Zollars: 'Parts of U.S. economy may be in recession'

Parts of the U.S. economy may already be in recession and the U.S. Federal Reserve should cut rates by up to 50 basis points to boost economic growth, the top executive of North America's largest trucking company said on Friday.
"We may already have parts of the economy that are in recession," Bill Zollars, Chief Executive of YRC Worldwide Inc., told Reuters in a telephone interview. "I think the Fed needs to do more to help boost the economy."
"They should cut rates by at least a quarter point, or a half point," he added.
Last month Zollars told Reuters that he thought the U.S. economy faced a "more than 50-50 chance of a recession."
"We are pretty much in the same downward trajectory right now," he said on Friday. "Regardless of what you call it, it's pretty tough out there for a lot of people right now."
Overland Park, Kansas-based YRC is a less-than-truckload operator. Less-than-truckload companies consolidate smaller loads into a single truck.
The U.S. trucking sector has struggled with declining freight volumes since the third quarter of 2006. Some analysts and truck company officials say the sector is in the midst of a "freight recession."
As well as slowing economic growth, the industry has been hurt by the housing slowdown, declining auto sales by U.S. domestic automakers and lackluster retail sales.
Oil's rise to nearly $100 a barrel has not helped trucking companies or their clients.
"The price of oil is really hurting our customers right now," Zollars said.
Like many transportation companies, YRC passes on higher fuel costs to customers via fuel surcharges.
With all these headwinds, Zollars said, "It's not clear when this (U.S. economic growth) is likely to turn around."
In trade on Nasdaq YRC shares were trading up 14 cents at $16.67.
YRC hit a 52-week high of $47.09 on Feb 22. The shares reached a 52-week low this Wednesday of $15.87.

YRC Worldwide, Inc. Chairman, President and Chief Executive Officer to Ring the NASDAQ Stock Market Opening Bell

What:
Bill Zollars, Chairman, President and Chief Executive Officer of
YRC Worldwide, Inc. will preside over the opening bell.

Where:
NASDAQ MarketSite - 4 Times Square - 43rd & Broadway - Broadcast Studio

When:
Friday, November 23, 2007 at 9:30 a.m. ET



A live webcast of the NASDAQ Opening Bell will be available at: http://www.nasdaq.com/reference/marketsite_about.stm.

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.

Cramer's 'Mad Money' Recap

All Aboard CSX

There are companies like YRC Worldwide and FedEx that are down significantly, yet no one's asking questions, Cramer said.

Then the railroads, specifically CSX, a stock that is up 17% for the year, are being badgered.

The Children's Investment Fund, a London-based asset management firm, has been writing angry letters, urging CSX to revamp its governance. But as far as Cramer can tell, CSX CEO Michael Ward has done nothing but make his shareholders richer.

So why are hedge funds letting companies like YRC Worldwide and FedEx get by and picking on CSX? Ward joined Cramer on the show to shed some light.

"We're very proud to stand by our record," Ward said, noting CSX has tripled its dividend during his tenure and has a strong buyback program, "I don't get it either."

When Cramer asked if TCI is motivated by CSX spending too much on the company rather than giving back to shareholders, Ward said the capital CSX spends is "very much in line with the rest of the industry."

The board did a thorough analysis of all the various claims that TCI had lodged and went through the various suggestions they proposed, Ward said. However, none of their ideas made sense, and some hurt the industry, he said.

"We've really been working hard for our shareholders for the last three years" and Ward said they will continue to do so.

There are so many CEOs Cramer said he can't stand, and he doesn't understand why TCI is picking on one that's making market players money. "I say buy CSX," he said.