Industry Surveys Transportation：Commercial

1、Industry Surveys Transportation：CommercialIndustry SurveysTransportation: CommercialAugust 18, 2005CURRENT ENVIRONMENT.1Economic growth and commercial transportation Andrew West, CFAConsolidation continues in the LTL industry Transportation New rules govern truckers hours of service, but uncertainti

2、es remain AnalystTrucking: tighter supply, more demand Railroads: traffic grows strongly Air cargo: carrier demand should strengthen INDUSTRY PROFILE.8Commercial transportation moves right along Trucking Railroads Air freight INDUSTRYTRENDS.10Air cargo: alliances and consolidation International mark

3、et growing faster Air cargo, LTL markets converging Trucking: driver market remains tight Rails look to intermodal for growth Contacts:HOWTHEINDUSTRYOPERATES.17Truckers dominate freight market Inquiries &The air cargo industry Client SupportTracking the railroad industry Transportation intermedi

4、aries 800.523.4534Commercial transport and the business cycle clientsupportCost issues standardandpoorsRegulation KEYINDUSTRYRATIOSANDSTATISTICS.24SalesTrucking 800.221.5277Railroads roger_walshAir freight standardandpoorsHOWTOANALYZEACOMMERCIALTRANSPORTATIONCOMPANY.26Quantitative factors MediaEarni

5、ngs quality Michael PriviteraQualitative factors Equity valuation 212.438.6679michael_priviteraGLOSSARY.30standardandpoorsINDUSTRY REFERENCES.32Replacement copies800.852.17641COMPARATIVE COMPANY ANALYSIS.35THIS ISSUE REPLACES THE ONE DATED FEBRUARY 10, 2005.THE NEXT UPDATE OF THIS SURVEY IS SCHEDULE

6、D FOR FEBRUARY 2006.Standard & Poors Industry SurveysEditor:Eileen M. Bossong-MartinesAssociate Editor:Joseph M. CodaCopy Editor:Kimberly A. CastroProduction:GraphMediaStatistician:Sally Kathryn NuttallJunior Designer:Paulette DixonClient Support: 1-800-523-4534Copyright 2005 by Standard & P

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11、 INDUSTRYSURVEYS does not guarantee the accuracy, adequacy, or completeness ofany information and is not responsible for any errors or omissions or forthe results obtained from the use of such information. VOLUME 173, NO. 33, SECTION 2 THIS ISSUE OF INDUSTRY SURVEYS INCLUDES 4 SECTIONS.CURRENTENVIRO

12、NMENTEconomic growth and commercialtransportationThe US economic recovery began to pick uping 10,000 pounds or less) industry over thesteam in late 2003, and has grown at apast three years. On December 11, 2003, Yel-healthy pace since then, allowing the trans-low Corp., which was the second LTL truc

13、kerportation industrys performance to strength-in the United States, acquired Roadwayen significantly as a result. Following realCorp., the largest US LTL trucker, for aboutgross domestic product (GDP) growth of$1 billion. The combined company, Yellow4.4% in 2004, Standard & Poors forecastsRoadw

14、ay Corp., generated revenues of morereal GDP growth of 3.6% in 2005 and 2.9%than $6.7 billion in 2004, about three timesin 2006 figures that should generate a posi-those of its next largest competitor. In Maytive but slowing rate of growth in shipping2005, Yellow Roadway acquired USF Corp.,volumes a

15、nd overall revenues. We expect ship-another major LTL trucker, creating a compa-ping demand to remain strong as consumerny with pro forma annual revenues of morepurchases and industrial production increase.than $9 billion, dwarfing the size of remain-Cass Information Systems Inc., a compa-ing LTL op

16、erators.ny that provides information on logistics is-Yellow, Roadway, and USF are expectedsues, said that, in May 2005, its freightto maintain their separate identities whileexpenditures index (a measure of totalachieving cost savings through back-officefreight outlays) hit the highest point in itsc

