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TRUCKING INDUSTRY ANALYSIS * USA - Death of the weak only hope for U.S. truck companies?
Either the U.S. economy needs to rebound or more companies need to fail for truck supply to shrink to meet demand
Chicago,ILL,USA -Reuters (UK), by Nick Carey. Editing by Patrick Fitzgibbons & Phil Berlowitz -Jan 29, 2009: -- For life to improve for America's battered truck sector, one of two things must happen: Either the U.S. economy needs to rebound or more companies need to fail for truck supply to shrink to meet demand... But as the U.S. continues to languish in recession, few analysts see any relief for truckers before 2010... Truck companies run low-margin operations on the front line of the world's largest economy... "We are now over 27 months into a freight recession that is the worst I have seen during my 37 years in this industry," Arkansas Best Corp Chief Executive Robert Davidson said after the less-than-truckload (LTL) company posted a loss this week... The company also said it had cut 1,100 jobs in the quarter. LTL operators consolidate small loads into a single truck. Another LTL carrier, Con-way Inc., said this week it was delaying buying new trucks to conserve cash... The one thing that has kept many truck companies -- small, medium and large -- from going under has been the recent drop in diesel prices from record highs last summer... "STAY OF EXECUTION": Analysts say that while the private companies are at the highest risk, all eyes are on the country's struggling No. 1 trucker, LTL carrier YRC Worldwide Inc... Oil was the truck killer in the first half of 2008. As prices rose to the July highs over $148 per barrel, the number of truckers filing for bankruptcy jumped... The number of second-half bankruptcies reached 1,160, bringing the total for 2008 to 3,065. High, but short of the record 3,990 in 2001 during the last U.S. recession... "Without the decline in diesel prices, more companies would have gone under," Tavio Hedley, staff economist at the ATA said... Jason Seidl, an analyst at Dahlman Rose and others, predict a wave of bankruptcies starting in the spring, and the best hope for the rest is to wait it out... YRC, which reported a quarterly loss of $244.4 million or $4.14 a share on Thursday, is seen as the one to watch... YRC has received a temporary waiver on its debt covenants and its unionized workers recently approved a 10 percent wage cut in return for a 15 percent stake in the company to save up to $250 million a year. YRC has also cut jobs and shut down facilities to take excess capacity out of its network... But in a January 23 blog, Wolfe Research wrote "we believe the restrictive conditions in these (debt covenant) waivers likely shows how little hand YRCW has left ... and we continue to believe a high risk of some form of bankruptcy remains"...* YRC CEO: Volume May Be Bottoming; Rules Out Bankruptcy
New York,NY,USA -The Dow Jones Newswires, by Bob Sechler/CNN Money -January 30, 2009: -- Trucking giant YRC Worldwide Inc. (YRCW) weighed in on the steep slump in freight volumes Friday, with Chief Executive Bill Zollars voicing some optimism that the industry-wide trend at least may be bottoming... "The percentage declines year-over-year have started to stabilize" in the early weeks of 2009, Zollars said in an interview. "Believe me, we're looking really hard for any sign of improvement"... Meanwhile, Zollars reiterated that bankruptcy isn't being considered as an option for debt-laden YRC. He said talks aimed at relaxing some debt covenants have been proceeding well with lenders and should be successfully completed by mid-February... YRC has $1.36 billion in debt, a portion of which it has been struggling to refinance. But because of a sinking bottom line, the company is at risk of falling out of compliance with credit lines and has been working to renegotiate covenants... * YRC Worldwide's quarterly losses exceed expectations
Overland Park,Kansas,USA -The Kansas City Star, by RANDOLPH HEASTER -30 Jan 2009: -- The economic crisis that escalated in the final three months of last year hit YRC Worldwide Inc. hard, leaving the Overland Park-based trucker a rough road in 2009... For the three months that ended Dec. 31, YRC posted a net loss of $244.41 million, or $4.14 a share, on $1.93 billion in revenue. That is an improvement, however, from a 2007 fourth-quarter loss of $735.77 million, or $12.99 a share, on $2.35 billion in revenue...
Labels: trucking industry analysis USA
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