CNW lowered its earning-per-share estimates by 40-45 cents due to decreased demand for their transportation services.
Despite lowering FY 2008 guidance, CNW's share price bounced of 52-week lows as transportation stocks recovered. The industry in which CNW competes is highly cyclical, because revenues are impacted by shipping rates that fluctuate with business cycles. The Fed cutting interest rates substantially and Congress announcing tax-rebates boosted the chance that the U.S. economy would recover.
Oil prices hit $100 per barrell. Transportation stocks sank as worries over the consumer mounted. Prices at gas stations, a weakening housing market, and rising unemployment appears to be huring consumer demand at stores. With less goods going off the shelf, trucking and logistics firms are shipping less goods, which hurts revenue.
YTD shipping tonage is down 1.7%. The declining volume means trucking companies have less to ship, which translates to lower profits.
YRC Worldwide CEO, Bill Zollars, hasn't seen signs of things improving for the trucking business. He cites weakness in the housing, automotive, and retail sectors as contributing to weak volume among less-than-truckload trucking companies, and does not think the bottom has been reached. Similar comments were made by YRC Worldwide's competitor, Fedex (FDX). Weak volume will likely impact revenue adversely. Zollar did say the West Coast remains okay due to imports from Asia. Weak pricing and declining tonage have weighed on Con-way's revenue and profit.