Economic Watch: Manufacturing Pushes Industrial Production Higher

The total output from the nation's factories, mines and utilities rebounded last month, posting its best quarterly performance in a year, due in part to increased manufacturing, according to new Federal Reserve figures.

Its measure of industrial production edged up 0.1% in September following a downwardly revised 0.5% drop in August.

Manufacturing output increased 0.2% in September and moved up at an annual rate of 0.9% in the third quarter. It's at the same level as a year ago. The production of durable goods, those designed to last three years or more, remained unchanged. The production of nondurables increased 0.5% while the production of other manufacturing, such as publishing and logging, fell 0.8%.

For the third quarter as a whole, industrial production rose at an annual rate of 1.8% for its first quarterly increase since the third quarter of 2015.

At 104.2% of its 2012 average, total industrial production in September was 1% lower than its year-earlier level.

Capacity utilization for the industrial sector edged up 0.1 of a percentage point in September to 75.4%, a rate that is 4.6 percentage points below its 1972–2015 average.

The improved overall performance adds to hope the nation's industrial sector has gotten past the effects of a strong U.S. dollar and lower oil prices, which pushed manufacturing numbers lower due to bloated inventories as goods made here became too expensive overseas and as the collapse in oil prices resulted in many companies in the energy sector pulling in the reins.

This latest report follows ones from earlier in the month showing manufacturing expanded in September, though they differed in how much things had actually improved.

These and other factors, such as increasing employment, have led to increasing optimism that when third quarter gross domestic product numbers are reported on Oct. 28, GDP will show annual growth of between 2% ...Read the rest of this story

Earnings Watch: Lower J.B. Hunt Numbers Kick off 3rd Quarter Reports

Third quarter earnings for the nation's trucking companies began rolling in on Monday, following reports of lowered expectations as several negative factors weigh on the nation's freight markets.

J.B. Hunt Transport Services Inc. (NASDAQ:JBHT) reported net earnings slipped to $109.4 million, or 97 cents per share, compared to $115.1 million, or 99 cents per share, a year earlier.

Total operating revenue for the most recent quarter was $1.69 billion, compared with $1.59 billion for the third quarter 2015. This topped a consensus estimate by analysts survey by Zacks Investment Research, but the per-share performance was 5 cents less than expected.

Operating income for the current quarter totaled $183 million compared $194 million for the third quarter 2015. The Arkansas-based company attributed the decline mainly to lower customer rates in its intermodal, brokerage and trucking segments, increased rail purchase transportation rates, lower box turns, increases in driver wages and recruiting costs, losses on the sale of used equipment, increased legal and consulting costs, and higher equipment maintenance and ownership costs.

J.B. Hunt's intermodal segment, which makes up nearly two-thirds of its operating income, saw revenue increase 2% in the third quarter from a year ago to $970 million as its operating income fell 7% to $116.9 million. This happened despite overall volume increasing 7%. Revenue per load fell 4.2% including fuel surcharges. Revenue per load excluding fuel surcharges fell 2%.

The company's dedicated operations saw revenue increase 6% to $394 million as operating income moved 16% higher to $52.5 million. This was attributed to a near 3% increase in revenue per truck per week, including fuel surcharge. Without the fuel surcharge the hike was approximately 4%. The dedicated operation has added 205 trucks to its operations over the past year, including 50 in the second quarter.

“Approximately 75% of these additions represent private fleet conversions versus traditional ...Read the rest of this story

JB Hunt Posts Disappointing Earnings

Right Out of the Factory

My colleague Dave Schaller recently presented a paper (16CV-0298) that he and I co-authored called Confidence in Freight Efficiency Technologies at the SAE 2016 Commercial Vehicle Engineering Congress as part of the conference's GHG Symposium. The paper talked about the fact that there are now lots of fuel efficiency technologies on the market for fleets to choose from, but there are barriers that get in the way of them making those investments.

Barriers included:

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Ontario reviewing Class D requirements

Digging into the new diesel engine oils: Part one

Dan Arcy, global OEM technical manager for the Americas for Shell Lubricants, will tell you that the new CK-4 and FA-4 diesel engine oil blends due for release December 1 – the end result of five years' worth of work – weren't just designed to help 2017-model engines comply with stringent Ph

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Vipar Heavy Duty Names New President

Vipar Heavy Duty has named Chris Baer its new president, effective immediately, as part of a transition plan eventually leading to the retirement of the aftermarket parts distributor group's long-time head, Steve Crowley, who remains as CEO.

Baer joined Vipar Heavy Duty in January 2002 as director of program management and in November 2003 he was named vice president and a corporate officer. He was promoted to executive vice president in November 2014.

Chairman Bill Nolan made the announcement Oct. 17 at the organization's annual business conference in Orlando, Fla.

“Chris is well-respected by Vipar Heavy Duty stockholders and suppliers and by his colleagues in the heavy duty industry,” Nolan said. “He is a proven leader with excellent market knowledge who will help us continue on a strong upward path as an organization.

"At the same time, I want to thank Steve Crowley on behalf of all my fellow shareholders for his years of leadership. We have experienced an immense amount of growth during his time at the helm and are grateful for his dedication and hard work. Steve has been a tremendous leader and a good friend.”

“It has been an honor to lead this organization for more than 16 years and I'm excited to see Chris step into this new role," Crowley said. "He has been a valued adviser to me and the board of directors, and is a natural fit to lead this organization into the future."

Before joining Vipar Heavy Duty, Baer was with Chicago Rawhide/SKF for 17 years in a variety of sales management roles, including director of automotive aftermarket sales.

He has served as a member of the AWDA Young Executive Society (YES) committee and earned the Automotive Aftermarket Professional (AAP) designation from the University of the Aftermarket. He is a 2014 recipient of the Northwood University Automotive Aftermarket Management Education ...Read the rest of this story