KLLM Contemplates Sale, Receives Offers

May 1, 2000
KLLM Transport Services Inc has received two offers for purchase of the company. One was made April 12, 2000, by Low Acquisition Inc, which is wholly

KLLM Transport Services Inc has received two offers for purchase of the company. One was made April 12, 2000, by Low Acquisition Inc, which is wholly owned by Robert E Low of Springfield MO. Low has offered to purchase all outstanding shares of common stock, par value $1 per share, of KLLM not owned by Low or its affiliates at a price of $7.75 per share.

The other offer was made by Jack Liles, chairman, president, and chief executive officer of KLLM; and Bernard Ebbers. The two propose to acquire all of the outstanding shares of KLLM at a price of $8.25 per share in cash.

Both offers are under consideration by KLLM, acting through a special committee of the board of directors consisting of independent KLLM directors.

Acceptance of the Liles-Ebbers offer would create a default under KLLM's existing revolving credit facility. Therefore, Liles and Ebbers have delivered to KLLM's board a commitment letter executed by Bank of America NA to refinance KLLM's existing revolving credit facility upon acceptance of the offer. Ebbers would finance the purchase price of KLLM's shares, subject to negotiation of a definitive refinancing agreement.

Frozen Food Express Tallies Quarterly Results Frozen Food Express Industries Inc, which previously announced that it would restructure its operations during 2000, has reported first-quarter operating results that, according to the company's chairman, were "better than we expected."

Revenue for the quarter was $92,416,000, compared with $88,257,000 for first-quarter 1999. The company reported a loss of $563,000 for the 2000 quarter, compared with net income of $1,263,000 for first-quarter 1999.

The 2000 quarter also reflected improvement over fourth-quarter 1999, for which the Dallas TX-based company reported a loss of $13,544,000 on revenue of $89,903,000.

Mesilla Valley Orders 150 Volvo 660 Tractors Mesilla Valley Transportation Inc in southeastern New Mexico has entered an agreement to purchase 150 Volvo 660 tractors to be delivered over a two-year period beginning in April 2000. This 250-unit refrigerated and general freight carrier had purchased its first eight Volvo 610s in 1998 for evaluation. All 150 tractors will be equipped with Cummins N14-430 engines and Eaton Autoshift transmissions.

AFFI Opposes Changes to Citizen Petition Rules In written comments submitted to the United States Food and Drug Administration (FDA), the American Frozen Food Institute (AFFI) voiced opposition to the agency's proposed revisions to current citizen petition rules, stating that the changes would suppress feedback on pertinent issues and stifle innovation in the food industry.

Under the proposed revisions, published November 30, 1999, in the Federal Register, FDA would give a "brief denial" of all petitions deemed to be without public health significance. Included on its list of such denials would be requests by the food industry to approve standards of identity for food products. Without such FDA standards, frozen food companies would be unable to test-market new products that differ from the accepted standard of identity.

The AFFI supports measures that enable the agency to use its resources more efficiently. However, AFFI believes this latest proposal will do little to further that goal. If the rule is enacted, it would not decrease the number of frivolous petitions filed, but only limit the number of issues which FDA takes under serious consideration. AFFI recommended that instead of proposing changes to a largely successful system, FDA should increase its efficiency more carefully through management changes and other internal modifications.

CTA Urges Meeting on Fuel Tax Reductions The Canadian Trucking Alliance (CTA) says it welcomes recent statements in Canada's House of Commons from federal finance minister, Paul Martin, that the federal government might reduce its excise taxes on fuel, as long as the provincial governments also reduce theirs.

However, the CTA cautions that the finance minister's comments, which were made during question period, do not appear to be a statement of government policy. Consequently, the truckers want Martin to demonstrate the federal government's seriousness by calling an early meeting with his provincial counterparts on the issue.

David Bradley, CTA chief executive officer, has written a letter to Martin urging him to confirm that diesel fuel taxes as well as gasoline taxes are on the table and "to pursue this strategy with haste."

"Trucks haul some 90 percent of consumer goods and foodstuffs and carry 70 percent trade with the United States," said Bradley. "With fuel being the second-largest component of motor carrier costs (sometimes up to 30 percent of operating costs) and the largest component of cost for independent owner-operators, the continuing impact of high fuel prices on Canadian competitiveness and the overall economy could be profound. This is compounded by the fact that not only do the combined federal-provincial fuel taxes further inflate the cost of fuel, but they are also profit-insensitive."

