Subscribe to our free, weekly email newsletter!


Con-way says LTL performance in Q1 may be a drag on earnings

By Jeff Berman, Group News Editor
March 20, 2013

Transportation and logistics services provider Con-way Inc. this week released an update on first quarter trends at Con-way Freight, its less-than-truckload unit, which it said could collectively reduce Freight’s quarterly operating income by roughly $14 million.

Chief among the factors for the potential loss in income cited by Con-way were that daily weight is expected to be down about 1.5 percent compared to the first quarter of 2012, coupled with other items expects to negatively impact near-term profitability, including:
a reserve for a large vehicular claim; a charge related to a transition to new technology; costs associated with adverse weather; and field training expenses pertaining to line-haul optimization.

Con-way added that first quarter 2013 revenue per hundredweight, excluding the impact of fuel surcharges, is expected to increase approximately 3.5 percent annually.

“Tonnage trends, while below last year, have been relatively stable throughout the first quarter and our core operational performance is trending in the right direction,” said Douglas W. Stotlar, Con-way Inc. President and CEO, in a statement. “Despite the near-term cost headwinds at Con-way Freight, confidence in our key initiatives and the ability to expand margins—particularly in the second half of 2013—is being reinforced each day.”

The key initiatives cited by Stotlar include lane-based pricing and line-haul optimization, which Con-way said are expected to provide increasingly improved results in the coming months.

Con-way’s first quarter earnings release is scheduled for Wednesday, May 1. Net income of $11.8 million—or $0.21 per share—for the fourth quarter, which it released in February, was down roughly 50 percent compared to the fourth quarter of 2011 at $23.0 million and $0.41 per share, falling short of Wall Street estimates of $0.28 per share. Quarterly operating income—at $37.8 million—was down compared to $49.9 million the previous year, and revenue—at $1.36 billion—saw a 3.4 percent gain.

Quarterly revenue at Con-way Freight—at $824.7 million—was up 3.6 percent, with yield—or revenue per hundredweight—up 5.1 percent year-over-year—4.2 percent excluding fuel surcharge. Tonnage per day decreased 3.5 percent, and operating income of $21.5 million was up 9.9 percent compared to $19.6 million last year. Con-way said that the revenue growth was primarily attributable to improved yield and higher fuel surcharge revenue and partially offset by lower tonnage levels. And it added that the operating income improvement was impacted by an accelerated decline in daily tonnage at the end of the fourth quarter that it said exceeded normal seasonality.

“LTL freight is just OK - not great, and Con-way Freight is not expected to see benefits from its improvement initiatives (costs come first) until 2H13,” wrote David Ross, Stifel Nicolaus analyst, in a research note.

As LM has reported, the LTL sector has made up significant ground from the depths of the Great Recession. This is due, in part, to tighter capacity and steady rate gains since 2010.

What’s more, there are many drivers contributing to the turnaround occurring in the LTL sector, including a sharp focus on yield management and contractual relationships, coupled with an ongoing commitment to service reliability. But even with this positive momentum, it is clear challenges still remain as volumes and the general economy remain below pre-recession levels seen in 2007 and earlier.

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

The PMI, the ISM’s index to measure growth, increased 1.8 percent to 57.1 in July. This is 1.8 percent higher than the 12-month average of 55.3. The PMI has grown in 18 of the last 20 months, with economic activity in the manufacturing sector expanding for the last 14 months as the overall economy was up for the 62nd consecutive month.

YRC Worldwide, whose regional and long-haul units provide the second-largest LTL capacity in the trucking industry, narrowed its second-quarter loss to $4.9 million on $1.32 billion revenue, compared with $15.1 million loss on $1.24 billion revenue in the year-ago quarter.

With NFL training camps in full swing, it stands to reason that Congress must be replete with football fans, given how it basically has elected to punt on federal transportation funding yet again, with the Senate yesterday signing off on a ten-month bill to keep federal surface transportation funding intact through May 2015 through a nearly $11 billion stopgap measure.

Carload volumes were up 4.3 percent at 306,988, and intermodal volume for the week ending July 26 was up 3.3 percent at 264,809

Lyon, France-based Norbert Dentressangle, a $5.5 billion global third-party logistics (3PL) services provider focused on global logistics, transport, ocean, and air services, said today it has acquired Des Moines, Iowa-based Jacobson Companies, a value-added warehousing (VAW) company, for $750 million from private equity firm Oak Hill Capital Partners.

Article Topics

News · LTL · Con-way · Con-way Freight · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA