The items in our November, 2008 Bulletin are:

INFRASTRUCTURE
(Excerpts From Business@Work)
Some comments as forwarded by Debbie Dowdle, Virginia Ports Authority: Infrastructure: Early Action to Fix Things. To keep America competitive, the new Administration must upgrade highways, rail, and ports along with telecommunications. What Business Wants. The US Chamber of Commerce estimates that the decaying transportation system annually costs the American economy $63 billion in lost time and fuel. Quoting Marc Benioff, chief executive of Web software maker www.Salesforce.com: “the most important thing for the new President to do is invest in the infrastructure of the country-the fundamental things we need to do to grow our businesses”. The US slid to 15th worldwide in broadband development, according to the Information Technology & Innovation Foundation. “The next President needs to create the rules and regulations that accelerate the rollout of mobile broadband”, says Gregory Brown, co-CEO of Motorola. Finding money to repair the things that need fixing will be difficult. Over the next 10 years, the Chamber estimates a shortfall of roughly $50 billion per year between what is needed to repair the highway system and the spending that’s currently planned. To expand the rail network to keep up with trade growth, the railroads will need an additional $148 billion. And the investment required to satisfy the projected fiftyfold rise in broadband traffic by 2015 could top $100 billion. Bruce Josten of the Chamber says that too much money has gone to pork barrel items and too many state politicians divert federal funds allocated for maintenance into other projects. So what is likely to happen? This could be one of the first items to get active attention. In mid-October, Mr. Obama called for $25 billion to repair roads, bridges, and public schools, which he argues would help create a million jobs. He and congressional leaders are working on a $150 billion stimulus plan for late November that could include a big allocation for infrastructure. Some congressional members argue that much of the money would go to pork and complain that such projects get off the ground too slowly to help in the short term. Important note: these comments are strictly from Business@Work.

DHL TO CUT US JOBS
Deutsche Post AG will cut 9,500 jobs at its DHL unit in the US and eliminate US-only domestic express shipping by land and air. The company cited heavy losses and fierce competition. International shipping to and from the US would continue. The express unit currently employees some 18,000 workers. Deutsche Post said the US remained a key market and that its other operations there, including freight and global mail and other logistics, will not be affected by the closings. Deutsche Post’s US logistics unit employs more than 25,000 workers in the US. Domestic shipping will cease by January 30 after the company closes all of its ground hubs and reduces the number of service centers from 412 to 103 in the US. Specific locations were not named. A proposed collaboration with UPS announced in May could last up to 10 years and gives UPS an additional $1 billion in annual revenue. Deutsche Post’s decision is expected to reduce operating costs at the US Express unit from $5.4 billion to less than $1 billion. Total losses in the US Express business would reach $1.5 billion for the year.

HORIZON LINES ANNOUNCES PROFIT
Charlotte based Horizon Lines reported a third quarter profit of about $12.5 million, up from $1.6 million a year earlier. Revenue on shipping and logistics were almost $353 million, up 10 percent from more than $321 million the same quarter in 2007. Horizon Lines operates container ships and port terminals that link the continental US with Alaska, Hawaii, Puerto Rico, Guam and Micronesia.

TRUCKS NEED HELP TOO
In an excerpt from Traffic World: Struggling trucking companies should join the ranks of financial institutions, banks, and even the automobile industry in seeking federal funds to stay afloat, so says James Hoffa, general president of the Teamsters Union. “There is this idea of everyone going to Washington,” Hoffa said in an interview. “Some trucking companies that we have should also be given assistance from the government from this huge fund we have of $700 billion”. Hoffa declined to identify which carriers he had in mind.

CON-WAY TO CLOSE TERMINALS
Con-Way Inc. said it will close 40 truck terminals to streamline its operations and save $30-$40 million per year. The shutdown will affect its Con-Way Freight LTL carrier unit, the company stated. Freight from the locations will be redistributed among more than 100 other service centers. While it did not release how many jobs would be lost, a spokesman said that the cuts would involve more than 1% of Con-Ways 20,400 employees. It expects to complete the changes by early December, and some employees will have the option to move to other facilities, with about 100 other facilities in the US and Canada handling freight from centers to be closed. More than 75% of the affected employees at closing locations will have the opportunity to follow work to a new operation location. Con-way is ranked number 6 on the Transport Topics 100 listing of US and Canadian for-hire carriers.

