Bear Stearns: bankruptcy filing has positive impacts for trucking industry

| Wednesday, September 04, 2002

The unexpected closing of Consolidated Freightways domestic trucking operations Tuesday has positive impacts for the trucking industry, according to an industry analyst. Bear Stearns, the banking, trading and brokerage firm, lists additional freight available and tighter capacity leading to firmer rates as positive impacts of the bankruptcy filing.

The firm also lists three groups as the biggest potential winners from the carrier's demise. Unionized less-than-truckload Yellow, Roadway and Arkansas Best are expected to see prices and capacity firm up immediately. Bear Stearns points out the three LTL carriers network and freight most closely resembled CF's.

Less-than-truckload carriers such as CNF, USFreightways and Old Dominion Freight Line likely will benefit more from tighter capacity leading to firmer rates. The analyst group says the regional companies generally are more expensive alternatives to the long-haul carriers and CF had become a price competitor.

Additionally, truckload providers are listed as potential winners. Bear Stearns says while a truckload provider rarely competes with LTL, they usually compete in the long-haul market where freight can be consolidated from LTL to cheaper truckload rates. CF's customers who generally chose the company for price reportedly may consider some truckload alternatives.

The less obvious risks of the shutdown involve underfunded Teamster pensions from CF's workers, the analyst group says. Teamsters make up about 80 percent of the company's domestic workforce. The potential joint and several liability of other Teamsters union LTL carriers also is listed.

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