Different sectors, different outlooks

Jan. 5, 2007
This week trucking companies serving different freight markets offered a mix of fourth quarter earnings projections, providing a glimpse of how freight patterns are shifting after the holidays

This week trucking companies serving different freight markets offered a mix of fourth quarter earnings projections, providing a glimpse of how freight patterns are shifting after the holidays. General freight carrier Con-Way Inc. has revised its earnings projections downward on softer truckload and LTL volumes, while USA Truck Inc. expects to make gains in its regional business, and Kitty Hawk Inc. received a windfall thanks to its holiday contract with the United States Postal Service (USPS).

Falling freight volumes and rising costs forced Con-way to lower earnings projections for the fourth quarter of 2006. The actual numbers due to be released at the end of January.

The San Mateo, CA-based carrier, which deals with LTL, truckload, logistics and warehousing, said 4Q 2006 earnings are now expected to be between 72 cents and 76 cents per share, compared to previous estimates of between 81 cents and 87 cents per share, due to a projected tonnage decline in the high single digits.

Also at issue is $3.5 million in higher vehicular casualty insurance expenses, and a $1.5 million curtailment charge related to changes in Con-way’s employee defined benefit pension plan.

“The slowdown we first experienced at Con-way Freight in the third quarter continued through the fourth quarter as the industry's traditional peak season surge did not materialize,” noted Con-way president & CEO Douglas Stotlar. “However, despite the tonnage decline, yield comparisons in the LTL business were positive and are expected to show a low single-digit increase for the quarter.”

Some experts believe that the growing popularity of gift cards could have changed freight seasonality as more consumer spending shifts toward after the holidays—not before. Read Holiday shopping—and trucking—has changed.

USA Truck Inc. has announced the official opening of its newest regional operations center in Spartanburg, SC to provide an operational base for the company’s short to medium-haul dry van truckload services in the Southeastern United States.

“This new operations center expands our long-term revenue growth prospects through deeper regional market penetration, and also provides driver employee development facilities for our various service offerings throughout the continental United States, Mexico and Eastern Canada,” said USA Truck chairman & CEO Robert M. Powell.

“Started in 2004, regional freight has grown rapidly and currently comprises over 12% of our tractor fleet,” Powell continued. “We have increased our presence in the regional truckload market due to the volume of business, the more attractive lifestyle that it affords our driver employees and the exodus of small carriers from the market over the past six years due to competitive and economic pressures. By the end of 2007, we expect regional freight to comprise 15% of our total tractor fleet and include 426 tractors, or $54 million in base revenue.”

Kitty Hawk Inc. said it expects to report its highest quarterly revenue since it began trading on the American Stock Exchange as well as “solid profitability” for the fourth quarter. This is because its subsidiaries Kitty Hawk Cargo Inc. and Kitty Hawk Aircargo Inc. have completed their contracts with the United States Postal Service and improved financial performance of its expedited ground freight operations.

Under the USPS contracts, Kitty Hawk managed a daytime multi-modal air and ground network for the holiday season mail from November 28 through December 24 through its hub in Ft. Wayne, IN. It also provided its own aircraft to support that hub in addition to its scheduled overnight air and expedited ground networks.

To comment on this article, write to Terrence Nguyen at [email protected]

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Terrence Nguyen

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