INDUSTRY SPOTLIGHT
Railroads are expected to grow earnings next year despite the slow economy. Shipping demand may remain weak due to softness in automotives and housing, but CSX sees strength in coal, phosphates, fertilizer, ethanol and agricultural shipments, while Union Pacific sees gains in energy. JP Morgan Securities analyst Thomas Wadewitz cut profit estimates for some railroad operators but says they still have pricing power. Union Pacific expects to renew long-term contracts, and says it will be able to hike prices. Wadewitz says lower fuel costs and job cuts will also aid profits. Union Pacific, which analysts expect to post the strongest earnings growth in 2009, is cutting costs by adjusting train speeds and pause times in terminals. CSX, Union Pacific, Burlington Northern and Norfolk Southern recently topped earnings estimates. Stifel Nicolaus analyst John Larking affirmed a “buy” rating on CSX, citing cost controls. He upgraded Norfolk Southern to “buy” from “hold”, saying it’s under priced.

FACTORIES CUT BACK
Manufacturing business declined steeply in October, according to an industry report. The Institute of Supply Management said the PMI, its index of manufacturing activity, fell to 38.9 in October from 43.5 in September. October’s index was the lowest level since September 1982 when it registered 38.8%. Any measure below 50 indicates contraction. It was the third consecutive month without growth, said the nation’s supply executives in the latest Manufacturing ISM Report On Business. According to Robert Ore, chair of the ISM survey committee: “the PMI indicates a significantly faster rate of decline in manufacturing when comparing October to September. It appears that manufacturing is experiencing significant demand destruction as a result of recent events, with members indicating challenges associated with the financial crisis, interruptions from the Gulf hurricane, and the lagging impact from higher oil prices.” Export orders contracted for the first time following 70 months of growth. A wide spectrum of industries reported prices dropping and contraction of new orders, production, employment and inventories.

CONTAINER TRAFFIC DROPS
According to Traffic World Online, cargo volume dropped further than expected in October, pointing the way to the lowest annual container volume at the nation’s ports since 2004. The monthly Port Tracker projects volume will total 15.3 million twenty-foot-equivalent units for the year, compared with 16.5 million TEU in 2007. That would be a decline of 7.1% and the lowest total since 2004, when 14 million TEU moved through the ports. Retail sales forecasts are the lowest in half a decade. US ports surveyed handled 1.33 million in September, the most recent month for which actual numbers are available. The number was down 2.9% from August and 9.8% from September 2007. October was estimated at 1.36 million TEU, down 5.7% from a year ago. If estimates hold true, October will have been the peak shipping month for 2008 but will have fallen significantly short of the 2007 peak of 1.48 million TEU set last September.

NC HIGHWAY PATROL TARGETS 53-FOOTERS
The NC Highway Patrol has begun to ticket carriers with 53-foot trailers that are off route. While there is a three-mile leeway, many carriers are simply not in a position to provide 48 footers to all service points. For instance, if there are not approved 53-foot routes to a specific manufacturer, retailer or town, a carrier must provide a 48 footer or shorter trailer. This is just not possible in most instances due to the popularity of 53-foot trailers. So the highway patrol is ticketing drivers for either faulty equipment of violation of the statute, which carries a fine and driver license points. Clearly this law needs to be changed. Many of our members are affected and it could become necessary for the League to appeal to state government for relief. With the state of the economy and the push by the Governor to attract new business, the fining of carriers is causing undue burden on parties involved. All comments appreciated. 

DAPU TAX EXEMPTION
ATA/TAEC Update. Congress approved legislation that exempts auxiliary power units and other idle-reduction devices installed on trucks when the trucks are new or within 6 months of being put into service from the 12% federal excise tax. To be exempt, APUs and other devices have to be verified as effective by the US EPA in consultation with the Department of Energy and Transportation. This could take some time but interagency discussions have already begun. ATA is hopeful that the verification of exempt devices can be completed by the end of 2008. In the meantime, truck dealers and suppliers of APUs are likely to have a list of items being considered by the EPA for exemption. Pending the EPA’s determination, purchasers will still have to pay the excise tax on such devices and then request a refund from the IRA. In addition to APUs and other idle-reduction devices, the new law provides an excise tax exemption for the cost of what the provision terms “advanced insulation” on new trucks and trailers, that is, insulation that has “an R value of not less than R35 per inch. That exemption is also in effect, and the law does not seem to require that qualifying insulation be verified by EPA.

