Monday, November 19, 2007

LTL Carriers Fall

Shares of less-than-truckload carriers fell in trading Monday, after a JPMorgan analyst said weak demand and oversupply will likely make 2008 worse than previously expected.

Less-than-truckload, or LTL carriers, usually fill their trucks with freight from a variety of sources and re-sort and redistribute it at company terminals along their routes.

Analyst Thomas R. Wadewitz said he expects less-than-truckload carriers to continue to increase capacity going into 2008, likely compounding current problems with weak demand.

And it appears demand won't pick up anytime soon. This was most recently suggested by FedEx Corp., which lowered its outlook for the fiscal second quarter and full year on Friday, blaming a sluggish U.S. freight market.

Pricing is also becoming increasingly competitive, Wadewitz added.

Wadewitz lowered his 2008 earnings estimates for the sector, and said he only expects growth from a lone carrier _ Con-way Inc. _ because of its company initiatives and recent acquisition.

Over the long-term, he noted Con-way and Old Dominion Freight Line Inc. could be good investments, although there are few catalysts to drive the stocks anytime soon.

Also Monday, Longbow analyst Lee A. Klaskow lowered his fourth-quarter and full-year estimates on YRC Worldwide Inc. _ the largest less-than-truckload carrier by revenue _ citing declining tonnage, increased competition and higher costs.

However, the analyst noted that the company's position as a market leader should help its performance improve in the first quarter of 2008.

In midday trading, YRC Worldwide Inc. fell 16 cents to $17.43, while Con-way Inc. lost 5 cents to $40.37.

Old Dominion Freight Line Inc. fell 86 cents, or 3.8 percent to $21.65. Arkansas Best Corp. slipped 69 cents, or 2.9 percent, to $22.84.

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