Despite the bleary economic recovery process, there is still no clear indication of a recession. Yes, it could happen! Many analysts believe it will happen and I believe a lot of that has to do because there are not enough positives to give consumers the competence to spend more.

Everybody keeps relating to Japan, but it’s important to understand that;

1. America isn’t Japan.
2. Spending hasn’t stopped cold, as it did in the 1990’s.
3. US labor markets are more flexible.
4. Certain manufacturing gains are helping the economy stay afloat.

Last, but not least, we haven’t had a natural tsunami or a nuclear meltdown. There is much concern about the global economy. Some analysts are predicting that U.S. banks can be in trouble if Greece defaults on their current debt.

I, personally, believe that US banks can absorb a default by Greece, but it certainly will hurt if the crisis grows. French banks have the most exposure to total debt at $56.7 billion. The exposure for U.S. banks is $7.3 billion, compared with $136.3 billion for Europe.

An orderly default, restructuring a chunk of Greek debt, would be less risky. Banks in Europe and US have enough capital to deal with some of these losses. Unfortunately, if the process moves much quicker; Ireland, Portugal, Italy and Spain could have some substantial problems. 

I’m constantly asked if 2011 is like 2005 and 2006 – the answer is a resounding no!

1. 2011 is very active.
2. It’s certainly more active than 2010 – 2009, but;
3.  2005 and 2006 were monumental years for the financial industry.

In 2005-2006, that was a period when the largest buyout record was set and surpassed several times with 9 out of the top 10 buyouts at the end of 2007 were announced in an 18 month window. In 2006, Private Equity firms purchased 654 US companies for $375 billion. This represented 18 times the level of transactions closed in 2003.

Additionally, Private Equity firms raised $215.4 billion on investment commitments to 32 funds, which surpassed the previous record set in 2000.

The Intermodal Association of North America has scheduled 2 September webinars in its “Stay Informed” series. One will examine multimodal supply chain options and the other will look at the US environmental protection agencies, Smartway drayage program.

The first of the webinars is slated for Wednesday, September 22, 2011 at 2:00pm EST. The second webinar is scheduled for Wednesday, September 28, 2011 at 2:00pm EST.

To register for the Smartway webinar; you may register at – https://www1gotomeeting.com/register/143781200.

Unfortunately, the housing market is burdened with short sales, default properties, more short sales and excess inventory. That coupled with fact with the Federal  Government is broke and they want to “Tax! Tax! Tax! Tax! Tax! Tax! Tax!” People that do not have jobs, that’s what I said… people that do not have jobs! … Is causing anxiety throughout the US.

In Europe, the debt menace is growing. There is a legitimate anxiety about bank write downs, which will continue to rattle stock markets, and more bailouts will fuel “Anti-Euro” sentiment.

In light of the tremendous government deficit don’t be surprised if there is a “blink” in the system and some tax revenue risers will ascend shortly. To save $1.5 trillion in the next 2 years taxes and the Consumer can’t be spared. Without taxes on the table, the 12 panel member charged with identifying cuts won’t strike a deal. The bottom line is taxes are going up.

The sad thing is that if the government was run like a business these problems wouldn’t have occurred; but since you can print money any time you want, the inevitable happens; chaos, poor management and ultimately the consumer pays.

That’s politics!        

The program began in May of 2009 as a potential  cost cutting measure, but drew criticism from the American Trucking Association, which claimed the mail service is barred by law from competing unfairly with private businesses.

In August the Postal Services disclosed that it lost $3.1 billion dollars in its fiscal 3^rd quarter ending in June. Compared to a $3.5 billion loss in 2010 (Excerpts taken from the Transport Topics)

Swift Transportation offers intermodal container – on – flatcars or COFC service between the US and Mexico to increase its service options available to customers.  The service points are Central and NE Mexico, as well as Mexico City and Guadalajara. The expansion of the COFC product to and from Mexico completes the geographic footprint and permits Swift to capitalize considerable advantages in the cross border segment.  Swift stated they will expand to 6,700 53’ containers all with GPS satellite tracking

Phoenix, AZ, September 5, 2011— Keeping their strong momentum while entering the final quarter of 2011, Ahern and Associates, Ltd. shows once again why they are the leading trucking and logistics acquisition firm by announcing consulting engagements by nine additional clients who are looking to expand operations. Andy Ahern, CEO of Ahern and Associates, who is well known for his ability to create markets within the transportation industry, makes this proclamation on the heels of their recent announcement of their second annual Transportation Conference to be held September 23^rd in Chicago.