17、onsolidation, joint purchasing, and similar15-year history when the index rose 13%activities. Competitors may hope to takeover prior-year levels. The chart “Cass Ex-away customers after these mergers, but wependitures Index vs. GDP and Factory Ship-have seen little evidence so far of volume di-ments

18、” illustrates how sensitive theversion from Yellow Roadway. We think thetransportation industry is to the economy,new industry leader may increasingly chal-with changes often magnified four to fivelenge smaller competitors that cannot matchtimes that of GDP.Yellow Roadways capacity and its financial

19、Despite the favorable demand environ-and technological advantages, if it can main-ment, challenges exist for the commercialtain a firm managerial grip on its expandedtransportation industry. During the secondbusiness operations.quarter of 2005, transportation prices andcosts appeared to be rising fa

20、ster than in-CASS EXPENDITURES INDEX VS. GDP AND FACTORYcreases in volumes shipped, with the CassSHIPMENTSfreight index of shipments rising only 2.2%(Year-to-year percent change)in May 2005 compared with May 2004.306GDP (right scale)Transportation companies are dealing with255204(and attempting to p

21、ass along to customers)153increased costs related to capacity con-102straints, unusually high fuel prices, tighter la-5100bor markets, and rising labor costs.-5-1-10-2Factory shipments (left scale)-15-3Consolidation continues in the Cass Expenditures Index (left scale)-20-4LTL industry-25-5199394959

22、697989900010203042005Yellow Roadway Corp. has been a leadingSources: US Bureau of Economic Analysis; Cass Information force for consolidation in the LTL (less-than-Systems.truckload; a designation for shipments weigh-1AUGUST 18, 2005 / TRANSPORTATION: COMMERCIAL INDUSTRY SURVEY After acquiring USF,

23、Yellow RoadwayCOST OF TRANSPORTATION SERVICESclosed the USF Dugan southern regional LTL(Producer Price Index, December 1992=100)business in July 2005, while hoping to cap-150210LTL carriers (right scale)ture most of Dugans desirable business with140190TL carriers (left scale)its other business opera

24、tions. In May 2004,130170following a one-day Teamsters union strike,Line-haul railroads(left scale)USF shut down its Northeast-based USF Red120150Star division, which generated $229 million110130in revenues for 2003. In November 2004,Air freight,100110Guaranteed Overnight Delivery (G.O.8D.)excl. mai

25、l (left scale)closed its LTL division, also operating in the90901994959697989900010203042005Northeast. When trucking operations close,Source: US Bureau of Labor Statistics.capacity is taken out of the industry, whilecustomer revenues tend to move to formercompetitors, a process that may strengthenov

26、erall industry freight rates and profitability.accidents. The FMCSA estimates that adher-United Parcel Service Inc. (UPS) intends toing to the new regulations will cost the indus-become a major new entrant in the LTL in-try about $1.28 billion, but could reducedustry. In May 2005, UPS announced anac

27、cident-related costs by $670 million agreement to acquire (subject to completion)trimming the total annual added cost to $610Overnite Corp. one of the largest nationalmillion. The agency also estimates that truck-LTL carriers with $1.7 billion in annual rev-ing companies will need to hire an additio

28、nalenues for about $1.3 billion, in a move to63,000 long-haul and 21,300 short-haul dri-further broaden its array of shipping solu-vers to comply with the rules.tions. If UPS completes this acquisition, bothStandard & Poors believes that the newmajor air freight companies (FedEx Corp.regulations

29、 have decreased worker productiv-and UPS) will compete directly with serviceity industrywide and increased labor costsofferings in the LTL arena.per mile. We believe long-distance truckloadhauls and multiple-stop hauls are most af-New rules govern truckers hours offected by the rules. Truckers pass

30、alongservice, but uncertainties remainmuch of this cost increase to their customersthrough higher rates and loading charges,The first substantial change to truck dri-and by assessing detention charges to ship-vers hours-of-service rules in 64 years tookpers who make trucks wait at their docks.effect

