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Sunday Apr 20, 2014 - How this agriculture startup taps the cloud to grow strong and lean
By James Dornbrook
Kansas City Business Journal

In a city better known as the home of Sprint Corp. and Hallmark Cards Inc., it can be easy to forget that Kansas City remains a leading agricultural hub. Five of the largest private companies and the second-largest public company based in the area do business related to agriculture or food.

Companies such as Dairy Farmers of America, Lansing Trade Group LLC, Seaboard Corp., The Scoular Co., and Bartlett and Co. are not only reminders of Kansas City’s heritage — they are big employers that each generate billions of dollars a year in revenue.

What could become the area’s next agribusiness giant is sprouting up — rapidly and largely unnoticed outside its industry — in Leawood.

For more news from the Kansas City Business Journal, check out James Dornbrook's work.

Agspring, founded in 2012, operates from a few cubicles in the Archer Foundation’s business incubator. When it relocated there from an office across the street, the move took about 15 minutes.

Yet Agspring isn’t your typical startup. It can call upon executives with decades of high-level agribusiness experience and is backed by hundreds of millions of dollars in capital from a variety of private equity investors.

This combination has allowed Agspring to make six acquisitions since the beginning of 2013, including huge grain operations in Idaho and Louisiana that already make it one of the nation’s 20 largest grain storage and transportation operations.

Core Focus

President Brad Clark said Agspring is able to build its business without a huge office because its headquarters is a cloud-based operation, with all noncore functions outsourced.

“What is not core to our business are things like accounting, IT infrastructure and human resources,” Clark said. “In those cases, there are many organizations out there that make a business of outsourcing those noncore functions and have world-class capabilities.

“We outsource to them, allowing us to focus on our core business. It allows us to compete very, very quickly, and we’re able to field a world-class organization without having to build a very large staff internally to do that.”

Agspring scouts for agricultural supply chains whose local owners want a well-capitalized, highly experienced partner. Agspring buys the companies, provides the capital needed to modernize and expand them, and aggregates them into a larger company that is more competitive on a global basis.

The strategy calls for keeping current management of its acquisitions in place and investing to increase capacity and efficiency. With each acquisition, the various operations in the fold gain buying and selling power.

Agspring’s focus on outsourcing helps it grow quickly. It doesn’t have to slow down to build a large staff to handle the business issues that come with rapid growth. And through a stable of what it calls executives in residence, it can quickly bring high-level management skills to projects.

Roll-up strategy

Agspring CEO Randal Linville is a 30-year veteran of the agriculture and commodity industry. Linville previously was CEO of The Scoular Co., growing it into a nearly $5 billion- a-year operation before he left in 2009. Recently cleared of his noncompete agreement with Scoular, Linville has set his sights on growing Agspring into a big agribusiness player.

Linville’s partner is Clark, who previously was senior vice president of Embarq Logistics, leading its turnaround and divestiture in 2009. The two were introduced by their pastor after both expressed an interest in finding a new project to work on.

The pair established several charitable-minded social enterprises designed to improve the standard of living around the globe. Then they decided to up the ante and found Agspring, a for-profit endeavor that could provide a serious benefit to the world’s food supply.

Agspring’s first purchases point to what the company has in mind for the big picture. Its initial focus was on acquisitions that created Big River Rice and Grain, a major grain and rice storage and transportation operation in Louisiana. It then bought the Idaho grain operations of General Mills Inc.

“You’re seeing more companies that own the farm and all the real estate, produce the crop, handle the transportation, store it, turn it into packaged product and send it to the store,” said Ray Tubaugh, a senior vice president of commercial lending for Arvest Bank. “It’s now all vertically integrated.”

He said Agspring’s early purchases point to a strategy of starting in the middle of the supply chain and working outward toward owning the farms and processing plants.

Agspring’s most recent acquisitions bear out what Tubaugh outlined. It bought a food service brand called Simply Omega and an organic food producer called Organic ID, then combined them into an entity called Function-O Foods LLC.

