Vince:

I'd like to send you some articles on the fleet card business.

If you have some time, I'd like to discuss the meeting that we had with 
Comdata (which has a 60% market share of the fleet card business).  They have 
some live data that potentially could be very interesting; however, I'd like 
to discuss it with you.

Shawn



What a Mess!(Statistical Data Included)
JOHN D. SCHULZ
03/26/2001 
Traffic World 
Page 25 
Copyright 2001 Gale Group Inc. All rights reserved. COPYRIGHT 2001 Journal of 
Commerce, Inc. 
Truckers still waiting for signs of pent-up freight demand; earnings 
shortfalls, layoffs loom 
If you are waiting for trucking to kick-start the nation's economic recovery, 
pull up a chair and wait awhile. Trucking CEOs say they haven't seen this 
slow a first quarter in a decade. 
"Perhaps the weakest first quarter for freight demand since Swift became a 
public company in 1990," Phoenix-based Swift Transportation Chairman and CEO 
Jerry Moyes said. 
The first-quarter trucking mantra historically has been this: everybody loses 
money in January, hopes for a break-even February and earns whatever profit 
there is in the quarter in March. That formula may not hold this year. 
Gregory L. Quesnel, president and CEO of Con-Way Transportation Services and 
Emery Worldwide parent CNF Inc., said the current slowdown was first detected 
late in the third quarter last year and has become "more pronounced in each 
successive quarter." March, he said, has been "as disappointing as the first 
two months this year." 
Layoffs already are occurring at the major LTL carriers. Yellow Freight 
System has idled as many as 1,000 Teamsters and hundreds of white-collar 
back-office workers. Most large carriers are warning of profit shortfalls 
that will cause them to miss analysts' first-quarter estimates. But there are 
deeper fears, too. Marginal players may be forced into bankruptcy. Small, 
family-owned carriers may be unable to exit the industry on their own terms 
because of the shocking decline in the value of used trucks that is causing 
some companies to be valued at less than half their worth of just two years 
ago. 
Swift's volume drop-off began with shipments originating on the West Coast in 
January and February and it is continuing in March, Moyes said. Coupled with 
reduced demand from the Southwest, Moyes said Swift will not meet analysts' 
first-quarter earnings expectations. Swift is not alone. 
"We hauled less freight in February than February a year ago," said Bob 
Hammel, executive vice president of Pittsburgh-based Pitt Ohio Express, a 
leading privately held Eastern regional LTL carrier. "The slowdown in 
manufacturing began in the middle of last year and it was precipitous. Nobody 
anticipated the speed in which manufacturing demand fell off." 
Even Con-Way, the most profitable LTL operation in the past five years, said 
it would have a decline in first-quarter operating income compared with the 
year-ago period. Con-Way's tonnage declines were estimated in the 
"mid-single-digit" percentage range. 
Roadway Express estimated that its current tonnage levels are running 10 to 
11 percent below those a year ago, which will result in an approximately 
one-half of 1 percent (0.5 percent) decline in its operating ratio. (see 
sidebar) 
Pat Hanley, Overnite Transportation's senior vice president and chief 
financial officer, said freight figures were flat in February year over year 
but rose slightly in March. Overnite is the exception to the LTL industry 
with as many as 24 new terminals scheduled to be opened this year. 
"January was pretty good to us, but February was flat. It's coming back in 
March. We're probably up in low single digits, 3 to 4 percent. We're picking 
back up. The economy has hurt us. If you had asked us at the start of the 
year, we'd have said we'd be up double-digits," Hanley said. 
The national economic picture is "a big concern," Hanley said. "We're not 
seeing pressure on prices, at least not so far. We're seeing customers ship 
10 pallets a day instead of 20. The shipment size is coming down. Certainly 
we're concerned. We'll do O.K., but not as great as we'd like." 
Forget consumer confidence surveys or the producer pricing index or whatever 
stars align in Federal Reserve Board Chairman Alan Greenspan's world. The 
genuine leading indicator of any national economic trend is trucking, which 
is always a first-in, first-out industry in any economic slowdown. 
To hear trucking industry leaders tell it, get comfortable with beans and 
franks for dinner. It's going to be awhile before it's filet mignon time 
again. 
