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“We think we’re on the verge of an economic recovery.”
– Bill Zollars, Yellow Corp.

When Yellow Corp. CEO Bill Zollars announced last month that his less-than-truckload carrier was buying competitor Roadway, he called the move the “right strategy with the right partner with the right brands at the right time.”

But whether the merger – which will create a company generating $6 billion a year in revenue – will be right for the LTL segment and the rest of trucking industry remains to be seen. Some investors, analysts and economists describe the merger as harbinger of better economic times. Others say the deal is merely the consolidation of two under-performing trucking firms.

Yellow, which operates about 8,000 trucks and employs around 23,000, will acquire Roadway Corp., a 9,000-truck, 27,0000-employee enterprise, for approximately $966 million. The deal includes a stock swap for Roadway investors, and Yellow Corp. will assume $140 million of Roadway debt. That pushes the deal’s total cost to just more than $1.1 billion.

The merged company, which will be known as Yellow-Roadway Corp., will be among the largest transportation companies in the world with important international logistics and technology holdings. Yellow-Roadway Corp. will maintain both brands, and customers will continue to see the same interface.

Signs of a recovery?
In announcing the merger, Zollars said economic timing was also a big factor, noting that both companies were performing well at the current time. “It’s always better to do things when you don’t have to,” Zollars said. “We think we’re on the verge of an economic recovery.”

Just as Yellow was predicting rosier economic times, investors were propping up trucking stocks across the board on the news – many reasoning a large merger means better days ahead. Truckload stocks rose with the news, but trucking analysts say the improvement may be wishful thinking.

“If the rise in the equity price in trucking stocks other than ABF was the result of the merger, then it doesn’t make sense,” says Donald Broughton, transportation equity analyst for A.G. Edwards. “If those stocks went up because of other economic news, then that’s rational.”

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Broughton wasn’t alone in his cautious response to the merger. Others pointed to relatively low margins for the two companies, which have operated between negative numbers and 4 percent profit over the last 10 years.

“People who invest in equities look for any kind of signal they can find that business is getting better,” says Michael LaTronica, managing director and research analyst for Morgan Joseph and Co. “One trucking company buying another is (usually) a good sign ….But one indicator does not make a trend.”

Other analysts like Jeff Chung, a transportation and logistics analyst for USBX Advisory, says the merger may be producing a warm fuzzy feeling among some investors and economists, but “I wouldn’t bank on it. There are a lot of things that have to happen to kick-start the economy.”

Dominance or defensive action?
The main thing that Yellow is after in the merger is dominant market share in longhaul LTL, Chung says. “Combined, they own 60 percent of that market,” Chung says. That share will make the company more competitive, and the new company should be able to achieve some synergies, especially in legal and accounting areas, he says.

“They think they will save $45 million the first year, and $100 million plus by 2005,” Chung says. “But those [estimates] hardly ever come to fruition.”

Despite that skepticism, Chung says naysayers should give the companies some credit. “They’ve done really well over the last two years where they’ve been in a bad environment,” Chung says. The merger will put both companies in a better place if transportation giants UPS or FedEx decide to join the long-haul LTL market.

Of the two, analysts think UPS is more likely with an eye on acquiring ABF – a rumor that has been circulating among financial houses for months. Broughton, for one, thinks it’s unlikely because the longhaul LTL market is difficult to make a profit in.

“There’s a real reason why longhaul LTL hasn’t grown since deregulation,” Broughton says. “It has a high cost to truck. When you pay a longhaul LTL company, you’re paying them as much to handle the freight as to move it. Yellow has 15,000 to 20,000 forklifts. I’d be surprised if [truckload carrier] Werner had a dozen forklifts.”

Finalizing the merger shouldn’t be a problem; regulatory approval is likely because the companies can argue they are but a small part – only $6 billion – of the $700 billion transportation industry. The Teamsters Union is concerned about the merger, but the companies say they don’t expect many job losses. “There’s some negotiating to be done with the union,” Chung says. “But I think the companies have leverage to making the deal go through.”

