REPOST: Heavy truck data show signs industry is poised to recover

With investors expecting positive figures on their financial statements, the heavy truck industry is positioned to gain economic rebound. Bloomberg reports that the net heavy truck orders have been more than 20,000 since December, which means that the industry is gaining back its momentum.

Net heavy truck orders have been above 20,000 since December, an indication trucking companies are doing more than just swapping out aging tractors for new ones.

Truckers need to buy about 20,000 vehicles a month just to replace older ones made by companies such as Navistar International Corp. (NAV) and Paccar Inc. (PCAR) North American net orders have averaged 21,619 a month since October and stayed above 20,000 since December. In February, net orders grew 3.4 percent to 22,816, the first such monthly gain in 14 months.

While still shy of a full-fledged rebound in the industry, investors see the early signs as reasons for optimism in an industry that is an economic bellwether. Carriers are moving more automobiles and home construction equipment, helping drive demand for Class 8 tractors, the backbone of interstate hauling.

“There is a lot of optimism out there,” Kristine Kubacki, a St. Louis-based analyst at Avondale Partners LLC. “It’s really geared toward a back-half recovery.”

Truck production has risen each of the past two years, it topped the typical replacement level of 250,000 in 2011 for the first time since 2006 after a fitful recovery from the recession-low of 120,000 in 2009. New trucks are needed to replace aging models and to handle more goods as the economic recovery gains traction. The American Trucking Association’s truck tonnage index has risen 7.6 percent since October to the highest level since December 2011.

Class 8 Concern

Forecasters initially expected new orders of 285,000 last year. It ended up at 273,036, after a sluggish economy slowed demand in the second half of the year, said Karen Ubelhart, an analyst with Bloomberg Industries. Despite the positive signs, Class 8 shipments will fall about 12 percent to 240,719 this year, industry consultant FTR Associates forecasts. Class 8 retail sales fell 18 percent in the first quarter from a year earlier, according to a Bloomberg Industries report.

Orders are running at an annualized rate of 250,000 to 260,000, FTR said. Orders tend to run higher early in the year as freight haulers buy new trucks in advance of peak shipping demand in the summer, Eric Starks, FTR’s president, said in an interview.

“I expect orders to start moving down as we get into the summer,” Starks said. “If they hold up, that’s a great thing, but I don’t expect them to, based on traditional behavior. We need to see monthly orders above 25,000 to be really optimistic, but we’re just not seeing that right now.”

Fleets tend to replace trucks after three to seven years of use, or about 500,000 miles, Starks said.

Cancellation Rate

The rate of canceled orders also is an important industry indicator. Class 8 order cancellations in North America dropped to 4.4 percent in March, the lowest level since December 2011, from 7.1 percent in February, according to FTR. A cancellation rate below 10 percent is a positive sign, Ubelhart said.

In addition, record stock prices and a housing-market rebound are offering reasons for optimism, she said. New home sales in February capped the best two-month stretch in more than four years, the U.S. Commerce Department said March 26. Orders for durable goods climbed more than forecast in February, boosted by automobiles and a rebound in commercial aircraft. The Standard & Poor’s 500 Index has gained 11 percent this year and closed at a record of 1,593.37 (SPX) April 11.

“Freight started to improve and that ultimately is what’s going to move things,” Ubelhart said. “What drives freight? The economy. A couple of sectors finally turned. The stock market looks at orders and confidence is going to build if orders stay at this level.”

Navistar, Paccar

Navistar, based in Lisle, Illinois, has advanced 46 percent this year, while Paccar climbed 7.9 percent. Those increases compare with a 1 percent drop for Stuttgart, Germany-based Daimler AG (DAI), the maker of Mercedes-Benz luxury cars which also sells heavy trucks, and a 1.1 percent increase for Gothenburg, Sweden-based Volvo AB. (VOLVB) Columbus, Indiana-based Cummins Inc. (CMI), a maker of engines including for Class 8 trucks, slid 0.8 percent. The U.S. economy may grow 2 percent this year, the median forecast of 76 economists surveyed by Bloomberg. The nation’s jobless rate fell to 7.6 percent in March.

“We’re cautiously optimistic,” Starks said. “We’re seeing some things that are really good and some things that are not so good.”

