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US economy 'is unlikely to rebound' in second half
Reuters

Published: April 27, 2008, 00:45


Chicago: The US economy is unlikely to rebound throughout the remainder of 2008 and may remain weak into 2009, the top executive at North America's largest trucking company said on Friday.

"I think just about everyone has given up on the idea of a US recovery in the second half of the year," Bill Zollars, chief executive of YRC Worldwide, told Reuters. (Holding company with subsidiaries which provide less-than-truckload motor carrier transportation services throughout North America and abroad http://www.yrcw.com/ )

Zollars said in a telephone interview the company's upbeat second-quarter outlook is not based on the assumption the economy will improve, but on an ongoing restructuring that will lead to improved productivity and cost savings.

The chief executive of YRC spoke to Reuters the day after the company reported a first-quarter loss but gave a second-quarter outlook that sent its shares up more than 30 per cent.

He said that benefits of the company's new, more flexible labour contract with its workers, represented by the Teamsters union, which went into effect at the beginning of April, will start boosting the bottom line in the third quarter. "We have some things to put in place first so it will be a few months before we see further productivity improvements from that agreement," Zollars said.

Overland Park, Kansas-based YRC is a less-than-truckload (LTL) company. LTL operators consolidate small loads into a single truck. The US trucking sector has been suffering from weak freight volumes and declining prices due to stiff competition for business.

Zollars said that YRC has remained "pretty disciplined" on pricing so far and will continue to do so.

"We have no desire to end up picking up unprofitable business," he said.

He said the US Federal Reserve's recent interest-rate cuts have been "too little, too late" to avert a slowing of the US economy. "As in previous downturns the Fed has finally got religion and we'll just have to see how long it will be before those rate cuts have an effect," Zollars said.

As to the US government's stimulus package aimed at revitalising the ailing economy, Zollars said he did not expect it to have much impact.

"The consumer has been getting hammered," he said. "Unless people see the economy starting to rebound, the impact of the tax rebates and stimulus package is going to be very limited."

http://www.gulfnews.com/business/Economy/10208821.html