Simply Omega is a line of branded and co-branded meats with naturally elevated levels of omega-3 fatty acids, a substance that can lower triglycerides and blood pressure. The company boosts levels of the healthy substance by feeding animals a mix that includes flaxseed or other omega-3-rich substances. Agspring is focused on ensuring the integrity of the supply chain for delivering the feed to the animals, slaughtering the animals and delivering the product to market.

The focus at Organic ID is very similar. It works with consumer packaged-good companies and processors of organic, nonpesticide or non-GMO (containing no genetically modified organisms) products, ensuring that these specialized crops are delivered and stored in a way that avoids co-mingling with regular agricultural products. Accomplishing that on a larger scale requires additional investment in infrastructure, such as storage and transportation, but it’s a highly lucrative market.

“Being truly organic is tough to do without any current-day production methods,” Tubaugh said. “It’s why you pay more for organic foods.”

The focus of Agspring’s roll-up strategy extends beyond the United States. Clark just returned from a trip to South America, where he sees a similarly fragmented agricultural market in need of investment capital.

Agspring is just getting started.

“The ethos and the thinking behind (Agspring) is the need for a large, well-capitalized company to aggregate this highly fragmented industry, to deliver more food across the globe to a growing population,” Clark said.

“We have to make money to sustain the organization, but the goal is to feed a changing world. A saying we have here is ‘Work hard, have fun, make money and feed the world.’”



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Sunday Apr 20, 2014 - New DOT Rules in the Pipeline
The U.S. Department of Transportation expects developments for three new trucking related rules in the rest of 2014. The rules deal with driver coercion, a system for identifying carriers that need safety intervention, the use of speed limiters and an increase in minimum insurance coverage for carriers.
A rule which would help prevent driver coercion was expected to clear the White House’s Office of Management and Budget earlier this week, but it has not yet been released. The rule could be published as soon as April 23 pending OMB clearance.
This rule is unique in that it regulates how the Federal Motor Carrier Safety Administration creates future rules. It would require the agency to evaluate whether future rulemakings would be likely to result in driver coercion from shippers, receivers, carriers or brokers. Once the proposed rule is published, the public will have 60 days to comment on it before the final rule is created.
A second rule that may see action soon deals with the development of a carrier “Safety Fitness Determination.” The rule would allow the FMCSA to produce a score for carriers that could be used to target companies for safety interventions. The score would be based on data similar to that which was used for the Compliance, Safety, Accountability program’s Safety Measurement System.
DOT expects the rule to be submitted to the Office of the Secretary of Transportation May 6. It will then move to the OMG by June 6.
A rule to require the use of speed limiters in heavy trucks is also in the works. The FMCSA announced this rule last month, and DOT expects it to reach the OST May 21 and the OMB June 26. The speed limiter mandate will apply to trucks weighing more than 26,000 pounds. The agency has not released details as to what speed or speeds the rule will require limiters to be set to.
If all goes according to schedule, the speed limiter rule will be published September 16 with a 90-day public comment period.
Finally, the FMCSA just announced the formation of a rulemaking team to determine the appropriate minimum level of insurance for carriers. The administration reported to Congress that the current $1 million minimum is not sufficient to cover the costs of some accidents.
- See more at: http://gobytrucknews.com/new-dot-rules-in-the-pipeline/123#sthash.ruCjmhQV.dpuf



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Sunday Apr 20, 2014 - 7 more things members of the general public don’t know about truckers
Wendy Parker http://www.overdriveonline.com/

It’s time again to put a little list together for the people who are officially unaffiliated with the industry. This statement alone is a fallacy: trucking is everyone’s business, as I have found myself reminding people time and again. Which brings us to number one on the list of things the Facebook readers, who just happen to also be professional drivers, wanted me to get out to the general public.

1. When we asked drivers what they wanted known about the industry, Paul Stogdill stated, “That people consume what we deliver.”

This may seem like a real “duh” to industry alums, but I’ve found the general public absolutely does not make the connection. They have no idea the truck they cut off to make the exit for Walmart is the very truck going to Walmart to deliver the steaks they’re busting a trucker’s chops to get to for their cookout that night. For some reason, they can’t make the connection to a very simple fact of life: Trucks bring you everything, and there are human beings driving those trucks. Which leads us to the next fun fact the pros want you to know.