Or as Broughton puts it: “They’re going to get cost savings. How? Cutting workers. Job consolidation is going to have to happen. Does the union have to like it? No, but it has to happen.”

Yellow-Roadway’s merger will obviously have a major impact on LTL competition, but analysts think its effect on truckload carriers will be minimal – even as a sign of better times. Morgan Joseph and Co.’s LaTronica says some signs that truckload business is better were apparent well before the merger was announced.

“Truckload started to see a pickup in March and April in prices and volume,” LaTronica says. “There are pockets of strength. Is the jury back with the verdict? No, it isn’t. But things look like they’re picking up.”

The combined company’s new chairman, president, and chief executive officer, Bill Zollars, has more confidence. “We have a new five-year agreement with the teamsters, and the debt market has never been more attractive than right now,” Zollars says.

At a Glance
Yellow Corp.

  • Founded in 1924 as Yellow Cab and Transit Co. in Oklahoma City. Added intrastate shipping in 1926.
  • Began hauling across the continent in 1965 after acquisition of Watson-Wilson Transportation System.
  • Two companies merged into Yellow Freight System, Inc. in 1968.
  • When deregulation occurred Yellow operated 248 terminals. Began operating hub-and-spoke system in 1981.
  • Expanded into Canada and acquired its 599th terminal in 1986.
  • Launched less-than-container-load service to Europe in 1992 and began servicing Asia/Pacific market in 1995.
  • Bill Zollars named chairman, president and CEO in 1999.
  • Changed its name to Yellow Transportation, Inc., in 2002 to reflect the company’s transformation to a full-service global transportation provider. Also in 2002, spun off Jevic Transportation and Saia Motor Freight Line into SCS Transportation.

Major divisions
Yellow Transportation – One-stop provider of regional, national and international transportation and related services.
Meridian IQ – Transportation management solutions division.
Yellow Technologies – Technology services, specializing in development and support of proprietary, state-of-the-art technology systems.


Power units
Approximately 8,000

Roadway Corp.

  • Founded in 1930 as R&M Transportation to move tires between Akron, Ohio and St. Louis, Missouri.
  • Renamed Roadway Express in 1930.
  • Developed relay and hub and spoke systems, which keep freight and equipment moving non-stop, in 1950s.
  • Became a transcontinental carrier in 1977.
  • Began using 28-foot doubles trailers in its fleet in 1980s.
  • Roadway Bodegas y Consolidacion, a subsidiary of Roadway Express, opened offices in Mexico City in 1986.
  • Began import services from Japan in 1995.
  • Acquired Canadian carrier Reimer Express Lines in 1997
  • Formed Roadway Corporation to identify acquisition, merger, and partnership candidates in 2001.
  • Major divisions
    Roadway Express – Carrier providing service between all 50 states, Canada, Mexico and Puerto Rico; export/import services to more than 100 countries worldwide.
    Roadway Next Day Corporation/New Penn Motor Express – Next-day, ground less-than-truckload carrier of general commodities serving twelve states in the Northeastern United States, Quebec, Canada and Puerto Rico.


    Power units
    Approximately 9,000

    -Sean Kelley


    Wal-Mart Stores Inc., Arizona Public Service Co. and a group of associations calling itself the Hours of Service Coalition have separately asked FMCSA to reconsider the provision in the new hours-of-service rule prohibiting driving after the end of the 14th hour after a driver comes on duty. The groups argue, among other things, that the provision will create a disincentive for drivers to take breaks during the day and increase the number of trucks on the highway.

    Three groups that sued the Federal Motor Carrier Safety Administration to accelerate the completion of the hours-of-service rule changes have now asked a federal court to review the merits of the final rule. Public Citizen, Citizens for Reliable and Safe Highways and Parents Against Tired Truckers filed a petition in June in the U.S. Court of Appeals for the District of Columbia.

    National Truck Driver Appreciation Week is Aug. 24-30. The annual recognition of the nation’s truck drivers began seven years ago. The week follows the National Truck Driving Championships, slated for Aug. 19-23 in Columbus, Ohio.