 Analysts at Ahern and Associates are seeking assistance for the following open assignments:

Client #1: is a privately held transportation company with revenues exceeding 1 billion dollars

 The company is looking to acquire:

• Flatbed companies that are predominately independent contractor driven.
• Minimum revenue - $80MM.
• Maximum revenue - $400MM
• Company is willing to pay cash.
• Company is willing to pay a multiple of EBITDA.
• Company is looking for profitable carriers that have a strong management team and will want to stay on after acquisition.

Client #2: is a publically traded company looking to acquire freight brokers and logistics providers whose revenues generate $25MM - $80MM of annual revenue.

• Must have a strong management team.
• Management must be willing to commit 3-5yrs on running the company going forward, and;
• Company is willing to pay multiple of EBITDA.

Client #3: is a private equity firm looking to acquire a van carrier or van carriers in two specific categories.

• Carriers that generate $25MM of annual revenue and run primarily in the southeast/southwest.
• Carriers that generate $200MM and over of annual revenue running primarily to southeast/southwest. 

Client #4: is looking to acquire LTL carriers whose revenues exceed $150MM annually.

• Company can be marginally profitable.
• It has to have a long history in the business, and;
• The client is willing to pay a multiple of EBITDA.

Client #5: is a trucking and logistics company that is currently in the dedicated contract arena.

• They are looking to acquire companies that have 3-5yr dedicated contracts that pay all miles.
• They are willing to pay a multiple of EBITDA.
• They are not interested in automotive contracts within the auto industry, and;
• They are looking for companies that historically are looking for an exit strategy and want to stay on for some time period.

Client #6: is a privately held company well recognized in the industry and is looking to acquire a $100MM - $500MM refrigerated carrier. Currently, the client does not haul this type of freight.

• The company must have a very strong management team.
• The management team must be willing to stay and move the company forward, and;
• The client is willing to pay a multiple of EBITDA.

Client #7: is a small Midwestern, well capitalized family operation, looking for bulk pneumatic (dry) carriers in the IL, IN, MI, WI area.

• Is looking to acquire companies from $5MM - $30MM of annual revenue.
• Is also looking to acquire freight brokers that deal in the bulk commodity business, and;
• The company is willing to pay a multiple of EBITDA.

Client #8: is a well-established manufacturing company looking to acquire companies to utilize the strengths of their business and develop new products in the category of powered equipment and tools, which will be sold in commercial and industrial markets,  including new truck mounted applications. The client is looking for companies that offer;

• Multiple and virtual unrestricted channels of distribution.
• They are probably involved in manufacturing chipper units, log splitters, stump grinders, truck or trailer mounted vacuum systems, refrigeration units for trucks and trailer, under hood air compressors, turf products, air spades and air vacuums, portable winches used by arborists.
• Minimum revenue size is $20MM.
• Maximum revenue size cannot exceed $300MM of annual revenue.
• Company is very well known in the industry.
• They are willing to pay a multiple of EBITDA 

Client #9: is a well-known family owned flatbed company that is in the top 5% in the industry.

• Company is looking to acquire flatbed companies that utilize independent contractors.
• Will look at companies that have a minimum of 30 trucks.
• Will look at companies that operate 300 trucks.
• Client is willing to move quickly.
• They are willing to pay a multiple of EBITDA, and;
• They are specifically interested in specific geographic areas such as; TX, OK, GA, TN, AR, IL and IN.

Ahern’s unique approach to aiding companies seeking to acquire specific assets in transportation is entrenched in their ability to provide the most accurate company valuations in the industry while working with the broadest network of professionals and contacts in the country.  “We’ve seen a real spike in transportation acquisitions in 2011 and expect that trend to continue for quite some time.  Our analysts are constantly talking to companies who may be a match for our outstanding acquisition needs.”

If your company is a potential match to any of the above prerequisites, you are urged to contact Andy Ahern direct at 602-242-1030.

About Ahern & Associates, Ltd.:

Ahern and Associates is North America’s leading trucking and transportation management consulting firm.  The skilled consultants at Ahern and Associates specialize in mergers and acquisitions of trucking and logistics companies as well as the restructuring and evaluation of existing carriers that seek to increase operating efficiency and improve profitability.  Since 1987, Ahern and Associates has aided hundreds of buyers in the acquisition of trucking and logistics companies throughout the U.S. and Canada as well as assisting many transportation and logistics companies in reducing their overall operating costs and increasing their profitability.  For more information, please call 602-242-1030 or visit http://www.Ahern-Ltd.com

Transport Topics recently published, in their business and finance section on August 8^th, 2011 about consolidation in the trucking industry. On page #13, they quoted Andy Ahern, CEO of Trucking and Transportation Management Consulting Company Ahern and Associates LTD, indicating that;

1.       The number of mergers and acquisitions in trucking is up from 2010.

2.       Smaller carriers are having a hard time surviving the economic turmoil, and;

3.       Since 60% of fleets are 1-99 trucks this segment is finding reluctance for banks to lend them money for expansion and operating capital.