2. We are not dirty, uneducated heathens and serial killers. Stephen Henderson touches on the human aspect by saying this, “I am a husband, father and grandfather. I own a house and a vehicle that does not have 18 wheels. I work for a living. I do not come into your office and mess with you while you are at work; please don’t come into my office (the road) [and mess with me] while I am at work.”

Bryan Whitten continues in a similar vein by suggesting this: “We sacrifice a lot in our lives, so their lives don’t miss a beat. So that ice cream they’ve been craving all day is right there on the shelf waiting for them, even though we had to wait six hours at the store to get said ice cream off our truck.”

3. Petra Ham is a new trucker who is learning first hand something people outside of the industry should be aware of. She posts, “As a new trucker, it surprised me that there is such a huge parking deficit — I never paid attention to that before.” No one really has, Petra, which is why there are such ridiculous problems with hours of service rules. The public needs to understand that time restrictions are all fine and well if there is adequate parking, and every rule restricting drive hours needs to be accompanied by money to fund it. Making rules is pointless if you don’t provide people a way to follow them.

4. Being impatient isn’t going to make us go faster. Honking and pulling around us unsafely isn’t going to do anything other than risk both our lives, and the lives of everyone else around us. Bryan has excellent advice. “This is not NASCAR out here! They are not saving any gas by being two feet off our trailer. It makes us nervous.” He goes on to say, “If we are kind enough to move over to allow you to get on the freeway, then do so. Move ahead of us, or slow down enough so we can get back in the slow lane where we belong.”

5. No matter how big your personal vehicle is, it’s not anything like driving a commercial vehicle. You can’t impose your driving experience in a Hummer with a boat trailer onto being able to understand what it’s like to drive a tractor-trailer — it’s not the same, it’s not even close, it never will be. If you want to learn what it’s like to drive a tractor-trailer, ride along in one for a day. A lot of states and private entities have instituted truck awareness programs and implemented driving safety around commercial vehicles in their drivers’ education. If you are a newly licensed individual, or have teenagers who will be driving soon, this type of education is incredibly important, especially if you’re using the highways. Which leads us to more advice from drivers.

RELATED
5 things members of the general public don’t know about truckers

From typical speed to on-the-road conditions and pay packages, misunderstood elements of the trucking business remain in the dark for many in the general public.

6. “We make wide turns…if we swing to the left and have our right signal on it isn’t because we are dyslexic…we need that much room.” Candy Crichfield goes on to explain the nuances of those wide rights: “If you see I am going to be turning your way (hint: there are little flashy lights all along the side of the truck indicating that I am going to turn) stop short and let me around.”
7. Christine Gonyea and Richard Porky Young both mentioned the importance of four wheelers understanding blind spots. The message here goes something like this: We’re not kidding when we say, “If you can’t see our mirrors, we can’t see you.”

RELATED
5 more things members of the general public don’t know about truckers

Costs of operation eat up a majority of an owner-operator business's revenue -- more on fuel, maintenance, tires, oil and food in this occasional series.

Bryan sums it up with this, “We try hard to know where we are going — sometimes our directions aren’t the best. Please be patient: we are guiding a huge vehicle down a street while trying to figure out address and access points to our destination.”
Have a little love for the truckers. They’re human beings, out there doing a hard job and a lot of them aren’t making as much money as people think. According to the Bureau of Labor Statistics, tractor-trailer truck drivers had a median pay of $38,200 in 2012, so they’re definitely not getting rich on the road.



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Friday Apr 18, 2014 - Grain elevator construction around the clock
Jim Grawe, jgrawe@kwch.com

CANTON, Kan. -
Along Highway 56 east of McPherson is something you don't see every day, and it's growing by a foot every hour.

"I've never seen anything like it," Moundridge resident Richard Morgan says as he watches from his car.

Sightseers are just parking and marveling at the sight of a giant grain elevator appearing before their eyes.

