In The News

LTL Survey Provides Us With Something Positive to Say

According to a survey of Less Than Truck Load (LTL) carriers conducted by Longbow Research analyst Lee Klaskow LTL carriers are winning back share from the TL carriers.  See summary below. 


Mr. Klaskow said, " Driving this trend are lower shipment sizes as retailers remain cautious about inventory and shipping larger quantities of freight."  Mr. Klaskow added that, "We do not believe this is a secular long-term shift; however, it is new business. Any new freight is considered good freight for LTL carriers." 


Mr. Klaskow said, that despite the uptick for LTL services, carriers remained generally pessimistic regarding their outlook for LTL industry fundamentals over the next 3-6 months. Roughly 56% of the contacts said they have a negative outlook for LTL demand over the next three-to-six months, which is slightly lower than 59% during December, although it remained higher than October when roughly 50% of contacts said they had a negative outlook for demand.
 

"Shippers give carriers little insight into their future freight requirements given high levels of economic uncertainty and lack of visibility into the upcoming quarters" Mr. Klaskow said. 


Mr. Klaskow maintained his NEUTRAL ratings on YRC Worldwide (YRCW) and Con-Way (CNW). 


For further information or to speak with Mr. Klaskow, please contact me at [email protected].  David Evanson

· LTL Carriers Picking up Traditional TL Freight. Our January

survey pointed to something we have not seen or heard in a long time -
LTL carriers are winning back some share from TL carriers. Driving this
are lower shipment sizes as retailers remain cautious in regards to taking
on too much additional inventory and shipping larger quantities of freight.
We do not believe this is a secular long-term shift; however, it is new
business. Any new freight is considered good freight for LTL carriers.

· Demand Showing Signs of Bottoming in Recent Weeks. LTL

services demand remained soft during January but has shown some signs
of bottoming in recent weeks. However, we are not ready to break out the
champagne yet since we have had the bottom pulled out from us a few
times since the current freight recession began over three years ago.

·

Non-Union Carriers Reportedly Taking Share. According to our

industry contacts, reported market share gains from YRCW are creating
some incremental benefit to non-union regional LTL carriers such as
CNW and ODFL as shippers move to secure more reliable capacity given
that the difficulty of the current operating environment appears to
continue to negatively impact YRCW's service quality and threaten its
long-term sustainability. However, we do not view these share gains as
significant. YRCW is expected to announce over the coming days a new
agreement with its bankers regarding its credit facilities, which will be
instrumental in helping it survive the current downturn, in our view.

· LTL Pricing Showing No Improvement Signs. Less-than-truckload

pricing remained under pressure during January as carriers continue to
remain willing to offer significant discounts of their General Rate
Increases and are willing to wave assessorial fees for shippers in an effort
to secure freight and improve deteriorating asset-utilization. Irrational
pricing is being fueled by excess capacity.

Shippers Offer Carriers Little Future Insight. Our respondents

remained generally pessimistic regarding their outlook for LTL industry
fundamentals over the next 3-6 months as shippers give carriers little
insight into their future freight requirements given high levels of
economic uncertainty and lack of visibility into the upcoming quarters.

· Given the current pricing and volumes trends, we are maintaining our

NEUTRAL ratings and 2009/2010 estimates for CNW and YRCW.