Shippers see what's happening as well but say it's still too early in the 
year for carriers to start cutting rates to fill empty trucks. 
"All the carriers we talk with report flat or slightly declining business 
levels -- definitely slower than early last year," said Bill Huie, assistant 
vice president of corporate transportation for NCH Corp., Irving, Texas. 
"With a couple of exceptions, carriers we talk with have no plans for 
expansion in the next few months. We are getting feelers about some possible 
lane adjustments to boost revenue. But generally it appears a little early in 
the economic downturn for much price movement." 
The national LTL carriers are seeing the same things. "Our business is down 
pretty substantially for the first quarter," said Roger Dick, spokesman for 
Yellow Corp., parent of Yellow Freight System and two large regional LTL 
carriers, Jevic Transportation, Delanco, N.J., and Saia Motor Freight, 
Duluth, Ga. 
USFreightways Corp., citing what it called the nation's "serious economic 
slowdown," said it expects first-quarter earnings to fall "very substantially 
below" current Wall Street consensus. 
Extreme weather conditions also contributed to the already weakened operating 
environment, USF Chairman, President and CEO Samuel K. Skinner added. 
"Traditionally, the first quarter builds momentum slowly, with March being 
the strongest month of the period," Skinner said in a statement. "This year, 
the economic slowdown of the fourth quarter of 2000 accelerated in January 
and February, softening even the normal modest expectations for those two 
months." 
It's not just the LTL industry that's hurting. The Morgan Stanley Dean Witter 
truckload freight index continues to show the worst demand-supply 
relationship since analyst James J. Valentine began tracking the data in 
April 1994. Two events can cause weakness in the index, according to 
Valentine. They are either an abundance of excess trucks on the road or weak 
freight demand. 
"So far in 2001, we have seen the confluence of both factors, but the 
fall-off in demand has far outpaced the increase in supply," Valentine wrote 
in his most recent "Trucking Snapshot" for early March. 
Year-to-date measurement for truckload demand is down 25 percent year over 
year, according to Valentine's index, while supply is up only 7 percent. That 
would indicate the over capacity was a significant issue last year but was 
"masked by the strong economy," Valentine says. 
In a more ominous note, Valentine believes overcapacity will continue to 
plague the truckload industry for the next one to two years. Only a 
reaccelerating national economy can bring the demand-supply back in balance 
for the truckload sector in the near term, Valentine predicts. 
The overproduction of new Class 8 trucks from early 1998 through early last 
year has put too many trucks on the roads and caused supply to back up at 
manufacturers, wholesalers and other retailers. Used trucks have lost on 
average more than 30 percent of their value over the past 18 months. 
Anecdotally, one used truck dealer, Music City Truck & Equipment, in 
LaVergne, Tenn., is holding a "two-for-one" sale on three- to five-year-old 
Class 8 Freightliners. You can buy two for around $30,000, less than a brand 
new Chevy Suburban SUV. 
What that means is a trucker who bought a 1998 Class 8 truck for $70,000 and 
depreciated half the value over three years has a piece of equipment on the 
books this year at $35,000. But assuming it has lost 30 percent of that 
value, it may only be worth $24,500 in actuality. For a carrier with a 
100-truck fleet, that equates to a loss of more than $1 million on assets. 
The glut may last for a while, according to Valentine's analysis. Assuming a 
three-year trade-in cycle, most of the Class 8 tractors in the truckload 
sector are just now rolling over to the used-truck market. That means that 
overcapacity will plague the truckload industry for at least the next year. 
That will result in some of the marginal carriers exiting the business, as 
did nearly 1,900 carriers last year that either closed or declared 
bankruptcy. 
"We can see from indexes, surveys and other information available to us that 
it is unlikely there will be any significant improvement in March and freight 
demands will continue to be soft throughout the month. Based on all of these 
factors, we expect USFreightways' profits for the first quarter to be very 
substantially less than published analysts' forecasts," Skinner said. 
In addition, severe weather conditions including an earthquake in Seattle, 
rainstorms in California and blizzards in the Northeast have added cost and 
decreased efficiencies, Skinner added. 
