RULING HITS CELADON’S EXPANSION PLANS
Celadon Group Inc., a major truckload carrier with extensive operations to and from Mexico and Canada, cut its earnings forecast for 2003 on Tuesday citing last week’s federal appeals court ruling blocking Mexican trucks from entering the United States on environmental grounds and higher oil prices.
Indianapolis-based Celadon said it expects 2003 earnings of 90 cents to $1 per share, down from its prior forecast of $1.10 to $1.20 per share.
For the fourth quarter ended Dec. 31 Celadon warned earnings would be 12 cents to 14 cents per share, down from its previous forecast of 15 cents to 20 cents. It attributed the decline to higher fuel prices, lower-than-expected revenue in the last 10 days of December, and the effect of Christmas falling in mid-week.
The court ruling on Mexican trucks caused Celadon to revise its business plans. The company assumed last year that its Mexican subsidiary Jaguar would add 300 tractors and drivers by Dec. 30. However, 100 pieces of equipment were scheduled to be Mexican-built tractors that comply with U.S. Environmental Protection Agency rules and which now are ineligible to enter the country.
President Bush lifted a moratorium on Mexican trucks and buses traveling on U.S. highways in November to comply with terms of the North American Free Trade Agreement. The Department of Transportation was in the process of reviewing more than 130 applications from Mexican carriers seeking U.S. operating authority when the 9th U.S. Circuit Court of Appeals issued its decision. The opening of the border was delayed several years until DOT addressed safety concerns from environmental, labor and some trucking groups. At the urging of Congress the department added inspectors and expanding facilities to check drivers and equipment for compliance with U.S. laws.
But the court said DOT failed to take into account the potential impact Mexican trucks, which are generally older and tend to pollute, on air quality. It ordered DOT to conduct a full environmental impact study before it can open the border. U.S. emissions standards for new heavy-duty trucks are scheduled to become tougher in 2004 and 2007.
Environmental impact statements typically take several years to complete, and Nick DiMichael, counsel for the National Industrial Transportation League, predicted DOT will file a petition to have the 9th Circuit reconsider the case before making an appeal to the Supreme Court.
Under current rules, Mexican trucks can only operated in limited commercial zones near U.S. cities close to the border. The free trade agreement was designed to make cross-border freight movement more efficient by eliminating the need to transfer goods from Mexican shuttle trucks to U.S. vehicles for transport to the rest of the country.