"Just the size of it and the way it's all coming together--it's an amazing project!" Morgan adds.

Construction started Sunday, and it's reached 100 feet high. It will be 131 feet by the time it's finished sometime late Friday or early Saturday.

This kind of construction requires the concrete to be poured continuously until it's finished. A lot of the grain elevators you see along the Kansas countryside were built this way, but few of us were alive back when they were built.

"This is not a real common sight in this part of the world," Mid-Kansas Cooperative's Erik Lange says. "Slip-form construction was very common in the 1950s and 1960s, but there have not been many slip-form grain elevators built in the last 20 or 30 years."

Mid-Kansas Cooperative is building the 1.2 million bushel elevator because more Kansas farmers are growing high-yield crops like corn and soybeans, requiring more storage space.

The elevator will also be attached to a rail like that will make it easy to export local grain to other states and countries.

People in the McPherson area are hoping the towering new building will elevate the local agriculture economy to new heights.

The elevator will start accepting grain in September.



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Friday Apr 18, 2014 - Fracking Sand Spurs Grain-Like Silos for Rail Transport
By Thomas Black
http://www.bloomberg.com/

The U.S. shale oil boom is putting millions of tons of sand onto North American railroads, enabling carriers to pack trains full instead of hauling just a handful of cars at a time.

With help from Union Pacific Corp. (UNP) and Warren Buffett’s BNSF Railway Co., the sleepy silica sand industry that once mostly supplied glassmakers now ships more than 20 million tons of the material a year. Buyers including Halliburton Co. (HAL) and Schlumberger Ltd. (SLB) use the sand in hydraulic fracturing at oil fields in Texas and North Dakota.

Miners such as Emerge Energy Services LP, U.S. Silica Holdings Inc. (SLCA) and Hi-Crush Partners LP (HCLP) are taking a page from the grain industry’s playbook to deliver sand faster and cheaper. They’re building facilities at their mines to load unit trains, which move just one type of cargo, and near oil fields to empty them.

“The customers more and more are saying ‘We don’t want the headache of logistics. That’s on you,’” Rick Shearer, chief executive officer of Southlake, Texas-based Emerge (EMES), said in an April 14 phone interview. “We’ve scrambled to put in a network of storage and trans-load sites all over North America.”

100 Cars

For decades, sand-mining companies catered mostly to glassmakers that sent a few rail cars, said Shearer, whose company was created in 2012 by combining Superior Silica Sands with two energy-service firms. Now, with fracking helping drive oil output, Emerge fills trains pulling 100 cars on newly laid track from shiny metal silos.

Unit trains will move about 25 percent of sand sent to oil and gas users this year, a fivefold surge from 2013, and the share could rise to 50 percent in the future, according to U.S. Silica. Union Pacific and BNSF, the two major carriers in the western U.S., are poised to benefit from shale-oil production in the region and sand mines in Wisconsin, Illinois and Minnesota.

“The whole shale development for us is great,” Union Pacific Chief Executive Officer Jack Koraleski said today in a telephone interview. “We move so much frac sand and so much pipe, that’s really our key franchise strength.”

U.S. frac-sand shipments jumped more than fourfold to 20.9 million tons in 2012 from 4.9 million tons in 2007, according to Freedonia Group, a Cleveland-based market researcher. Demand is expected to more than double to 52.1 million tons by 2022, Freedonia said.

Texas Projects

Union Pacific, the largest publicly traded U.S. railroad, and U.S. Silica together are constructing a $12 million storage facility for the sand in Odessa, Texas, that will handle two unit trains at a time.

BNSF built an off-loading operation near San Antonio with U.S. Silica that reached capacity of 15,000 tons sooner than expected and will be expanded, U.S. Silica CEO Bryan Shinn said in an April 11 phone interview.

Unit trains help railroads because the cargo is hauled quicker and doesn’t have to be switched at crowded yards. Trains loaded only with sand can reach their destination and return in four days instead of two or three weeks. The cost savings is as much as 20 percent, Emerge’s Shearer said.

