LTL demand dives in 1Q
By Staff -- Purchasing, 5/17/2007 2:00:00 AM
Now is a good time for buyers to negotiate with their less-than-truckload (LTL) carriers. Several carriers' first-quarter financials showed continuing declines in demand and some rare indications that carriers may be willing to talk on pricing to keep market share.
Con-way reported a 28% decline in first-quarter profit due to slackening demand as well as a 2.3% drop in the freight tonnage it moved each day. In a recent Reuters interview, Con-way CEO Doug Stotlar said Con-way is more focused on growing its 9% market share now than it was a year ago, when it focused more on increasing rates.
"The price rises from last year did stick in some places, but they did give us some leverage for lowering prices elsewhere," Stotlar said.
J.B. Hunt, the second-largest U.S. trucking company, reported a decline in its shipping demand for the first quarter and a 9.8% profit decline. Swift Transportation Co., the trucking company being repurchased by its founder, said first-quarter profit fell 74% because of the pending buyout, higher fuel costs and less freight shipping demand.
YRC Worldwide also saw a major demand plunge as its first-quarter operating ratio rose to 99.1% from 96.3%, indicating more capacity for shippers to take advantage of.
Saia was a rare exception among LTL carriers. Its quarterly profit actually rose 27%. On April 2, the company issued a 4.95% general rate increase, saying it will invest in excess of $85 million on capital expenditures in 2007.
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