Thomas Pecora is the President of H&H Transportation, Inc., a private trucking company in Fords, NJ. Follow this Twitter page for more information.

REPOST: To Prevent Overpass Hits, New Rules for Truckers

The New York Times reports new federal standards for GPS technology in the trucking industry to prevent overpass hits.  Read full article below.

Image Source: The New York Times

Tractor-trailers and other commercial vehicles are prohibited from using parkways in New York, like the Jackie Robinson Parkway in Brooklyn and Queens and the Saw Mill River Parkway in Westchester County.

But inadequate GPS units sometimes lead truck drivers astray and onto these roads, causing accidents when trucks cannot fit beneath bridges — a problem that has persisted for years despite advances in technology.

On Monday, Senator Charles E. Schumer and federal officials announced new federal standards for GPS technology in the trucking industry at a news conference at the Eagle Avenue overpass of Long Island’s Southern State Parkway. The bridge has been struck at least 27 times by trucks that should not have been on the road, Mr. Schumer said.

“Eighty percent of all the trucks that get stuck under bridges are a result of using the wrong GPS,” Mr. Schumer said in a phone interview. Last year, there were 58 reported bridge strikes in New York City, according to the city’s Transportation Department.

The federal Motor Carrier Safety Administration will now issue official recommendations for GPS systems approved for use in commercial trucks. The professional-level devices take a vehicle’s height, weight and contents into account and direct drivers away from prohibited roads, while consumer devices do not have that capability, Mr. Schumer said. The professional devices are more expensive, he acknowledged, but they will save truckers and taxpayers money in the long run by preventing damage to vehicles and infrastructure and by preventing traffic jams.

People renewing or applying for commercial driver’s licenses will also be required to take GPS training, Mr. Schumer said.

A 2011 report by the State Department of Transportation found that the most common city locations for over-height truck accidents included the F.D.R. Drive, which accounted for 87 percent of those incidents in Manhattan; the Belt Parkway, the site of 70 percent of Brooklyn’s total; and the Hutchinson River Parkway, where 60 percent of such Bronx collisions occurred.

The Westchester Avenue overpass of the Hutchinson River Parkway and the F.D.R.’s junction with the Gracie Mansion Tunnel at 88th Street are particularly notorious stretches, the report said. The problem also extends to the Hudson Valley, where 855 over-height truck accidents occurred from 1993 to 2011, and Long Island, which had 341 such accidents over the same period.

“In the Northeast, we’re particularly susceptible to this because many of the highways were built before trucks were a main mode of transportation,” Mr. Schumer said. “Many of them were built for recreational purposes, by Robert Moses and others.”



Keep abreast of the latest happenings in the transportation industry. Follow this Twitter page for Thomas Pecora, president of the NJ-based trucking company H&H Transportation, Inc.

REPOST: A Closer Look: Diesel exhaust fluid

What is diesel exhaust fluid? Sean Randall of Overdrive Magazine delves into this aqueous solution and the chemistry behind it.

Image source: Overdrive.com

With the advent of 2010 engine technology came urea-based diesel exhaust fluid. It’s now standard on all North American engines except those made by Navistar, which announced in July it also would begin using the aftertreatment in 2013. While it performs a sophisticated task – turning harmful emissions into water and nitrogen, the basis of the selective catalytic reduction system – DEF itself is a simple blend of urea and water.


DEIONIZED WATER
The water in DEF needs to be deionized and demineralized because the SCR system is sensitive to minerals and impurities. Using tap water would potentially cause corrosion or even a breakdown.


UREA
Urea is a major component in urine, but it’s produced synthetically for a variety of uses. More than 90 percent of manufactured urea is used as a nitrogen-release fertilizer. Other uses include the explosive urea nitrate, a replacement for rock salt in de-icing roads and a cloud seeding agent. It’s also found in many consumer products: a flavor enhancement for cigarettes, and an ingredient in dish soap, teeth whitening products, skin creams, moisturizers and hair conditioners.


There is much more to learn about the trucking industry. To catch up on the latest developments in the field, follow this Twitter page for Thomas Pecora, president of H&H Transportation.

