Replies to post #120 on YRC Worldwide Inc (YRCW)

[Seminole Red]

Cut-throat pricing in the trucking sector is being exacerbated by what appear to be efforts of some competitors to drive struggling YRC Worldwide Inc. (YRCW) out of business, an industry executive said Wednesday.

David Congdon, chief executive of Old Dominion Freight Line Inc. (ODFL), cited the economic downturn and trucking overcapacity as culprits behind "the worst pricing environment we've ever experienced."

But he also said in an interview that some of the pricing trends likely stem from deliberate moves to undercut YRC, a top but financially teetering player in the less-than-truckload, or LTL, shipping market. Less-than-truckload shippers consolidate freight from multiple customers onto single trucks.

A spokesman for YRC, which reports third-quarter results Friday, declined to comment, citing proximity to the earnings report. The debt-laden company also faces a deadline Friday to meet some covenants of its credit agreements, although it has won repeated leniency over the past year as its lenders have hesitated to push it into bankruptcy.

Industry observers estimate that the less-than-truckload industry is suffering from upwards of 25% too much capacity, a figure that a big bankruptcy in the sector could go a long way toward resolving.

Some recent competitive pricing actions appear aimed at nudging YRC in that direction. Congdon said Old Dominion, which has about 4% to 5% of the $34 billion LTL freight market, has noted prices in some cases cut "below variable costs," with YRC "reacting" to the trends more than leading them.

"Some of the pricing practices of our industry peers are just absolutely not sustainable," Congdon said.

Congdon, who declined to name any of the carriers, said his company has defended some business by matching price cuts but hasn't deployed price as an offensive weapon.

"We never intentionally go out and cut someone else's price to gain volume," he said.

But the Thomasville, N.C., company is nonetheless preparing for a potential YRC demise. Congdon said Old Dominion has bought or is in the process of buying $90 million in terminals and other real estate this year--about $60 million to $70 million of it from YRC--for long-term growth but also for near-term opportunities if YRC goes bankrupt.

"It's anybody's guess how [YRC is] going to come out of this thing," Congdon said. "But if they don't make it, I think that the supply-demand equation is going to go back to pretty much equilibrium."

He said Old Dominion is "absolutely" prepared to pick up new business should YRC exit the market.

Old Dominion posted third-quarter results last week, with profit down 55%, at $10.5 million, and revenue down 22%, at $322.8 million. Still, Congdon said the company is well positioned and should continue to be solidly profitable, and he said the economy appears to be in recovery.

"I believe that we are in a recovery, but it is a very mild recovery from a very low base," he said.


-By Bob Sechler, Dow Jones Newswires; 512-394-0285; [e-mail]


Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=VIofgaKvteUwiqc4ESSVHw%3D%3D. You can use this link on the day this article is published and the following day.

[Seminole Red]

YRC Worldwide Inc. (YRCW, $3.65, -$0.41, -10.10%) posted a narrower third-quarter loss on fewer charges as the struggling trucking company unveiled plans for what it called "the final piece of the puzzle"--a $550 million debt-for-stock swap--to put it on firmer financial footing. Chief Executive Bill Zollars acknowledged in an interview that the note exchange, expected to be completed by mid-December, will be dilutive to existing shareholders, although the company still is negotiating a precise formula for the swap.

[Seminole Red]

bankrupt most likely....down 1.51 today so far....

[Seminole Red]

Shares of YRC Worldwide Inc. (YRCW, $1.32, -$2.33, -63.84%) fell by more than half Monday as the struggling trucking company announced the details of the exchange offer for its note holders that would put the holders in control of 95% of the company's stock.