Cal/OSHA Issues Alert on Ethylene Gas Use The California Division of Occupational Safety and Health (Cal/OSHA) has issued an alert informing employers of steps to prevent injury or death from use of ethylene gas in the produce-ripening industry. Ethylene gas is used to ripen fruit such as apples, bananas, and berries.

In a recent accident at Pan American Banana Co in Los Angeles CA, one employee was fatally injured and another critically injured by an explosion that occurred inside a tightly enclosed room where ethylene gas was being used to ripen fruit. Five other employees were injured in the blast. These precautions should be observed:

* Only experienced workers should be permitted to use ethylene gas-ripening equipment.

* Use ethylene gas and related equipment in accordance with manufacturer instructions and applicable Title 8 safety orders - such as Section 5194, Hazard Communication; or Section 5189, Process Safety Management. Title 8 of the California Code of Regulations covers all Cal/OSHA workplace safety and health requirements.

* Train employees to recognize and report unsafe conditions in their immediate work environment.

* Electrically ground all equipment when using ethylene gas.

* Keep ethylene gas away from flames, sparks, or other sources of ignition.

The California Department of Industrial Relations web site at www.dir.ca.gov/ DOSH/dosh1.html has a copy of the alert.

DOT Unveils Proposed HOS Revisions United States Secretary of Transportation Rodney E Slater helped unveil proposed revisions to the hours of service regulations governing the trucking industry, with plans to have concrete changes to HOS rules in place by the end of 2000.

Key parts of the proposed HOS revisions also may alter the way the trucking industry operates, though Slater hopes they will not create a negative impact.

"We understand how important the trucking industry is in this country, but this is not just an issue of productivity," he said at press conference at DOT headquarters in Washington DC. "We have the obligation to the American people to have the safest transportation system in the world."

Proposed by the Federal Motor Carrier Safety Administration, HOS revisions include:

* All drivers now will function on a 24-hour daily cycle instead of the 18-hour cycle in the current HOS regulations.

* There will be no difference between "on-duty driving" and "on-duty-not driving" anymore.

* Instead of 10 hours of driving and 15 hours of on-duty time allowed by the current HOS rules, the proposed revisions will limit drivers to 12 hours on-duty time to drive.

* Instead of a one-size-fits-all-approach, proposed HOS revisions cover five driving applications-long-haul, regional, local-split shift, local, and work vehicle-with flexible HOS rules in some categories.

* Electronic onboard recording devices (EOBRs) will be mandated for long-haul and regional truckers once the final rule goes into effect. Companies with more than 50 trucks will have two years to install EOBRs; companies with between 21 and 50 trucks, three years; and companies with less than 21 trucks, four years.

The EOBRs are intended to replace and eliminate paper logs, said Julie Cirillo, acting FMCSA deputy administrator. However, truckers who do not install EOBRs will not be allowed to function under the proposed HOS revisions, she said. This means they will be limited to 10 hours of on-duty driving time.

FMCSA estimates the proposed HOS revisions will cost the trucking industry $3.4 billion over the next 10 years, including the $500 estimated cost to install EOBRs. However, FMCSA also estimates the proposed changes will help prevent 2,600 crashes, 115 fatalities, and some 3,000 injuries in the same period-a savings of $6.8 billion.

The public will have 90 days to comment upon the proposed revisions, with hearings scheduled in: Atlanta GA, Denver CO, Indianapolis IN, Kansas City MO, Los Angeles CA, Springfield MA, and Washington DC. However, both DOT and FMCSA are intent on publishing a final HOS rule by the end of 2000, so the 90-day comment period will not be extended, said Cirillo.

Thermo King Acquires Zexel Cold Systems Thermo King Corp has acquired controlling interest in Zexel Cold Systems. Based in Tokyo, Japan, Zexel manufactures bus air-conditioning equipment and small truck refrigeration systems. Zexel employs 120 people and has an estimated $50 million in annual sales. Thermo King, through parent company Ingersoll-Rand, has purchased 70 percent of the company. Thermo King, as well as Zexel, will become part of Ingersoll-Rand's newly formed Climate Control Sector.

Along with a manufacturing facility in Shenzhen, China, Thermo King has 67 dealerships in Asia.

