Freight volume: Tough times may be receding

Though the slump in freight volume is expected to continue for the rest of the year, many transportation providers believe the toughest stretch may now be in the rearview mirror. And if the downturn removes weaker competitors from the playing field, some companies believe that may open up opportunities for growth and market share gains.

"I do not foresee a significant change in the current freight environment as we move through the third quarter. However, there has been a slight improvement in volume trends,” said Henry Gerkens, president & CEO of Landstar System in the carrier’s second quarter earnings report.

“In addition, some of the very difficult revenue comparisons experienced during the first half of 2009 begin to ease toward the end of the 2009 third quarter and into the 2009 fourth quarter,” he noted. “I believe the worst is over.”

That being said, however, Gerkens stressed that there continues to be some level of uncertainty in the marketplace. He noted Landstar’s revenue continued to be negatively impacted by the severe recession in the domestic and global economies during the second quarter, with earnings shrinking to $17.9 million on revenues of $491.2 million, compared to $29.8 million in earnings on revenues of $697.7 million in the same period last year.

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UPS Q2 profit falls 49%

The recession continued to take a toll on package shipping giant United Parcel Service Inc.

Atlanta-based UPS on Thursday said its net income for the second quarter fell 49 percent to $445 million, as revenue dropped 16.7 percent to $10.8 billion. Its net income in the second quarter of 2008 was $873 million and its revenue was $13 billion.

Earnings per share were down 48.2 percent to 44 cents.

U.S. Domestic package revenue declined 12 percent to $6.8 billion, while international package revenue decreased 23.8 percent to $2.2 billion and supply chain and freight revenue fell 23.3 percent to $1.8 billion.

Average daily volume in the U.S. Domestic Package segment declined 4.6 percent in the quarter and international export volume decreased 7.3 percent.

“The global economic environment pressured our performance, but UPS remains financially very strong,” said Scott Davis, UPS chairman and CEO, in an earnings statement. “We continue to invest in growth opportunities, even as UPSers improve productivity and help our customers manage through these challenging times. We are a company that can weather this recession, positioning ourselves well to benefit when economic recovery occurs.”

FedEx Says Soft Demand To Continue Into 2010

FedEx Corporation said that it's bracing for soft demand for shipping services to continue into 2010, warning that it may be forced to take more cost-cutting actions if the economy deteriorates next year, Dow Jones reported.

FedEx, considered an economic bellwether, noted that it has taken a number of steps this year to bring its services in line with reduced demand, including laying off some employees and grounding some older aircraft.

But the company warned that "additional actions will be necessary to reduce the size of our networks" if the economy continues to decline in 2010.”

Still, FedEx said in the outlook that it won't take any action that hurts its ability to provide high-quality service. It pegged its 2010 capital-spending budget at about $2.6 billion, although it said it will reduce the budget if conditions worsen.

FedEx said 2010 revenue will be hurt by lower yields stemming from reduced fuel surcharges and a competitive pricing environment.

It said it expects volume growth in 2010 at its FedEx Ground unit due to market-share gains, but flat volume at its premium FedEx Express unit. It forecast a drop in shipments at its less-than-truckload unit due to industry overcapacity in the segment. 10k Statement..........

Shippers sailed rough seas in 2008 economic storm

They carry laptops and toys, cars and coal, but they're not Santa's elves, and they weren't very jolly this holiday season.

It's been a devastating year for the nation's railroads, trucking companies and package shippers - the companies on the "front lines" of the economic recession. Shipments have plunged as retailers pulled back on orders and consumers tied their purse strings tight in preparation for more hard times. Swiftly accelerating oil prices through the first seven months of the year crippled companies even more.

The Dow Jones Transportation Average, which incorporates railroads, shippers, airlines and logistics companies, lost a quarter of its value in 2008 and fell more drastically - by about a third - in the last three months of the year. That compares with a 40 percent decline for the Dow Jones Total Market index and a drop of 39 percent for the Standard & Poor's 500 index in 2008. Full Story......

Wholesale inventories, sales plunge in October

Wholesalers cut back on their inventories in October by the largest amount since the period following the 2001 terrorist attacks while they watched their sales plunge by a record amount.

Analysts predict more grim news in the months ahead as the current recession deepens.

The Commerce Department says wholesalers, the companies in the supply chain between manufacturers and retailers, reduced their inventories by 1.1 percent in October, the biggest cutback since a similar drop in inventories in November 2001.

The inventory decline was much bigger than the 0.2 percent decrease economists expected.

Sales at the wholesale level plunged by 4.1 percent in October, the largest decline on record.