PTS DOA
by John Horner
June 14th, 2008 12:59 PM
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The AP reports America's second largest automotive hauler is giving up. Thanks to a Teamster's strike, Performance Transportation Services (PTS) is calling it quits. PTS was already operating under Chapter 11 reorganization caused by the double whammy of imploding demand and skyrocketing fuel costs. Perhaps the fact that PTS was not a participant in the "national car haulers contract" with the Teamsters are negotiating with other major suppliers had something to do with what went down. CEO Jeff Cornish concluded that "the leadership of the union had a different agenda [other than PTS' workers' paychecks]." Oh well. The company that "delivered more than 4 million new and used cars annually from 24 facilities nationwide with its fleet of 1,800 trucks" is now gone for good. Expect to see more cars on freight trains. Or maybe Toyota wants to mop-up some of it's extra cash and put 1800 rolling billboards on the highway with it's own-branded delivery fleet. The four Horsemen of the Apocalypse continue to gallop through the American automotive industry's supplier base.
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I bet you will see the remains picked up on the cheap. I would buy into this with a decent private equity firm. At the very least, 1800 truckers will have the opportunity to get into the car hauling business for cheap.
The abandoned mileage stats are deceptive. It was mostly the secondary and tertiary lines that were abandoned. The mainline "interstates" are still going quite strong. The old model was you loaded a box car with your freight and it would often go all the way to its destination at another warehouse in the box car. In many older industrial areas they never went to the trouble and expense of ripping up the train tracks in the street. The new model is you load your freight into a 53' domestic container, it goes on a intermodal semi-trailer to the (relatively) local rail ramp, rides the rails most of the way and then has final delivery by another local drayage carrier. The trucking industry has had a good 35 year run based on cheap fuel and the subsidized interstate highway system.
Of course, relying on a few rail "mainlines" could leave important commerce vulnerable to terrorism, so security will be an added cost...