Expectations at each of USF's operating companies have been affected, some 
more than others. The LTL, logistics, reverse logistics and 
freight-forwarding units are all showing decreased revenue and volume over a 
similar period last year, Skinner said. 
Further job cuts at USF Worldwide, its freight forwarder, would be in the 
offing as cost controls at the unit would be "accelerated" in the wake of the 
softening economy, Skinner said. Late last year, Skinner said the rebuilding 
process at USF Worldwide would be a two-year process. But the worsening 
economy has made that rebuilding job harder, he said. 
"We are seeing evidence that the slowing economy is, in fact, further 
impeding progress in this area," Skinner said. "During the fourth quarter of 
2000 and continuing into the first quarter of 2001, the company has taken 
steps to increase cost efficiencies. Among these actions are a substantial 
cutback in capital spending and significant reductions in the labor force. 
These cost-control efforts will be accelerated to partially counterbalance 
the damaging impact of the current economic and weather conditions." 
In the 2000 first quarter, USF posted $22.3 million net income, a 27 percent 
rise from the $17.5 million earnings in the 1999 first quarter. At the time, 
that was USF's 15th straight quarter-over-quarter earnings increase. It came 
on $608.2 million revenue, an 18.5 percent rise in from the $513.2 million 
revenue in the 1999 first quarter. Analysts had been estimating USF to earn 
about $3.50 a share earnings for 2001, compared with actual $3.61 earnings 
per share for all of last year. In the fourth quarter last year, USF earned 
$23.7 million, or 91 cents a share. 
                          Trucking in a Snapshot
Market             What's Going On
MSDW [*] truckload Remains in record-low territory, indicating
freight index      the worst demand-supply relationship since MSDW
                   began tracking the date in April 1994.
Diesel prices      Diesel prices in the first quarter of 2001
                   have come down 6% sequentially from 4Q00. However,
                   the average price for the quarter remains 6%
                   above that of 1Q00.
WTI oil            OPEC recently agreed to reduce supply by 5% and
                   has stated a price objective of $25 per barrel.
Capacity           Retail sales of Class 8 tractors (new trucks
                   entering the market) came down in January, but
                   inventory (trucks that will enter the market at some 
                   point) to sales ratio hit a new high of 3.4 months
GDP                4Q00 GDP increased 1.1% and economists see U.S.
                   recession in 2001 with +0.5% and -1.4% GDP forecast 
                   for 1Q01 and 2Q01, respectively.
Retail sales       Retail sales rose 0.7% in January. While this
                   was better than forecast, the upside was likely
                   the result of excessive clearance sales after a
                   disappointing holiday season.
Consumer           The Conference Board's measure of consumer
confidence         confidence fell again (nine points) in February
                   after registering the largest one-month decline
                   in 10 years in January (14 points).
NAPM               The February NAPM rose slightly to 41.9.
                   However, it still indicates a contracting
                   manufacturing sector.
Leading            The index of leading economic indicators
economic           rose 0.8% in January, while
indicator          MSDW had forecast a 0.6% increase. This
                   represents the first rise in four months.
Stock              After a recent pullback, trucking stocks remain
perfonnance        up year-to-date with TL stocks up 5%, regional
                   LTL stocks up 9% and national LTL stocks up 13%.
Investor           For the week ended February 28, mutual fund
                   outflows totaled $309 million, compared with
                   inflows of $2 billion in the prior week.
Market             Implications
MSDW [*] truckload Negative for all TL carriers.
freight index
Diesel prices      The downward trend is Positive for all
                   carriers, especially TL carriers, which have
                   greater exposure to fuel than LTL carriers.
WTI oil            Negative for all carriers, as $25 per
                   barrel is still 25% higher than the $20 per
                   barrel average since 1990.
Capacity           Negative for TL carriers, not a major
                   concern for LTL carriers, which measure
                   capacity by the number of terminals.
GDP                Negative for all carriers.
Retail sales       Negative for both TI and LTL carriers.
Consumer           Negative for all carriers
confidence
NAPM               Negative for all carriers.
Leading            Positive for all carriers.
economic
indicator
Stock              Positive, however, stocks could pull
perfonnance        back further in the short term as
                   fundamentals catch up.
Investor           Negative.
Source: Morgan Stanley Dean Witter Research