    State of New York on Nov. 1 will begin fining truck operators $250 to $875 per incident for idling more than three minutes at New York City’s Hunts Point Produce Market. City law stipulates that trucks and buses of any engine type may not idle for more than three consecutive minutes, except when loading or unloading, or when processing something.

    U.S. Environmental Protection Agency and the Engine Manufacturers Association announced a settlement agreement that will produce a manufacturer-run, in-use emissions testing program for heavy-duty diesel engines, beginning with 2007 model-year engines. This program will document diesel engine exhaust emissions via portable onboard measurement equipment, the EPA said.

    DaimlerChrysler, as part of a restructuring of its global commercial vehicle operations, has placed Detroit Diesel under the management of sister company Freightliner. The change is a result of DaimlerChrysler’s decision to dismantle its Powersystems Business Unit and move the functions into other structures. Despite the move, Freightliner customers will still be able to obtain engines from third-party suppliers.

    American Trucking Associations contracted with the University of Idaho’s National Institute for Advanced Transportation Technology to perform studies of winter road management practices, load securement procedures and the safety performance of longer-combination vehicles in the western states. The studies will be conducted using a portion of Idaho’s weight-distance tax receipts that ATA successfully challenged in court more than three years ago.

    U.S. Xpress ordered more than 7,000 Wabash National DuraPlate trailers valued at around $120 million. The trailers will be equipped with several ArvinMeritor components, including its RideStar Highway Parallelogram air suspension system and Meritor TL trailer axles.

    XTRA Lease purchased various transportation equipment assets of Gainey Corp. subsidiary Leasing USA Inc., which has nine branches across the United States. XTRA Lease President Bill Franz says adding locations bolsters the company’s “street corner” strategy.

    Wabash National and Jefferies Capital Partners plan to sell nearly all of the assets of Wabash National’s trailer leasing and rental and wholesale aftermarket parts distribution businesses to Aurora Trailer Holdings. Aurora will supply parts to Wabash factory branches and Wabash will provide new and used trailers and maintenance to Aurora.

    As part of an effort throughout the entire Department of Transportation to clean up its regulatory dockets and streamline the rulemaking process, the Federal Motor Carrier Safety Administration has withdrawn four rulemaking proceedings that it considers unnecessary or contrary to public policy. FMCSA rulemakings withdrawn are:

    • An advance notice of proposed rulemaking (Docket No. 2759) requesting comments on potential changes to a provision in the safety regulations involving the English language. After analyzing and reviewing comments, the agency concluded that there is no quantifiable data on which to propose modifying the regulation to require a more stringent or definitive standard.
    • ANPRM (Docket No. 3414) concerning the use of the North American Uniform Out-of-Service Criteria. FMCSA has decided that including the criteria in the safety regulations would not provide any discernible safety benefits to the public or resolve issues raised by parties seeking such action.
    • A notice of proposed rulemaking (Docket No. 2278) to rescind restrictions on the locations at which television receivers may be positioned within commercial motor vehicles. After reviewing comments, FMCSA no longer considers the restrictions to be obsolete and redundant.
    • An ANPRM (Docket No. 2213) relating to the use and design of driver sleeper berths used by the motorcoach industry. Due to other regulatory priorities and minimal interest by the industry concerning this issue, no further action was taken by the FMCSA.

    The department’s notice of rulemaking withdrawals is available online by visiting this site and searching Docket No. 15243.