Preventing subway deaths through laser sensors

Pushed on the subway track, this man is about to die, read the December 4, 2012 edition of The New York Post. The controversial cover photo of the newspaper, more than the news itself, sparked outrage from readers and Internet users. The tragedy that befell 58-year-old Ki Suk Han of Queens, New York, continues to percolate as a hate crime involving a Black and an Asian man. The latter had been crushed ‘like a rag doll’ by the train, according to a witness.

Image source: nypost.com

The death of Ki Suk Han is among the many subway deaths which the Metropolitan Transportation Authority (MTA) is hoping to prevent in the future by rigging subway platforms with intrusion technology. The technology uses laser sensors connected to an alarm system, flashing lights, or anything that will trigger alert in case someone steps or has fallen onto the tracks.

Image source: nytimes.com

MTA officials are considering how the technology could be used in a more efficient yet cost-effective manner. The officials said that the laser sensors are a more viable option than platform screen doors which are complicated to install because subway trains come in different sizes, and some units have curved and tapered platforms. Regardless, MTA is open for other methods to improve security and safety in subway trains.

Image source: huffingtonpost.com

While the agency is yet to roll out a pilot test for laser sensors, it appeals on passengers to cooperate on its effort. At the core of its project is to stimulate a change in customer behaviour by strengthening public awareness. The agency carries out its agenda by handing out pamphlets and other advertising paraphernalia, and putting up help desks in each station so that passengers can report emergencies and ask for help.

Thomas Pecora of NJ-based H&H Transportation Inc. is among the many who encourage the public to participate in every effort meant to ensure transport security and efficient urban mobility. Know the latest in transportation by visiting this Facebook page.

REPOST: Oil drops 1.5 percent; gains could be tapering off

By: The Associated Press

Reposted from: thetrucker.com

The article talks about the  1.5 percent decline in oil price as the amount of oil moving through the Seaway pipeline had allegedly been constrained.

NEW YORK — Oil declined the most this year Wednesday on reports that the amount of oil moving through a key pipeline to the Gulf Coast had been cut in half.

Benchmark oil dropped $1.45, or 1.5 percent, to finish at $95.23 per barrel, the first decline of more than 1 percent since Dec. 21.

Even before the price sank in the afternoon, traders were questioning whether recent gains in oil had run their course. As of Tuesday's close, the price of oil had risen more than $10 a barrel since Dec. 13.

One catalyst for the recent price increase has been the apparent strengthening of the global economy. But the International Monetary Fund dampened that optimism when it projected only modest global economic growth in 2013, while warning that "there remain considerable challenges ahead."

Some oil analysts raised the caution flag as well.

"The approximate 12 percent crude advance extending back to early December has priced in a very optimistic global economic view," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, in a note to clients.

The price of oil began to fall in the early afternoon after reports surfaced that the Seaway pipeline, which takes crude from Cushing, Oklahoma, to the Gulf Coast, was constrained and could only work at about half its 400,000 barrel-per-day capacity, according to Andrew Lebow, an analyst at Jefferies Bache. That will likely mean growing supplies at Cushing, the trading hub for U.S. benchmark oil, and lower prices.

"There's a logjam down there," Lebow said. "Inventories have the potential to build further and they are already at record highs." Analysts were already forecasting that the U.S. government would report a 2 million-barrel increase in oil supplies in its weekly update Thursday, according to Platts, a division of McGraw-Hill.

U.S. drivers won't mind if oil prices level off or fall. The average price for a gallon of gas has gone up nearly 10 cents since Dec. 21. But the increase so far in January is just 2 cents a gallon. Last year gas prices rose an average 16 cents in the first month and kept rising until reaching a peak of $3.94 a gallon in early April.

Brent crude, used to price international varieties of oil, rose 38 cents to end at $112.80 per barrel on the ICE Futures exchange in London.

In other energy futures trading on Nymex: — Natural gas was flat at $3.55 per 1,000 cubic feet. — Wholesale gasoline was unchanged at $2.83 per gallon. — Heating oil rose 1 cent to $3.08 a gallon.

Thomas Pecora currently heads the NJ-based H&H Transportation, Inc. This Facebook page reveals his perspective on the oil forecast and the market outlook for the trucking industry.