Media Kit » Try RailPrime™ Today! »
Progressive Railroading
Newsletter Sign Up
Stay updated on news, articles and information for the rail industry



This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.




railPrime
View Current Digital Issue »


RAIL EMPLOYMENT & NOTICES



Rail News Home Rail Industry Trends

6/9/2009



Rail News: Rail Industry Trends

For truckers, 'technology-based efficiency' is the competitive key — Stifel Nicolaus note


advertisement

In the competitive trucking market, tapping technology to stay the cost-efficiency course is vital. It also gives the larger, well-managed carriers that much more of an edge, Stifel Nicolaus Co. Inc. analysts David Ross and John Larkin said in a research note issued June 5.

The pair held a conference call last week featuring three trucking industry execs: New Century Transportation Inc. Chairman and Chief Executive Officer Harry Muhlschlegel, U.S. Xpress Enterprises Inc. Co-Chairman Max Fuller, and Marten Transport Ltd. President and Chairman Randy Marten. The three officials are “viewed by their peers as gurus when it comes to the latest in technology-based efficiency or cost-reduction-oriented advancements,” the analysts wrote in their note. But “smaller, weaker carriers” often can’t apply cost-saving technologies because of time constraints, management depth and/or capital, they said.

Two innovations discussed during the call included selective catalytic reduction (SCR) engines and Navistar International Corp.’s exhaust gas recirculation (EGR) engine. SCR engines “appear to be ready for mass consumption in the U.S. truck market,” while pre-buys won’t be necessary with the 2010 SCR engines because the “bugs” have been worked out in Europe, the analysts said. And because a new engine needs 400,000 miles to 500,000 miles to be thoroughly tested, Navistar’s new EGR engine “will be a tough one to buy initially, given the uncertainty regarding its durability and longevity,” Larkin and Ross wrote.

Larger carriers’ edge — combined with the freight recession, rising fuel prices and tight credit markets — will “continue driving industry consolidation around the bigger carriers, as small carriers continue to fall by the wayside,” Larkin and Ross said.

“Having said that, we are not recommending any truckload-based stocks presently as we believe they have come too far too quickly, relative to current extraordinarily weak fundamentals,” they said. “We do continue to recommend Conway, however, as our favorite play on YRC Worldwide Inc.’s ongoing liquidation.”

By Desiree J. Hanford. A Chicago-based free-lance writer, Hanford covered the equities market, including transportation, for Dow Jones & Co. for 10 years.


Contact Progressive Railroading editorial staff.

More News from 6/9/2009