    Illinois, Ohio rank high in September demand

    SEPTEMBER ’02 ’01 ’00
    Illinois 1 1 1
    Ohio 2 2 2
    Tennessee 3 7 5
    Missouri 4 6 3
    Wisconsin 5 3 7
    Indiana 6 5 6
    California 7 4 4
    N. Carolina 8 8 10
    Texas 9 9 11
    New York 10 11 8
    Kentucky 11 12 9
    Minnesota 12 14 16
    Georgia 13 10 12
    Michigan 14 15 15
    Indiana 15 13 17
    SEPTEMBER ’02 ’01 ’00
    Ohio 1 2 2
    Texas 2 1 5
    Illinois 3 7 1
    Arkansas 4 6 7
    Alabama 5 3 6
    Indiana 6 10 4
    N. Carolina 7 4 12
    Georgia 8 9 8
    Tennessee 9 5 3
    Mississippi 10 11 15
    S. Carolina 11 8 13
    Kentucky 12 13 14
    Louisiana 13 12 17
    Oregon 14 16 19
    Michigan 15 17 11
    SEPTEMBER ’02 ’01 ’00
    California 1 4 3
    Illinois 2 1 1
    Ohio 3 2 2
    Missouri 4 7 5
    Wisconsin 5 3 7
    Texas 6 6 12
    Washington 7 12 10
    New York 8 17 4
    Minnesota 9 8 17
    Idaho 10 19 18
    Iowa 11 9 8
    Georgia 12 11 22
    Indiana 13 5 6
    Michigan 14 15 9
    Arkansas 15 10 16

    When looking for spot freight in the dry van market in August, Illinois should be an excellent source. According to the CCJ Equipment Demand Index, Illinois has held the top spot for van demand in August for three years. Ohio, second in demand, is No. 1 for flatbeds. Demand for flatbed equipment has grown over the past three years with greatest growth occurring in Texas.

    California maintained the top position for reefer demand for the third consecutive month. Illinois and Ohio follow.

    The index, based on equipment searches performed by TransCore customers, shows the top 15 states in terms of demand for trucks in the spot market in the three most common equipment types: dry vans, flatbeds and refrigerated units. The index is intended to help fleet operators identify the most promising opportunities for backhaul and other spot-market freight in the month after its publication.

    The Federal Motor Carrier Safety Administration last month issued a supplemental notice of proposed rulemaking (SNPRM) to increase the amount of information on prospective drivers that can be available to motor carriers. The SNPRM is a revision to a proposal originally issued in March 1996.

    The SNPRM proposes a limitation on liability for carriers required to provide and use driver safety performance information, encouraging more complete driver background information. Prospective employers would be required, however, to advise driver applications that they could review, request correction or refute what a previous employer provides in the driver’s employment history.

    Under FMCSA’s proposal, a previous employer would, for a period of three years, be required to respond within 30 days to inquiries from prospective motor carriers about an applicant and provide at a minimum the following:

    • Information verifying the driver worked for that employer and the dates of employment;
    • Information indicating whether the driver was involved in any reportable accidents;
    • The driver’s three-year alcohol and controlled substance history;
    • Information indicating whether the driver failed to complete a rehabilitation referral prescribed within the previous three years, but only if that information is recorded with the responding previous employer; and
    • Information indicating whether the driver illegally used alcohol and controlled substances after having completed a rehabilitation referral, but only if that information is recorded with the responding previous employer.

    The SNPRM supplemental proposal increases from two to three years the period during which previous employers must provide information regarding violations of the federal regulations relating to alcohol and controlled substances. It also proposes that employers be required to retain reportable accident information for three years. They now are required to keep such information for a year.

    Comments on the SNPRM are due Sept. 2. For more information, visit this site and search Docket. No. 2277.

    Citing a desire to help fleets reduce operating expenses, ChevronTexaco Global Lubricants (CTGL) (www.chevrontexacolubricants.com) announced that its Delo brand of heavy-duty lubricants will sponsor the Texas Motor Transportation Association’s mobile classroom and driver simulator for the next two years. The sponsorship is part of an ongoing CTGL effort to support programs that promote both on- and off-highway safety.

    “We understand that one of the primary ways for fleets to reduce their costs is by minimizing the risk of accidents,” said Kurt Schulte, commercial automotive specialist for CTGL, in announcing the sponsorship. “Allowing drivers to experience hazardous situations in the simulator gives them the skills and confidence to safely handle these situations on the open road. For fleets, safer drivers mean ensuring public safety, reducing insurance costs and having more vehicles on the road to transport goods.”

    The mobile classroom provides training in two ways. The trailer is equipped with several workstations that provide computer-based training for several drivers simultaneously. The classroom also includes a full-motion truck simulator, giving drivers the experience of driving through hazards such as poor weather, equipment failures and unexpected obstructions. The simulator also operates in a public-exhibit mode, allowing the general public to experience what the truck driver does, including blind spots, stopping times and turning capabilities.

