Sep 262011

My speech at the 2011 Transportation & Infrastructure Summit

Posted By: Tom Sanderson
Date Posted:  Monday, September 26, 2011  6:05 PM

I had the opportunity to speak at the 2011 Transportation & Infrastructure Summit in Irving, TX  in August. My remarks and slides are available on You Tube. I feel it is only fair to warn you that the speech (and video) are 25 minutes long, but I do think you will find the history and facts about the federal fuel tax and highway spending very interesting.

The bottom line is that the current mechanisms for funding highway and bridge construction and repair are broken. The solution though, is not to implement an entirely new taxing mechanism in the form of a vehicle-miles tax. Our federal government officials have proven that we cannot trust them to manage the Highway Trust Fund. The HTF has morphed from a true user fee designed to build and maintain the interstate highway system into a slush fund for bike paths, public transit, and bridges to nowhere.

Senator Kay Bailey Hutchison and the Reason Foundation provide interesting alternatives that give more power and money back to the states and help restore trust in the Trust Fund.


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Categories: Highway funding
Sep 212011

Fuel prices drop 2.9 cents per gallon

Posted By: Tom Sanderson
Date Posted:  Wednesday, September 21, 2011  1:50 PM

Weekly retail on-highway U.S. diesel prices decreased by 2.9 cents to $3.833 per gallon. Diesel prices are up 15% year-to-date, from $3.331 in January, and are still nearly double the recent low point of $2.023 on March 16, 2009. A view of weekly prices over the last 3 years shows much higher prices than seen in 2009 or 2010 (second graph). Diesel prices peaked at $4.764 per gallon in July of 2008 and were above $3 per gallon from September 24, 2007 to November 3, 2008 (over 13 months). Prices have been back over $3 since October 4, 2010 (11+ months). In 2008, diesel exceeded $4 per gallon for 23 straight weeks, compared with 6 straight weeks earlier in 2011. Some forecasters are predicting lower fuel prices, but because of the weak dollar and commodity inflation, it still seems likely to me that we will see $5 diesel before we see $3 diesel.

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Categories: Diesel fuel prices
Sep 212011

Retail sales remain flat

Posted By: Tom Sanderson
Date Posted:  Wednesday, September 21, 2011  1:39 PM

Seasonally adjusted real retail sales dropped slightly in August to $172.1 billion. (Note that actual sales are deflated using CPI 1982-84=100.) Year-over-year growth was 3.1%, the sixth month in a row under 5%. From peak (Sep '07) to current, retail sales are off 4.5%, a much smaller percentage decline than what has occurred in the housing and auto markets. August sales were 10.0% higher than the trough (Mar '09) of the recent recession. Real retail sales have only recovered to the levels of early 2005, which is not much of a recovery. The vertical bars in the graph represent recessions.

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Categories: Retail sales and same store sales
Sep 162011

President Obama signs extension to highway bill

Posted By: Tom Sanderson
Date Posted:  Friday, September 16, 2011  6:24 PM

On Friday, September 16, 2011, the President signed into law:

H.R. 2887, the “Surface and Air Transportation Programs Extension Act of 2011,” which extends through March 31, 2012, funding for programs funded from the Highway Trust Fund (HTF), authority to make expenditures from the HTF for HTF-financed programs, and authority to collect taxes that fund the HTF; and extends through January 31, 2012, authorities to collect taxes that fund the Airport and Airway Trust Fund, make expenditures from the Airport and Airway Trust Fund, and make grants to airports under the Airport Improvement Program.

The White House, Office of the Press Secretary, September 16, 2011


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Categories: Highway funding
Sep 152011

Highway bill extension nears the finish line, but there is a snag

Posted By: Tom Sanderson
Date Posted:  Thursday, September 15, 2011  3:30 PM

The eighth extension to the SAFETY-LU highway bill appears to be on-track but there is a somewhat welcome voice of sanity that is temporarily holding up the extension. On September 13, the House unanimously approved extending surface transportation programs until March 31, 2012 authorizing $23 billion to be spent from the Highway Trust Fund. The Senate has also agreed to the six-month extension and the price tag but has not passed the bill at this point.

The fly in the ointment is that Senator Tom Coburn (R-OK) is blocking attempts to pass the bill and wants an amendment to block the mandate that states use 10% of Highway Trust Fund dollars to fund so called “transportation enhancements”. Coburn noted some of the enhancement projects that had been funded with hundreds of thousands of dollars of federal fuel tax money. Among those cited were a museum in Pennsylvania, a Chinatown gateway in California and a squirrel sanctuary in Tennessee. He said states could choose to fund such projects but shouldn't be forced to do so in order to receive their federal road funding. Read more. John Hart, a spokesman for Coburn, said earlier this week that the senator "believes we need to prioritize bridge repair over bike paths and will use procedural tools at his disposal to strip the enhancement requirements from the bill."

