The collapse of LTL carrier Consolidated Freightways may be a boon of sorts to Yellow Corp. and Roadway Corp., CF's two major competitors.
Akron, OH-based Roadway may benefit the most because its third quarter freight and revenue levels had slipped below projections before CF announced it was shutting down. Prior to CF's announcement that it would idle its trucks after 73 years of business, Roadway said that it would meet its goal of improving its operating ratio by one-half of a percent compared to the third quarter of 2001.
Roadway said it projects its earnings to be 10% to 20% higher in the third quarter this year due to rising profits generated by its New Penn and Arnold Transportation Services subsidiaries, recent general freight rate increases and operating efficiencies at Roadway Express.
Roadway's projects its operating margin in the fourth quarter will improve three-fourths of one percent when compared to the same quarter of 2001.
Meanwhile, Overland Park, KS-based Yellow said it plans to put CF's freight and drivers to good use as well.
President & CEO Bill Zollars said in a statement that the carrier would strive to find employment opportunities for CF's pool of 15,500 former employees and is "ready, willing and able" to provide service to former CF customers.
Yellow could use the revenue CF freight would bring in to help it recuperate from a tough first quarter. Yellow saw net income of $2.7 million in the first quarter wiped out as it recorded a $75.2 million charge associated with new accounting rules. The charge reflects goodwill deductions Yellow recorded after it purchased rival LTL carrier Jevic Transportation.
Yellow said its consolidated operating revenue for the first quarter dropped 8.4% to $762 million, compared to $832 million in the same period last year. Consolidated operating income, before the accounting charge, totaled $9.1 million this quarter, compared to $18.4 million in the first quarter of 2001.
Its first-quarter total tonnage was down 7.4% and LTL tonnage dropped 7.2% on a per day basis from levels reached in the first quarter of 2001.