31、 on January 4, 2004. Promulgated byWe also believe some multistop business maythe Federal Motor Carrier Safety Administra-have been diverted from TL to LTL truckerstion (FMCSA), a federal agency within theas a result. (TL is truckload capacity, withUS Department of Transportation, the newshipments e

32、xceeding 10,000 pounds.)rules permit drivers to spend 11 consecutiveRegulatory enforcement became strict onlyhours behind the wheel before they mustin March 2004, and there were few com-take time off to rest, up from 10 hours underplaints from large carriers about the new rulesthe previous regulatio

33、ns. However, the newsince that time. Many publicly owned shippersrules require drivers to take off 10 hours be-stated that they saw little or no negative effecttween shifts (versus eight under the oldon operations, and some noted improved co-rules), and drivers total hours of service in-ordination w

34、ith shippers and increased driverclude loading, unloading, and refueling time.retention rates. Some smaller transportationThus, the new rules reduce drivers maxi-companies have reported difficulties, however,mum workday (including loading and refuel-estimating that their productivity has beening) to

35、 14 hours from 15. (Because theslashed 10% to 20% by the rules.former 15-hour maximum did not includeOn July 16, 2004, the US Court of Ap-loading and refueling, it is likely that truck-peals for the District of Columbia Circuit va-ers workdays were actually longer.)cated the new hours-of-service rul

36、es, basedThe FMCSA claims that, by reducing dri-on the courts 6view that the FMCSA had notver fatigue, the new rules could save up to 75considered the rules impact on driverslives annually and prevent more than 1,300health. Congress intervened to hold the new2AUGUST 18, 2005 / TRANSPORTATION: COMMER

37、CIAL INDUSTRY SURVEYhours-of-service rule in place until Septemberreached a record high of 136% in the fourth2005, by which time the FMCSA is due toquarter of 2004, with driver turnover higherprovide a new rule complying with thethan 100% seemingly becoming the norm.courts requirements. The FMCSA ho

38、pes thatSeveral carriers have complained of a driverCongress can codify its hours-of-service regu-“shortage,” and others have raised driverlations by including it in legislation as apay several times through the year in ordermeans of protecting it from being broughtto attract and retain drivers.back

39、 to court and potentially overruled. Webelieve the trucking industry hopes to avoidLTL traffic grows along with the economyconfusing and unexpected changes in hours-The LTL segment of the trucking industryof-service regulations, and it hopes to see ahandles a broad range of finished products,substan

40、tially similar new rule. However, webut it typically excludes raw materials orbelieve the risks are that regulations may be-low-value items. LTL traffic follows trends income more onerous, from the perspective offactory shipments of both durable and non-trucking companies (less flexibility, fewerdur

41、able goods, which collectively approxi-available hours per trucker, and more bur-mate retail sales. Based on our economicdensome tracking requirements), or thatforecast, we see LTL truck revenues risinghours-of-service regulations may face the on-about 7.0% in 2005, after an estimated 10%going threa

42、t of revision.rise in 2004.Standard & Poors sees outlays for non-Trucking: tighter supply, more demanddurable goods growing 3.9% in 2005 and3.1% in 2006, slower than the 4.6% increaseStandard & Poors believes that industryof 2004. Durable goods big-ticket itemsconsolidation over the past few

43、 years has leftsuch as appliances, carpet, furniture, andremaining participants in a position to takecomputers, which tend to be more cyclical advantage of increased demand. In 2004, theshould also grow at a slower pace in 2005.stronger carriers regained pricing power forFor this category, we projec

44、t that the 6.7%the first time in several years, enjoying highergain seen in 2004 will be followed by increas-prices and improved yields a trend thates of 4.9% in 2005 and 2.5% in 2006.has so far continued in 2005, which shouldIn 2005, we expect shipment volumes tooffset higher costs. In our view, li