EPA Issues Anhydrous Ammonia Theft Alert The Environmental Protection Agency (EPA) has issued a chemical accident alert because a number of anhydrous ammonia thefts have resulted in chemical releases from agricultural product dealers and facilities with ammonia refrigeration systems. The accidents have occurred because: valves were left open after anhydrous ammonia was siphoned off, locks were sawed or broken, anhydrous ammonia was transferred inappropriately into makeshift containers, plugs were removed from anhydrous ammonia lines at refrigeration facilities, or the wrong hose and/or fittings were attached to storage containers.

Anhydrous ammonia is used as an agricultural fertilizer and industrial refrigerant. It is also used in the illegal production of methamphetamines. Illegal drug makers often steal anhydrous ammonia from areas where it is stored and used. Anhydrous ammonia can be harmful to people who come in contact with it or inhale airborne concentrations of the gas. When stolen, the toxic gas can be released unintentionally, causing injuries.

The chemical alert provides tips to deter anhydrous ammonia theft. For a copy of the alert, access EPA's web page at www.epa.gov/ceppo or phone-800-424-9346 or 703-412-9810.

focus: warehousing/logistics Daymark Group Opens Consolidation Facility Russellville AR-based Daymark Group has opened a new 14,700-sq-ft consolidation facility in Miami FL. This eight-dock center has pre-cooling capabilities. Flowers shipped through the facility are shipped throughout the Southeast, Midwest, and Southwest.

Loop Cold Storage Opens Freezer Addition Guests recently attended the opening of Loop Cold Storage's new 50,000-sq-ft freezer storage addition in San Antonio TX. The new building increases storage capacity to about 50 million pounds of product with the new freezer (Freezer 10) accounting for 12 million pounds. Cold Systems Inc provided construction.

This new expansion holds 7,773 pallet positions of product. Of these, 6,340 are two-deep pushback and 1,433 are single-deep. Included in these numbers, the freezer has 204 floor staging pallet positions and 431 floor pick slots. This storage capability is due to a new storage rack system. Created by Loop Cold Storage, Parkway Systems, and INCA Metal Products Corp, this rack system narrows aisles within the building, thus turning aisle space into usable storage space.

Freezer 10 was built with a 12,685-sq-ft refrigerated dock with 12 dock doors and Kelly dock levelers. The new building has a maximum product storage height of 37 feet and will connect three other buildings.

TLC Acquires Assets of Paw Paw Freezer Corp Total Logistic Control (TLC) has purchased the assets of Paw Paw Freezer Corp, a deep-frozen and refrigerated public warehouse in Paw Paw MI.

The acquisition of the 91,200-sq-ft warehouse brings the TLC network to 12 distribution facilities, with 36,300,000 cubic feet of refrigerated and deep-frozen and 2,000,000 square feet of dry space. Located on 16 acres adjacent to Interstate 94, the Paw Paw facility is fully racked with 12 doors and a -20 degrees F temperature storage capacity and will be enhanced by TLC's information management and RF scanning systems. TLC also received an option on 90 acres of surrounding land for future expansion.

Privately held Paw Paw was founded in 1981 to serve fruit growers in southwest Michigan. Richard Carrier, company president, will continue in an advisory capacity.

Volvo Plans to Purchase Renault VI/Mack AB Volvo and Renault announced a proposed memorandum of understanding in which Volvo will exchange 15 percent of its shares for 100 percent of the shares in Renault's truck business, Renault VI/Mack. The transaction would nearly double the volumes of Volvo's truck business.

After authorization from Volvo shareholders, the company's board of directors plans to buy back Volvo shares amounting to 15 percent of the total number of shares in the company. Volvo then plans to transfer these shares to Renault in exchange for Renault VI/Mack.

Renault intends to maintain its shareholding in Volvo for at least three years and also plans to increase its holding in Volvo over time, to no more than 20 percent.

Neither Renault VI's bus business, organized in the Irisbus company owned jointly by Renault and Iveco; nor Renault's holding in Nissan Diesel of Japan is included in the transaction.

Including Renault VI/Mack, Volvo says it will become the largest manufacturer of heavy trucks in Europe and the second-largest in the world. After the transaction, Volvo's and Renault VI's combined market share for heavy trucks in Western Europe will be about 28 percent; and with Mack in North America, to around 24 percent. Based on Class 8 retail sales for first-quarter 2000, the combined Volvo/Mack would be the number two truck maker in the United States, 0.5 percent ahead of Paccar in market share.