TOP FMCSA VIOLATIONS BY MOTOR CARRIERS
Failing to implement an alcohol and/or drug testing $ program 670 33
Failing to randomly test for drugs and/or alcohol 524 26$
Offering/transporting hazmat without proper security plan $ 225 11
Inadequate or no financial responsibility 136 7 $
Using a driver to drive with a suspended/revoked CDL $ 72 4
Requiring, permitting or making false statements or $ records 64 3
Using a physically unqualified driver 43 2 $

TRUCKING FAILURES CONTINUE AT A RECORD PACE
More truckers are failing than ever before with a record number of companies failing in the first three quarters of 2008. Analyst Donald Broughton, reported that 785 companies with approximately 39,000 trucks representing 2% of the nation’s over the road heavy duty trucks closed their doors in the third quarter. That brings the total number of trucks pulled of the road in 2008 to more than 127,000 trucks or 6.5% of the trucks in the industry. Broughton said that the first three quarters of 2008 have already established a new record for the amount of capacity pulled from production in a single year. He said that never have more trucks been pulled off the road in a shorter period of time than in the first three quarters of this year. A total of 2,690 companies with 5 or more trucks went out of business between January and September. He also said that larger companies are failing than in 2001. Some companies that were holding on may have been saved by the reduction in fuel prices. He reports an increase of in the usage of “quick pay systems” and factoring and that the worst may not be over.

TRANSPORTATION REVENUES TO DECLINE OVER THE NEXT 6 YEARS
Virginia Secretary of Transportation Pierce Homer announced that state and federal transportation revenues are projected to decrease between $2.1 and $2.6 billion over the next six years. He said that we must make fundamental structural changes to our transportation administration, services, programs, and projects to address this long-term change to the revenue base. Obviously some wise planning can result in a reduction in costs and losses. 

NO MONEY FOR ROADS IN NC?
Plans are underway to widen Highway 55 in Pamlico County to 5 lanes. All this in a county with 13,000 people. The road will lead right to Cutter Bay, a high dollar development for the affluent. Pamlico County is one of the poorest and sparsely populated areas in the state. We could sure use some help on finishing up 485 around Charlotte.

PORT SHORTS
Bahrain hopes to enhance its position as a regional transport hub after the new Khalifa Bin Salman Port opens for business in December.

DOHA PORT RIDES WAVE OF RISING DEMAND
Doha Port has registered a steady increase in the number of incoming traffic during the first half of the year. The port witnessed a 50 percent increase in the visits of livestock ships and 28 percent in containers compared to the corrected period in 2007.

SSA UNVEILS DEVELOPMENT OF JEDDAH PORT
The Saudi Seaports Authority (SSA) has launched a US $140 development program for Jeddah Islamic Port.

EGYPT SUEZ CANAL SEPT REVENUES HIT $469.6 M
Egypt’s revenues from the Suez Canal hit $469.6 million in September

ABU DHABI EYES AIRPORT ACQUISITIONS
Abu Dhabi is currently looking at acquiring aviation related assets including an airport and hopefully a deal may be struck by the year-end, an official said.

MAERSK TO UPGRADE SAMBA LINE
Maersk Line has announced plans to add an additional vessel to the rotation of the Samba service, which covers trade from East Coast South America to Middle East.

HUB WINS AWARD
Hub wins Smartway’s 2008 excellence award. On October 7, 2008 Hub Group proudly accepted Smartway’s 2008 Environmental Excellence Award awarded at the Council of Supply Chain Management Professionals in Denver, Colorado. Smartway is an EPA program aimed at reducing carbon and particulate matter emissions, road congestion, and fuel consumption in the freight transportation industry. Smartway now boasts over 1,000 members from a variety of businesses, organizations and affiliates. Congratulations to Don Deese and the officers and employees of HUB group

LOWES IS NASSTRAC SHIPPER OF THE YEAR
Lowes has been awarded the 2008 NASSTRAC Shipper of the Year award. The award is given in recognition for outstanding achievement in transportation and distribution and is presented annually to a member. NASSTRAC is an organization that provides education, advocacy and networking for professionals in all areas of transportation. Lowes is a 20-year plus member of the League and we congratulate Steve Palmer, Rob Long, Kevin Perry, Dean Tracy and Doug Chellman.

LOWES EARNS SMARTWAY EXCELLENCE AWARD
Lowes also earned its second consecutive Environmental Excellence Award from the US Environmental Protection Agency SmartWay Transport Partnership. Steve Palmer, Lowes VP, stated that Lowes has been able to reduce overall diesel consumption by more than 40 million gallons and carbon emissions by more than 466,000 tons since 2005. With fiscal year sales of $48.3 billion, Lowes is a Fortune 50 company that serves approximately 14 million customers a week at more than 1,575 home improvement stores in the US and Canada. Founded in 1946, Lowes is the second-largest home improvement retailer in the world.