45、ttle net ca-grow as companies continue to maintain leanpacity has been added in the trucking indus-retail inventory levels and utilize just-in-timetry, and that, coupled with growing demand,supply chain systems. The estimated inventory-has shifted the supply/demand equation into-sales ratio was 1.30

46、 in April 2005 an his-favor of trucking companies.toric low in a 12-year downtrend.TL demand strong, capacity tightLTL profit improvement expectedAs demand for TL has grown with theStandard & Poors estimates that eighteconomy, many trucking firms have been re-leading LTL carriers posted about a

47、55%luctant or unable to add freight capacity, aresurge in aggregate operating profit in 2004,unable to attract new drivers at prevailingwages, are experiencing high driver turnover,DIESEL FUEL COSTSand are facing hours of service and engine(US No. 2 diesel fuel, cents per gallon)emissions regulatory

48、 changes. Many carriers250are focusing on raising rates and eliminating230less profitable freight lanes to boost prof-210itability. One result is that the price of TL190freight was 6.4% higher in May 2005 than170in May 2004, according to estimates by the150Bureau of Labor Statistics.130Employee turn

49、over has been particularly110challenging among large TL carriers in 2005.901996199719981999200020012002200320042005The American Trucking Associations, an in-Source: Energy Information Administration.dustry trade association, announced that an-nualized driver turnover rates (at large fleets)3AUGUST 1

50、8, 2005 / TRANSPORTATION: COMMERCIAL INDUSTRY SURVEYon an approximate 13.9% increase in rev-high up 37% from $1.72 a year earlier.enues. This is on top of the 5.8% improve-The average price in 2004 was $1.81, upment in aggregate operating profit this group20% from an average of $1.51 in 2003.recorde

51、d for 2003, on 7.1% growth in rev-Diesel fuel prices have been elevated for theenues. (See the table entitled “Leading TL &past two years due to high oil prices (onLTL carriers” in the “Industry Profile” sec-global supply tightness and Middle East in-tion of this Surveyfor details.)stability), t

52、ightness in refining capacity andIn our opinion, most of the 2003 revenueinput inventories, and changing refinery reg-growth was provided by the capturing ofulations. The American Trucking Associa-Consolidated Freightways Corp.s (Contions estimates that the US trucking industryFreight) revenues, rat

53、her than by the improv-consumes an average of more than 650 mil-ing US economy in the second half. (Consoli-lion gallons of diesel and 290 million gallonsdated Freightways went bankrupt inof gasoline each week. Standard & Poors ex-September 2002.) Many carriers achievedpects average diesel fuel

54、prices to be signifi-strong 2003 revenue growth and improvedcantly higher in 2005 than 2004, followedprofit margins because they adopted a strate-by a modest decline in 2006, with prices re-gy of taking only the highest-margin cus-maining above the levels in 2004 for thetomers formerly served by Con

55、 Freight.foreseeable future.In 2004, the economic upturn helped car-Taxation continues to play a large role inry the groups combined operating profitfuel costs. The combined state and federalmargin to 6.3%, up from 4.7% in both 2003shares of fuel taxes averaged 50.1 cents a gal-and 2002. For 2005, w

56、e expect this group tolon in 2004, according to the American Pe-report a modestly higher operating profittroleum Institute, an oil industry trade group.margin of 6.5%. Carriers profitability inThe federal tax is 24.4 cents a gallon, with2004 and 2005 has benefited from higherstate taxes ranging from

57、 a low of eight centsvolumes attributable to improved manufac-a gallon in Alaska to a high of 42.5 cents aturing and retail activity, asset utilization atgallon in New York. Given current budgetabout 90%, and price hikes the cost ofwoes at the state and federal level, we believeLTL freight has risen 8.0% in the 12 monthsthe trucking industry is not likely to get anyended May 2005, according to the Bureau ofnear-term relief from fuel taxes.Labor Statistics.Higher diesel fuel prices are