The payoff for the mining companies is a higher price, Shinn said. A ton of sand that sells for $50 at the mine gate can fetch $130 near the drilling area, he said. The sand moves in covered hoppers also used for cement. They’re shorter than grain cars because the product is heavier, Shinn said.

Fracking Boom

Driving the sand demand is fracking, which extracts crude and natural gas from shale rock. The sand is needed to keep open cracks in the shale after water and chemicals under high pressure fractures the rock. That allows hydrocarbons trapped in the shale to escape. BP Plc (BP/) projected in January that rising output would help make the U.S. energy self-sufficient by 2035.

Drillers covet the hard, round sand grains that are produced in the U.S. Midwest. The sand comes in several varieties and sizes depending on the shale fractures’ width, making the shipping logistics even more complicated than grain.

Unlike crude-by-rail shipments that face pipeline competition, frac sand is railroads’ domain. The amount hauled is growing faster than drilling activity as oil producers find they can improve yields by packing in more sand per well.

“Everyone has their own recipe, but nearly every method to improve production means more sand per well,” said Taylor Robinson, president of PLG Consulting, a Chicago-based logistics consultant.

Sand Shipments

Union Pacific, based in Omaha, Nebraska, hauled almost 200,000 carloads of frac sand in 2013, a 26 percent jump from a year earlier. Shale-related cargo including sand, pipe and crude oil accounted for 4.5 percent of the railroad’s total shipments.

BNSF’s shipments of sand, with the large majority of it for fracking, rose 15 percent to 140,000 carloads, said Mike Trevino, a spokesman for the Fort Worth, Texas-based railroad.

Shale-related freight is helping pump up results at both carriers. Union Pacific’s 2013 net income rose 11 percent to $4.39 billion on a 5 percent gain in revenue to $21.96 billion. BNSF’s net income climbed 12 percent to $3.79 billion on a 5.7 percent gain in revenue to $22 billion.

The railroads will also benefit from having a few large mining companies that ship most of the sand. The drive toward unit trains and the investment it requires puts smaller miners at a disadvantage on delivery times and cost, said Brandon Dobell, an analyst with William Blair & Co. in Chicago. The seven largest silica-sand companies have more than 60 percent of the market, Robinson said.

‘Logistical Equation’

“It’s really a complicated logistical equation and the small companies can’t do it,” Dobell said. “The big guys are really going to take a lot of market share because they have the capital to make the investments.”

Emerge is building toward 20 unit trains of sand a month from none two years ago, Shearer said. The company is adding two new mines that together will have annual capacity of 5 million tons and give it access to Canadian National Railway Co. (CNR) and Canadian Pacific Railway Ltd. (CP) The company’s existing mines are served by Union Pacific and BNSF, he said.

“We will be on four Class I railroads when we finish these plants,” Shearer said. “That was a key focus for us to add this logistics flexibility.”

U.S. Silica is now selling 70 percent of frac sand from its storage facilities near drilling areas, up from 5 percent two years earlier, U.S. Silica’s Shinn said.

“It’s been really a massive transformation,” Shinn said. “Some days it feels like we’re more of a logistics company that just happens to sell sand.”

To contact the reporter on this story: Thomas Black in Dallas at tblack@bloomberg.net

To contact the editors responsible for this story: Ed Dufner at edufner@bloomberg.net Philip Revzin





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Thursday Apr 17, 2014 - The Fight to Clean Up the Truck Broker Industry
By Karen E. Klein
http://www.businessweek.com/

In 32 years as a truck driver and seven years as a transportation broker, DuWayne Marshall has seen it all: brokers who pay late or not at all; brokers who go bankrupt; brokers who run outright scams.

“You’ve got a pile of somebody else’s money and there’s great temptation to use it for yourself, since you’re always paying backwards,” says Marshall, the owner of Watertown Refrigerated Logistics, based in Watertown, Wis. And the victims are, more often than not, small business owners.

