low sulfur diesel fuel, because it would result in the temporary manufacture, sale and use of two separate grades of fuel. Transport Topics
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O’Neill Confident Economy Will Bounce Back
Speaking at the opening session of the Asian Development Bank's annual meeting, Treasury Secretary Paul O'Neill said he is confident in the U.S. economy's ability to bounce back from its current slowdown, Reuters reported.He also appealed to Japan, the world’s No. 2 economy, to step up efforts to end a decade-long period of stagnation. O’Neill said he hopes Japan can act as an engine for growth throughout Asia.
In O’Neill’s opinion, the slowdown in the United States will end in the when bulging stocks of unsold goods are brought into line with sales, the article said. He suggested that was already well under way. Transport Topics
Navistar’s Ratings Cut by Moody's
Truck and engine maker Navistar International () had its credit and debt ratings cut to junk status by Moody's Investors Service, which said cash generation and debt protection measures at the company's manufacturing operations should remain weak through 2002, Reuters reported.
The agency said operations will remain weak because of the downturn in the North American truck sector, and the likelihood that a recovery in demand will be gradual.
Moody's cut Navistar's senior debt rating one notch to “Ba1,”' its highest junk grade, from “Baa3,” and also cut its short-term debt rating to “Not Prime'' from “Prime-3.”
The article noted downgrades to junk often raise corporate borrowing costs and forces investors not permitted to own junk bonds to sell. Transport Topics
Don’t Re-regulate, Rail Chiefs Urge Congress
Railroads need infrastructure help, but not re-regulation, the heads of two of the nation’s biggest railroads told Congress on Wednesday, according to Reuters.The financial picture for railroads is slipping, Matthew Rose, chief executive officer of Burlington Northern Santa Fe () said in a Senate hearing, noting that industry investment levels peaked at $7.4 billion in 1998, and are expected to be about $5 billion this year.
Also calling for the use of public money for rail infrastructure projects, Richard Davidson, chief executive officer of the Union Pacific (), warned the senators against attempts to regulate the railroads.
Powerful shippers want to regulate freight rail by forcing railroad companies to give competitors access to their facilities, Davidson said, and by imposing price controls. He said such controls would virtually wipe out rail profits. Transport Topics
ECB Unexpectedly Cut Rates
The European Central Bank unexpectedly cut its main interest rate by a quarter percentage point Thursday to 4.5% percent, bowing to pressure for action amid mounting evidence that growth was slowing, news services reported.This is only the second cut in the ECB's two-year history, and comes days after gloomy reports of falling levels of industrial production, orders and jobs reports from Germany, Europe's largest economy.
With the cut, the ECB joined the U.S. Federal Reserve and the Bank of Japan in a wave of interest rate cuts this year.
The Federal Reserve, which has cut rates in the United States four times so far this year, is expect to make another half percentage point reduction when it meets next week.
The Bank of England also cut its base rate by a quarter percentage point Thursday to 5.25 percent, its third cut this year. Transport Topics
Express Mail Dispute Rages in China
China's trade ministry is trying to resolve a dispute between the state postal system and freight forwarders like DHL Worldwide Express, FedEx () and United Parcel Service () over who has the right to deliver mail, the New York Times reported.The state system is claiming these companies are breaking a law that gives it the exclusive right to deliver mail. However, the delivery companies say a 1995 order by China's cabinet granted them an exception to the law.
Express mail delivery is one of the few promising activities for China's struggling postal system.
China’s state-controlled news media noted that roadblocks set up by the Postal Service to intercept deliveries by foreign freight forwarders have also been reported in some areas as the dispute escalates.
The Chinese government has not offered any timetable for a resolution. Transport Topics
Record Revenues for Mullen Transportation
Calgary-based Mullen Transportation said that first-quarter profit jumped 26% as higher fuel costs were offset by a high demand for its oil field hauling services.
Despite being negatively impacted by the slowing economy and higher diesel fuel costs, the company's trucking business produced small increases in both revenue and profitability.
Overall net income for the quarter was C$11.2 million ($7.3 million) or 80 Canadian cents a share, up from 68 Canadian cents last year. Revenues were up 17% percent to a record C$111 million. Transport Topics