DOE Names Cummins Clean Engine Partner The Department of Energy (DOE) has selected Cummins Engine Co to participate in a project designed to develop heavy-duty diesel engines with improved fuel efficiency and marked emissions reductions. The engines are used in on-highway 18-wheel vehicles.

DOE will award up to $5 million to Cummins during the first year of the project. The partnership between the federal government and engine manufacturers is expected to continue through January 2006.

The proposed heavy-duty diesel engines will exhibit superior fuel economy while reducing nitrogen oxide (NOx) emissions and particulate matter by 90 percent of the stated 2002 levels. These targets are expected to be reached by improvements in engine efficiency, advances in NOx and particulate aftertreatment technology, and through use of low-sulfur fuels.

Meritor, Arvin Industries Agree to Merger Meritor Automotive Inc and Arvin Industries Inc have entered into a definitive agreement to combine their businesses in a strategic merger. The transaction will create a global supplier of integrated systems, modules, and components for light-vehicle, commercial truck, trailer, and specialty original equipment manufacturers and related aftermarkets.

The new company, to be called ArvinMeritor Inc, will have combined revenues of $7.5 billion. It will be incorporated in Indiana and will have its corporate headquarters in Troy MI. All its operating units will remain at their current locations.

Under terms of the agreement, which has been approved by both boards of directors, Arvin shareholders will receive one share of ArvinMeritor common stock plus $2 of cash consideration for each share of Arvin common stock. Meritor shareholders will receive 0.75 shares of ArvinMeritor common stock for each share of Meritor common stock. Meritor shareholders will own about 65.8 percent, and Arvin shareholders will own about 34.2 percent of the combined company's shares. The new company's fiscal year will end September 30.

Larry Yost, chairman and chief executive officer of Meritor, will be the new company's chairman and CEO. Bill Hunt, chairman and CEO of Arvin, will serve as vice-chairman and president. Together, they will comprise the office of the chairman, which will directly oversee corporate staff functions, as well as operations of its six business groups, which include heavy-vehicle systems, light-vehicle systems, exhaust systems, light-vehicle aftermarket, heavy-vehicle aftermarket, and coil coating.

The board of directors of the new company will consist of nine members from the current Meritor board and nine members from the current Arvin board, plus one new independent director agreed upon by the parties. The respective boards have a plan by which Bill Hunt will succeed Larry Yost as chairman and CEO upon Yost's retirement from these positions.

TTC Facility Is QS-Certified The Knoxville TN manufacturing facility of Transmission Technologies Corp (TTC) has earned QS-9000 registration from Underwriters Laboratories Inc (UL). The registration process began in 1999. To determine continued compliance with QS-9000, UL will conduct routine surveillance audits of TTC operations periodically.

Millard Opens Distribution Center Addition Millard Refrigerated Services has opened the third addition to its Atlanta GA distribution center. The 109,660-sq-ft addition expands this center to 518,500 square feet and 15.6 million cubic feet. Including facilities under construction, Millard operates 24 refrigerated warehouse and distribution facilities throughout the United States. These account for more than 180 million cubic feet.

Newest Condyne Facilities Now Operational Condyne Freezers and Condyne Logistics opened its newest facility Dec 7, 1999. As of March 1, 2000, both the new multi-temp facility and the dry facility on the adjacent lot are fully operational. The 7.5-million-cu-ft freezer warehouse and distribution facility, as well as the dry warehouse, are located in the Myles Standish Industrial Park in Taunton MA.

The multi-temp facility has 30 loading doors, six rail doors, and a 30,000-sq-ft refrigerated dock. It has incorporated technology in temperature control, racking systems, and building layouts to increase productivity. In addition, the 2-million-cu-ft dry storage building adjacent to the new freezer provides additional storage options. These two facilities, combined with the existing Avon MA facility, result in a total of 15 million cubic feet available from Condyne to service distribution needs in the Northeast.

USCO Acquires Nortel Operations in Calgary USCO Logistics has announced an agreement with Nortel Networks to acquire Nortel's Calgary, Alberta-area warehouse and distribution operations. As part of the transaction, which took effect April 1, 2000, about 130 Nortel employees will join USCO Logistics. USCO is also building a logistics center that will permit consolidation of the current warehouse and distribution activities serving Nortel in the Calgary area. The 220,000-sq-ft center, which is expandable to 300,000 square feet, is expected to open in July 2000.