That’s because, despite the large, highly visible trucking fleets that dominate American highways, the vast majority of trucking companies are small businesses. Of the estimated 500,000 trucking companies nationwide, the average fleet size is five to six trucks, says Kenny Lund, a board member of the Transportation Intermediaries Association (TIA). He’s also vice president of Allen Lund transportation brokers, founded by his father nearly 40 years ago in La Cañada Flintridge, Calif.

STORY: Why No One Wants to Drive a Truck Anymore
In the complex industry known as third-party logistics, or 3PL, brokers are middlemen between the companies that need stuff moved and the people who have trucks to move it. “In just about every industry there’s a bad element, but in transport there was a higher percentage,” Lund says. “My father, when he was selling, wouldn’t even tell people he was a truck broker. He used phrasing like ‘freight forwarder’ to get away from that notorious image.”

Unscrupulous brokers will take payment from the shippers but withhold payment from their drivers for months, leaving them scrambling to cover fuel and maintenance costs with high-interest merchant cash advances. Others offer quick payment terms, but only if the trucker will agree to take 3 percent to 4 percent less than what he’s owed.

“A normal business would turn around and pay the guy, but instead they float the money,” says Joe Rajkovacz, director of governmental affairs for the California Construction Trucking Association, a trade group. That means brokers use money collected from one shipment to pay truckers who delivered goods in earlier months—or for their own personal use. In that respect, he says, “brokering is not much different from what took down [Bernie] Madoff.”

STORY: Are Truckers About to Get Rich?
Those suffering the most are the smallest operators—the 97.2 percent of trucking companies with 20 or fewer vehicles, according to the TIA—many of them owned by immigrants and first-generation Americans. They depend on brokers for business, Rajkovacz says, because “they’re just too small to contract directly. They get squeezed from every angle.”

Jim Kienbaum, whose Stepping West trucking company takes produce from the agricultural fields in California to the Midwest, has horror stories about brokers. One owed him $1,500 but filed for bankruptcy before he could collect. Another broker’s checks bounced when he owed Kienbaum $40,000. “I got really nervous because I have a truck and a family. I had hauled for him forever but he got a divorce and started drinking and gambling, and things just went downhill,” he says. After weeks of hounding, Kienbaum finally got paid, but many other truckers did not. “One guy got burned for $18,000,” he recalls.

Since 1980, when the transportation industry was deregulated, small truckers have had little recourse in such situations. The law made it easy to become a broker and required only a $10,000 bond—insurance to make sure a broker could pay. In the event a broker didn’t pay, the truckers owed small amounts could file claims and expect to get paid, but those stiffed for more than a few hundred dollars would often have to eat their losses if the bond was exhausted, Rajkovacz says. “Truckers don’t even think of turning something over to collections,” he says. “Most of them are like Timex—they take their licks and keep on ticking.”

STORY: Germany Wants More Truck Drivers
The situation may be getting better for truckers. A new provision of federal transportation law that went into effect in December tightens restrictions for brokers and their bonding companies, and increases the bond requirement to $75,000 annually. That means that someone owed $20,000 at least has a chance of collecting it from the bonding company.

The legislation was contentious, although the TIA and other industry groups wound up supporting it. When brokers had to re-register and post the higher bond, Lund says about 7,000 of the 24,000 licensed brokers disappeared overnight, though many may have been inactive companies. Critics blamed the regulation for killing businesses, but Marshall says he’s not sorry to see some brokers go. “There was an uproar from small brokers about it. But honestly, if you can’t get a bank or bonding company to trust you for $75,000, why should anyone else trust you?” Marshall says.

Kienbaum hopes the new law will help. And he lives by lessons he’s learned from getting burned, like always checking brokers’ online ratings, and calling recent references even for highly rated brokers. “Things change fast,” he notes. He avoids brokers vague on details and those who sound desperate. “Someone who’s putting a lot of pressure on you is having trouble getting trucks,” he says. “That tells you something right there.”

Lund and other industry insiders want to hold land shipping to the same high standards that apply to other areas of transportation. He recalls his father, Allen, chastising foul-mouthed truckers on his CB radio in the 1970s. “He’d get on the radio and say, ‘Can you imagine airline pilots talking that way?’ He expected more and would push them all to be professional.”