With only two weeks remaining before the current extension of the highway bill expires, this is probably not the best time for one senator to draw a line in the sand, but his point is valid. We must restore trust in the Highway Trust Fund, and that means spending our federal fuel tax dollars on highway and bridge repairs and maintenance, and nothing else. For an excellent article on this subject, I refer you to The Reason Foundation.


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Categories: Highway funding
Sep 152011

Flatbed capacity remains tight, but continues to ease

Posted By: Tom Sanderson
Date Posted:  Thursday, September 15, 2011  11:22 AM

Morgan Stanley's flatbed freight index has fallen from earlier this year but remains high relative to historical patterns. Capacity had eased early in the second quarter but tightened significantly coming out of Q2. The index has softened throughout Q3 but remains higher than all other reference years and is considerably higher (tighter capacity) than the average over the complete time frame. The flatbed market was particularly hard hit by the fall off in housing starts, but has gained some ground with the growth in U. S. manufacturing. The index measures incremental demand for flatbed truckload services compared to incremental supply. The higher the index the tighter is capacity relative to demand when compared to a prior period.

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Graph reproduced with permission from Morgan Stanley. For more information contact: Adam Longson at Adam.Longson@morganstanley.com or Bill Greene at William.Greene@morganstanley.com


Sep 142011

Intermodal volume surges in August

Posted By: Tom Sanderson
Date Posted:  Wednesday, September 14, 2011  3:44 PM

IANA, the Intermodal Association of North America, reported strong growth in domestic intermodal shipments in August. Shipments in domestic boxes are well above the same period in 2010 and match the highpoint for 2011. Shipments moving in international containers also showed strong growth in August, nearly matching the total from August 2010 after dropping behind in July. Shipments in ISO containers set a new high for 2011. Halfway through September it remains unclear whether we will have a fall peak shipping season with tight capacity, or if economic challenges will result in readily available capacity.

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Categories: Intermodal Volume
Sep 142011

Dry van capacity-demand balance remains near the historical average

Posted By: Tom Sanderson
Date Posted:  Wednesday, September 14, 2011  10:27 AM

Morgan Stanley's dry van truckload freight index indicates capacity has started to tighten again in recent weeks, but remains very near the long term average for this time of year and is identical to 2010. Capacity has been more readily available than 2010 since the lines crossed in April, but now they may be crossing again. Our view is that unless the economy recovers and we experience a fall peak shipping season, we are not likely to see tight capacity for the balance of 2011. The index measures incremental demand for dry-van truckload services compared to incremental supply. The higher the index the tighter is capacity relative to demand when compared to a prior period.

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Graph reproduced with permission from Morgan Stanley. For more information contact: Adam Longson at Adam.Longson@morganstanley.com or Bill Greene at William.Greene@morganstanley.com


Sep 142011

Refrigerated capacity continues to tighten

Posted By: Tom Sanderson
Date Posted:  Wednesday, September 14, 2011  7:20 AM

Morgan Stanley's refrigerated truckload freight index shows very tight capacity. The index was up and down through Q2 and early Q3, but is now at a highpoint not only for 2011 but for for the series.  Refrigerated capacity is very tight relative to all of the reference years. The pricing environment in this segment clearly favors the carriers at this point. The index measures incremental demand for refrigerated truckload services compared to incremental supply. The higher the index the tighter is capacity relative to demand when compared to a prior period.

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Graph reproduced with permission from Morgan Stanley. For more information contact: Adam Longson at Adam.Longson@morganstanley.com or Bill Greene at William.Greene@morganstanley.com


Sep 132011

Diesel prices drop by 0.6 cents per gallon

Posted By: Tom Sanderson
Date Posted:  Tuesday, September 13, 2011  3:56 PM

Weekly retail on-highway U.S. diesel prices decreased by 0.6 cents to $3.862 per gallon. Diesel prices are up 16% year-to-date, from $3.331 in January, and are still nearly double the recent low point of $2.023 on March 16, 2009. A view of weekly prices over the last 3 years shows much higher prices than seen in 2009 or 2010 (second graph). Diesel prices peaked at $4.764 per gallon in July of 2008 and were above $3 per gallon from September 24, 2007 to November 3, 2008 (over 13 months). Prices have been back over $3 since October 4, 2010 (11+ months). In 2008, diesel exceeded $4 per gallon for 23 straight weeks, compared with 6 straight weeks earlier in 2011. Some forecasters are predicting lower fuel prices, but because of the weak dollar and commodity inflation, it still seems likely to me that we will see $5 diesel before we see $3 diesel.

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Categories: Diesel fuel prices
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