Con-way profitable despite LTL struggles

Newly renamed San Mateo, CA-based transportation conglomerate Con-way Inc. said net income soared 17% to $45.5 million on 11.7% higher revenues of $1.06 billion in the first quarter compared to the same period in 2005. Its regional LTL carriers struggled to stay profitable, however.

Con-way’s regional LTL operations now operate under the new Con-way Freight moniker, while its truckload, expedited, forwarding and brokerage divisions, plus Road Systems – a trailer manufacturer owned by the carrier – now function under the new Con-way Transportation banner.

Con-way Freight and Transportation reported 3.3% higher operating income of $65.6 million on 9.7% higher revenues of $708.3 million in the first quarter compared to same period in 2005. Yet for LTL operation, all of those gains came from fuel surcharge revenue as yields nose-dived into negative territory.

Though total tonnage handled by Con-way Freight’s LTL carriers increased 8.3% and yields rose 2.3%, without fuel surcharges, yield dropped 0.9%. That worsened its operating ratio, increasing it to 90.5 in the first quarter compared to a much more streamlined 89.8 in the same period last year.

Con-way’s logistics operations – Menlo Worldwide and Vector SCM – posted much healthier returns in the first quarter, with operating income rising 26.4% to $11.5 million on 15.9% higher revenues of $349.9 million compared to the same quarter in 2005. Individually, operating income from Menlo Logistics jumped 23% to $6.2 million, while Vector SCM’s rose 30.7% to $5.3 million.

For the second quarter this year, Douglas Stotlar, Con-way’s president and CEO, is more confident that profitability is going to improve, partly on the strength of 5.5% general rate increase implemented April 3.