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Thursday Apr 17, 2014 - Trucking Rates Expected to Stay Steady in 2014 and Accelerate in 2015
Spend Matters welcomes another guest post from John Bauman, Principal Economist at IHS. IHS anticipates that 2014 will see weak prices for trucking, with the truckload sector experiencing flat prices and the less-than-truckload (LTL) sector experiencing only mild gains. The second half of the year is expected to be stronger than the first, but this improvement may be delayed, resulting in a weaker 2014 than forecasted before. This is particularly true in the truckload sector, where rates have had little growth recently. Trucking rates are diverging between sectors. Truckload rates have been going down since 2012 and are not expected to rise until the second half of 2014. Overall, the producer price index (PPI) for truckloads will decline 0.1 percent in 2014, after a meager 0.4 percent increase in 2013. Next year is expected to see a 2.4 percent rise, however. Meanwhile, the PPI for the LTL sector remains on an upward trend and will rise throughout the year, albeit at a subdued rate. LTL rates will increase 2.4 percent in 2014, after having risen by 3.1 percent last year. IHS expects price growth to reach 3.2 percent in 2015. There is little to propel rates upwards. Carriers have only a bit of pricing power, while fuel prices are drifting downwards. Fuel costs are always a large risk to trucking prices. Diesel prices have peaked and are expected to continue decreasing over the next two years, slipping 5.2 percent on average and removing upward pressure within trucking rates. Any rise in costs would be passed along to customers, and fuel prices can certainly shift rapidly and unexpectedly. Geopolitical issues in the Middle East would seem to represent the largest risk to a price spike. Conversely, if economic struggles erode petroleum demand and fuel prices drop sharply, rate increases would slow or halt. Meanwhile, demand for trucking continues to strengthen. While this has not been happening at a particularly rapid pace, recent history justifies some cautious optimism about the near-term outlook. Traffic has been climbing steadily since 2010, and many industries that ship heavily by truck continue to show improvement. Consumer spending and construction activity will both accelerate in 2014, though the latter sector is hindered by austere government budgets restraining growth in infrastructure spending. Manufacturing expansion remains a bit lackluster, though. There is growing concern about capacity tightness, and shippers are reporting occasional difficulty in finding space on trucks. Carriers took a significant amount of capacity offline during the recession, and plenty of it was scrapped due to aging. New equipment orders are still primarily driven by the replacement cycle rather than expansion plans. But 2014 will be a better year for equipment orders and carriers will start to place more orders. US medium truck sales grew 6.2 percent in 2013. It’s a slowdown from prior years, but still makes for decent growth. Another 6.0 percent gain is on tap for 2014. Meanwhile, heavy-duty truck sales will jump 11 percent in 2014 and 12 percent in 2015. Capacity tightness is not expected to be a serious issue over the next year, but carriers will have more pricing power and rates will rise if the supply situation deteriorates. - See more at: http://spendmatters.com/2014/04/15/trucking-rates-expected-to-stay-steady-in-2014-and-accelerate-in-2015/#sthash.6v1Q0fjN.dpuf



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Thursday Apr 17, 2014 - Carrier Sues Illinois Over Rolling Stock Tax Exemption
A trucking company has filed a lawsuit against the Illinois Department of Revenue over it disallowing the states rolling stock sales tax exemption on one of its pieces of equipment.
At issue is the department's disallowance of a rolling stock exemption claimed by Illinois-based Seggebruch Trucking on the purchase of a Peterbilt truck, according to the Mid-West Truckers Association. The suit was filed after the company had paid a notice of tax liability issued by the department under protest.

The department's determination followed an audit conducted on the purchase. The company supplied information indicating during the first year of use, the truck made numerous trips from points in Illinois to grain terminals in Indiana. Also, the company made numerous trips from points in Illinois to grain terminals in Illinois, where the terminal operators had provided certification statements, indicating that a substantial portion of the grain delivered to its Illinois terminal was ultimately shipped outside the state on other common carriers.