    CTGL’s sponsorship allows it to use the simulator several times a year for training and public awareness. The company’s first use of the simulator was in Southern California during the week of July 20, and CTGL offered it for driver training to several customers, including Ryder Transportation, Hadley Transportation, Southern Counties Lubricants and GP Resources.

    XTRA Lease (www.xtralease.com) is donating space on 50 trailers to the U.S. Marine Corps, converting them into rolling murals displaying Marine Corps graphics. Several months ago, the

    Each of the 50 trailers provided by XTRA Lease will be equipped with trailer-tracking devices.

    Marines actively sought out fleet operators to help with recruiting efforts by displaying its trailer graphics. “We felt it was a great opportunity to relay an important message since we have such a terrific rolling canvas,” says XTRA Lease President Bill Franz.

    The decaled trailers will be on the road for two years. The trailers will be equipped with Terion’s FleetView trailer tracking units, allowing the Marine Corps to obtain position reports. “We will be able to tell the Marine Corps where the trailers have been so they can estimate ad impressions,” Franz says. XTRA Lease is decaling trailers in eight different cities, and customers will be able to rent them for a variety of uses and routes.

    The Great American Trucking Show, to be held Sept. 26-28 in Dallas, has added the Fleet Pavilion and Lounge, courtesy of CCJ. The area will feature special exhibits and products and seminars developed specifically for fleet operators.

    Returning this year are the Commercial Work Truck Pavilion, focusing specifically on light- and medium-duty work trucks, and the Internet & Technology Pavilion. The Texas Motor Transportation Association will present educational programs for fleet executives and drivers

    For more information, visit this site.

    Randall Publishing Co., publisher of Commercial Carrier Journal, on July 8 completed the acquisition of Truckers News magazine from NATSO, a national trade association representing travel plaza and truck stop owners and operators. Randall Publishing has produced Truckers News on behalf of NATSO since January 1999. While ownership transfers to Randall Publishing, Truckers News will remain the official publication of NATSO under terms of the agreement.

    Large truck-related fatalities in 2002 were at their lowest level since the first recorded statistics in 1975, the Federal Motor Carrier Safety Administration said last month. In 2002, truck-related fatalities decreased 4.2 percent from 2001. The total number of people killed in truck crashes was 4,897, compared with 5,111 people in 2001 – making 2002 the fifth consecutive year for decreases in both the large truck fatality rate and fatalities in large truck-related crashes.

    “This positive news is a tribute to our professional truck drivers and our motor carriers who work hard every mile, every hour, everyday to safely share the road with other motorists,” said American Trucking Associations President Bill Graves.

    “While this continues a positive trend of reduced fatalities, we believe that additional commonsense steps can save more lives,” Graves added. “If we all insist on increased, visible traffic enforcement for cars and trucks – especially for speeders – then we’ll continue to see the numbers move in the right direction.”

    The drop in truck-related highway deaths came as overall traffic fatalities in the United States increased from 42,196 in 2001 to 42,815 in 2002.

    Crash statistics for each of the 50 states and the District of Columbia are available at this site.

    The American Society of Business Publication Editors in June recognized Commercial Carrier Journal with nine regional and national editorial awards. Other Randall Trucking Media

    CCJ takes nine editorial awards.

    magazines garnered six ASBPE awards, including one national award and four regionals for Overdrive and two regional awards for Truckers News. Overdrive also ranked in the top 10 nationally in the Magazine of the Year competition.