Haskell Co Will Build Amerifreeze Facility The Haskell Co's Midwest regional office in Chicago IL has been selected by Amerifreeze to provide design/build services for a new facility in West Deer Township PA northeast of Pittsburgh. The plant will provide 125,000 square feet of blast-freezing, storage, and distribution space for frozen food products.

Program on Sharing Road with Large Trucks The Shell Oil Co has unveiled a major public service highway safety program to educate motorists on how to share the road safely with large trucks. The American Trucking Associations (ATA) participated in production of the month-long television and print campaign, part of the national "Count on Shell" safety effort.

Shell's effort mirrors ATA's How To Drive program, which takes America's Road Team drivers to United States cities to demonstrate to the news media and public on how to share the road safely with large trucks.

Shell plans a national advertising campaign for the highway safety message. The ad will appear in the morning and evening newscasts of up to 175 local TV stations and on nine national cable TV networks. It will run in three national newspapers, 19 national news magazines, and 16 minority newspapers. In addition, Shell will direct-mail the safety message to two million households in six major markets.

Ruan Field-Tests Soybean-Based Grease Field-testing of SoyTRUK, a bio-based fifthwheel grease, has been completed by Ruan Transportation Management Systems, a national truck transportation service company based in Des Moines IA. Eight of Ruan's 200 facilities across the United States participated in the field-testing, providing varying climate conditions for the assessment.

Ruan is now offering the product to all of its facilities for use on their fifthwheel tractor-trailers as an alternative to conventional petroleum-based grease. Those facilities in particularly sensitive environmental areas are encouraged to use SoyTRUK.

SoyTRUK was developed and field-tests were conducted by the University of Northern Iowa's Ag-Based Industrial Lubricants Research Program, and is currently marketed by West Central Cooperative of Ralston IA. The soybean-based grease product uses about 70 percent soybean-based oil along with other natural thickeners.

The eight Ruan facilities chosen included one of its Des Moines maintenance facilities, as well as locations in Renton WA, Pico Rivera CA, Salt Lake City UT, Phoenix AZ, Fargo ND, Memphis TN, and Tampa FL.

Technician Program Graduates Initial Class The Peterbilt Specialized Training Service Program graduated its initial class recently. The program, which provides dealers with an avenue for recruitment and training of entry-level technicians, evolved through the cooperative efforts of Peterbilt Motors Co, a group of its dealerships, and the Wyoming Technical Institute.

In exchange for tuition payment by sponsoring dealers, the recruited post-secondary vocational school graduates receive Peterbilt-specific training at the Laramie WY facility of Wyoming Technical Institute.

With an emphasis on Peterbilt proprietary components and systems, the three-month, 500-hour program mixes classroom lectures and hands-on training using Peterbilt trucks. As part of the course work, students learn how to use Peterbilt computer-based programs, including ServiceNet and E-Cat, and the diagnostic, programming, and troubleshooting programs of the engine manufacturers. Upon completion of the Peterbilt-specific course, the sponsoring dealerships employ the graduates.

Nissan Diesel Undergoes Restructuring As part of a restructuring plan currently underway for Nissan Diesel Motor Co, lenders led by Fuji Bank have approved a four-year credit line in the amount of $1.87 billion providing liquidity to the truck manufacturer. Nissan Diesel is gaining another $235 million by collateralizing its Ageo manufacturing and assembly plant and issuing $47 million in convertible bonds to Nissan Motor Co. Cost reduction measures have been instituted, including an overall reduction in the labor force and the transition of production to the Ageo plant from the Gunma plant.

One offshoot of the plan is the agreement whereby Nissan Diesel will supply diesel engines to both Renault and Renault Vehicules Industriels (RVI). This agreement also has Nissan Diesel selling Renault-manufactured light commercial trucks through its Japanese sales outlets, and certain light-duty Nissan Diesel vehicles being sold through the RVI sales network. Nissan Diesel also will receive assistance from Nissan Motor Co in reinforcing its management group, and additional enhancements to strengthen Nissan Diesel's business plan further will be announced by the end of April 2000.

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The Refrigerated Transporter Staff

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