Federal Appeals Court on Friday, August 26 vacated the federal motor carrier safety administrations Electronic On board Recorder Regulation for not addressing how the world could prevent the device from being used to harass drivers.  A 3 judge panel for the US court of Appeals for the 7^th circuit concluded that “the ruling cannot stand because the agency failed to consider an issue that is/was statutorily required to address.”

The Safety and Regulatory Reform Act of 1988, requires the agency to ensure that any such devices are not used to “harass vehicle operators”.

Navastar Sales and Marketing Vice President, James Hebe said that the industry needs to adapt to the changes in the economy. “The conditions since 2006 have changed our industry forever”.  Hebe told trucking executives gathered for the Commercial Vehicle Outlook conference, prior to the start of the Great American Trucking show in Dallas. “The next 10yrs will change the industry faster than any time in the history of heavy duty trucking”

Challenges the industry must respond to include; carrier consolidation, longer running trucks, decrease on demand for class “A” trucks, increase production of medium duty trucks, increase intermodal freight, the rise of engines powered by natural gas and diesel and more regulation on diesel emissions.

Owner/operators will take more competition from technology.

Friday – Ahern/Benesch Transportation Conference

When: September 23, 2011

Where: JW Marriott

                151 W. Adams

                Chicago, IL

Time: 9:30am – 3:30pm

Topics:

1.       State of capital markets in logistics.

2.       Getting your trucking/logistics company ready to sell.

3.       The regulatory landscape, CSA, Hours of Service, Independent Contractors.

4.       What transportation buyers are purchasing and why.

As most of us know, fuel prices have just torn apart the trucking industry;

·         We can’t pass on the fuel surcharges quick enough to the shippers.

·         Many of the shippers are requiring the smaller carriers to adjust, once a week, according to the department of energy index, and;

·         Many of your larger carriers are adjusting daily with the fuel.org index.

Last week, oil prices fell as mixed economic reports offered few clues about future energy demand. Although this was bad for the stock market, it was bad for the trucking industry. Prices for benchmark West Texas Intermediate Crude ended the day down 34¢ at $85.38 per barrel on the New York Mercantile Exchange.

In London, Brent Crude rose 1¢ to $108.03 a barrel on the Ice Futures Exchange.

In the past several weeks, WTI’s prices have fallen about $12.00. Overall, fuel prices are going to continue to spike; the economy is going to continue to sputter and trucking companies are going to have to start being creative and looking for alternatives to solve their problems such as agency programs, partnership programs, PEO programs, etc.

The divided 3 judge panel of the 11^th US Circuit Court of Appeals concluded that Congress overstepped its authority when they passed a “so called” individual mandate. The decision marks a significant victory for the 26 states, including Arizona, to challenge the Health Care law.

The American public has been battered over the last 2 ½ years and to mandate medical coverage, was just another step towards placing further hardships on individuals and businesses.

It’s been stated that 60% of trucking companies have 1 – 99 trucks. It’s a fact that many of the small trucking and logistics companies are having a very difficult time competing in today’s marketplace, due to the fact that their lenders are very reluctant to provide any working capital, due to not only the cyclical nature of our industry, but also the economy.

Many companies are cutting back on their advertising cost and that’s the worst thing you can do when your business is not thriving;

• You need to be creative.

• You need to think out of the box, and;

• You need to learn to use the internet to your benefit.

• You need to create meaningful advertising and get the biggest bang for your dollar.

I recognize it’s very difficult to do this when cash flow is very tight. Recently, I read an article in the newspaper and there is a new website called Fiverr.com. This helps build businesses and it charges $5.00 at a time. If you want to mail someone a postcard from Las Vegas, you want to create some decals or provide some basic advertising on your company. If you want someone to do a voiceover about your business, it’s $5.00 payable through Pay Pal.

In reference to Fiverr.com, they claim to make available 500,000 services offered by individuals and businesses in 200 countries – check it out!

• Industry volumes were outstanding in the 2nd quarter, particularly in May and June.

• Driver availability is the number one challenge for the industry.

• Use equipment prices for both tractors and trailers continue to increase, thereby making it difficult for new owner operators to be created.

• A “niche” market such as the expedited team, dry van market and the flat bed market are not not see the ebs and flows associated with the macro economy, and;

• Heartland Express believes they’re going to grow their fleet by 40% or more and much of it will be through acquisitions.