Trucking Sector Prices Pressured Despite Signs Of Bottom
April 24 2009 - 11:43AM
Dow Jones News
Prices to ship freight by truck have been coming down as
truckers fight over fewer customers amid the soft economy, a trend
that may continue despite some industry optimism that steep volume
declines are stabilizing.
"Pricing is more competitive than I've ever seen it," Con-way
Inc. (CNW) Chief Executive Douglas W. Stotlar said in an interview
Friday.
Stotlar, who estimates the less-than-truckload freight sector
has about 15% to 20% too much capacity, said he sees little chance
for the pressure on prices to abate this year even if freight
volumes have stabilized.
Less-than-truckload shippers consolidate freight from multiple
customers onto single trucks.
"January marked the low-water mark for us during the (first)
quarter" in terms of volumes, Stotlar said. But "even with modest
improvement, it's not enough to soak up the overcapacity" in the
industry and alleviate the pricing pressure.
Con-way, which posted first-quarter results late Thursday, said
volume in its less-than-truckload segment fell 12.4% compared to
the year-ago period. Still, the company voiced tentative optimism
that the trend may have bottomed, saying volume improved throughout
the quarter.
But yield in Con-way's less-than-truckload division fell 4.3%,
excluding fuel surcharges, accelerating from a 1.4% decline in the
fourth quarter. Yield, or revenue-per-hundredweight of goods
shipped, is considered a broad barometer of pricing trends.
Less-than-truckload shipping company YRC Worldwide Inc. (YRCW),
which also reported first-quarter results late Thursday, said yield
in its regional division was off about 2%, excluding fuel
surcharges. Yield in YRC's national division ticked up about 1%,
although the company noted the figure was helped by its decision to
concentrate on the most profitable customers.
YRC, which has been wrestling with a substantial debt load,
reported a 30% slide in per-day tonnage at its national segment and
a 22% slide at its regional business. The company said it was hurt
both by the poor economy and by concerns by some customers
regarding its financial position.
YRC Chief Executive Bill Zollars called the pricing environment
"very competitive" overall. In an interview Friday, he said he has
seen signs of "some stabilization in the underlying economy" that
could stem declining industry freight volumes, but he stopped short
of calling a bottom.
"We've had a couple of head-fakes before," only to be
disappointed when the downturn reignited, Zollars said.
-By Bob Sechler, Dow Jones Newswires; 512-394-0285;
bob.sechler@dowjones.com