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The company believed that they had provided sufficient information for the department to allow rolling stock on the truck in accordance with the department's regulations covering this exemption, said MTA. However, the department's audit staff ruled that only those miles where the vehicle actually traveled across state lines could be used in determining if the rolling stock exemption was applicable. It disqualified the intrastate miles the company had sought to include in its calculation.

The MTA is contacting its members about the lawsuit, especially if they are currently the subject of an audit or have been assessed tax based on disqualification of rolling stock. It advises them to contact the Illinois Department of Revenue asking that any further action be held up pending resolution of the Seggebruch Trucking case.

“Anyone who has paid tax on vehicles and equipment felt to be rolling stock as a result of an audit, may wish to file a protective claim with the Department of Revenue to recoup the tax paid,” said the association.

It notes taxpayers have two years to file claims on money paid to the state and if this case takes a lengthy time to eventually be resolved, the ability to recoup the tax paid could be lost by waiting for a final answer.

MTA has also been working with several members who are involved in challenges to their rolling stock sales tax exemption, including those currently the subject of a Department of Revenue audit or have been assessed tax based on disqualification as a result of an audit.



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Wednesday Apr 16, 2014 - North Dakota could fine truck company more than $1M
By Josh Wood
The Associated Press

4/15/2014
WILLISTON, N.D. — North Dakota officials say a Wyoming-based trucking company working in the state could face fines of more than $1 million for operating without a license and illegally dumping saltwater, a byproduct of oil production.
The state's health and mineral resources departments announced the possible fines Tuesday.
A Health Department official says Black Hills Trucking Inc. could be fined up to $1,000 for every day it operated without a license. He says it hasn't had a license since 2008.
The Department of Mineral Resources says it is seeking maximum penalties of more than $950,000 from the company for illegally dumping saltwater on a Williams County road.
The company didn't immediately return a call seeking comment.
The Attorney General's office has filed criminal charges against one of the company's drivers for illegal dumping.

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Wednesday Apr 16, 2014 - Elevator will greatly increase grain storage for area
On Monday, Mid Kansas Cooperative (MKC) offered a tour of the slip construction of the Canton Rail Terminal, a grain shuttle loader facility with the potential to load 110-car unit trains in less than 12 hours.
Once loaded, grain will be exported to facilities in the Pacific Northwest, Gulf Coast and Mexico. The Canton Rail Terminal is on Avenue 25, just north of U.S Highway 56 between Galva and Canton.
The necessity for a new elevator developed through two paths: current and potential grain crop yield increases and the aging of available elevators, whose facilities are or soon will be requiring infrastructure improvements. The new operation will both increase storage (with a capability of 1.1 million bushels of cement storage and more than two million bushels of ground storage) and quickly move it where needed (with the capacity to load rail cars up to 80,000 bushels per hour).
After multiple market studies by different companies, it became apparent the U.S. 56 corridor east of McPherson was not only short on storage space but had the potential for a facility that could access a broader market. This project is directly in line with MKC’s vision of providing market relevance, current assets and good service to its customers.
The new facility will provide two scales; state-of-the-art automation; easy access and an easily maneuverable traffic pattern for all truck sizes; three truck pits, two of which will accommodate semis; one rail pit; and the ability to receive up to 60,000 bushels per hour, eliminating waiting time to dump. It also offers ample room for multiple forms of future storage.
Any customer can deliver grain.
All major market grains will be accepted. With the increase in soybean and corn production, the new facility will be able to handle the slower drying time that corn especially needs over wheat. Older elevators, built when wheat was practically the solo crop, weren’t designed for the slower drying times.
The facility is owned 50/50 by MKC and CHS, though MKC will operate the facility like a local MKC elevator and will pay patronage at MKC rates.
CHS was chosen as a partner after an extensive pool of possibilities because both are cooperatives and thus share a similar business model, both have a parallel vision, and CHS had prior railway experience, which MKC sought.
While the elevator will not be fully completed until early fall, ground storage should be available this summer.
To learn more about MKC, visit www.mkcoop.com.


Read more: http://www.mcphersonsentinel.com/article/20140415/News/140419517#ixzz2z4Gmfgpq



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