    Awards won by CCJ for magazines with more than 80,000 in circulation were:

    • Silver, Signed Editorial, “Business First,” Avery Vise, editorial director
    • Silver, Front Cover Illustration, “A Peek Under the Hood,” Tony Breland, art director
      Midwest Region
    • Gold, Regular Column, Staff Written, “Information Technology,” Aaron Huff, technology editor
    • Gold, Front Cover Illustration, “A Peek Under the Hood,” Tony Breland, art director
    • Silver, Signed Editorial, “Business First,” Avery Vise, editorial director
    • Silver, Regular Column, Contributed, “Operations,” David Goodson, contributor
    • Silver, Front Cover, Computer Generated, “America’s Newest Soldier,” Tony Breland, art director
    • Bronze, Signed Editorial, “Technically Speaking,” Paul Richards, editor
    • Bronze, Front Cover, Computer Generated, “Unlocking Success,” Tony Breland, art director

    “These awards prove that our publications continue to rank among the top trade magazines in the nation,” said Jeff Mason, vice president and group publisher. “We’re thrilled that our peers in the publishing industry recognize the high quality of industry, journalistic and design expertise that our editors and designers bring to each magazine.”

    Customs proposes notification rule
    The Bureau of Customs and Border Protection (CBP), on July 23 published in the Federal Register its long-awaited proposed rule to require advance information, in electronic format, on cargo destined to and from the United States. CBP will run the cargo data through an automated targeting system that is linked to various law enforcement databases, allowing CBP to better identify shipments that pose a potential terrorist risk.

    For motor carriers importing goods into the United States, CBP is proposing to require electronic notification 30 minutes prior to arrival for carriers participating in the FAST program and 1 hour for non-FAST carriers. Electronic notification of exports would be required 1 hour prior to arrival of the truck at the border.

    Comments are due Aug. 22. A copy of the proposed rule is available at www.cbp.gov.

    FMCSA begins hazmat security test
    The Federal Motor Carrier Safety Administration has begun a year-long test to measure the effectiveness of Intelligent Transportation Systems safety and security technologies for protecting hazardous materials transported by trucks. The Hazardous Materials Safety and Security Field Operational Test will quantify the costs and benefits associated with transportation security technologies. FMCSA believes this information will assist companies in their decisions to deploy technology applications that are most appropriate for their businesses.

    The test will involve 100 trucks equipped with a variety of existing technologies packaged into several different cost tiers. All configurations of technologies will be tested across four different transportation scenarios. Among the technologies to be tested are:

    • Driver verification using password logins, fingerprint biometrics and smart cards;
    • Vehicle and load tracking, using satellites and other wireless systems;
    • Off-route and stolen vehicle alerts, using geo-fencing;
    • Cargo tampering alerts, using electronic seals;
    • Driver distress alerts, using driver panic buttons; and
    • Remote vehicle disabling in instances of known terrorist attacks.

    Carriers and shippers that have expressed their intent to participate in the test include BP Chemicals, Cox Petroleum, Distribution Technologies, Dupre Transport, Dyno Nobel Transportation, ExxonMobil, GE Betz, Hercules Incorporated, Orica USA Inc., Quality Carriers, Roadway Express, Inc., Roeder Cartage Co., Inc., R&R Trucking, The Dow Chemical Company and Transport Service Co.

    The ITS field operational test deployment team is led by the Battelle Memorial Institute. Deployment team members include Qualcomm, Inc., the American Transportation Research Institute, Commercial Vehicle Safety Alliance, TotalSecurity.US, Savi Technology and Information Systems Support.

    Original equipment and engine manufacturers also involved in the field operational test include Caterpillar Inc., Cummins Inc., Detroit Diesel Corporation, Freightliner Truck Group and International Truck and Engine Corporation.

    ATA objects to background check deadline
    The American Trucking Associations and others have asked federal officials to postpone a deadline for implementing criminal background checks before issuing commercial driver’s license hazmat endorsements. Trucking, law enforcement and state motor vehicle departments filed comments asking federal agencies to delay the Nov. 3 deadline for implementing a requirement that fingerprint-based background checks be performed before hazmat endorsements could be issued.

    ATA said it supports background checks but does not believe state agencies can make the switch from using name-based background checks to fingerprint-based checks by Nov. 3. Also, the association took issue with the fact that the rule does not provide carriers with access to their employees’ background check information.

    The association noted the cost burden on carriers and stated that additional security measures for hazmat transporters should be applicable only to hazardous materials that are a true security risk.

    Comments on the new rule were due July 7. To view comments and the TSA and related rules, visit this site and search Docket Nos. 14610 and 11117.