NEW YORK (AP) — An RBC analyst said Monday less-than-truckload carriers have a tough road ahead, and that road is likely even worse for the biggest company in the sector.
Less-than-truckload are carriers that take freight from a variety of sources, sort and redistribute it at terminals along their route. Truckload carriers take freight directly from one shipper to a receiver.
Barnes issued an "Underperform" rating on troubled trucking company YRC Worldwide Inc., the country's largest trucking company. YRC has lost customers as many fear the company might still file for bankruptcy, despite many drastic cost-saving measures.
Barnes thinks so, too.
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"We believe that still weak volumes and deteriorating pricing sector wide will be exacerbated for YRCW by market share losses and the continued struggle with a massive fixed cost base," Barnes wrote in a note to clients. "We believe that YRC's precarious financial position will ultimately result in its failure barring a material U.S. economic rebound."
Barnes also gave an "Underperform" rating to Arkansas Best Corp., saying its pension liabilities and unionized work force might make it less attractive to customers leaving YRC. But if YRC does fail, Barnes thinks that Arkansas Best will still capture a sizable amount of business.
Two other LTL carriers, Con-way Inc. and Old Dominion Freight Line Inc. are best-positioned to benefit if YRC files for bankruptcy protection, Barnes said. He gave them both "Outperform" ratings.
All four stocks gained ground in midday trading, with YRC leading the pack. It gained 16 cents, or 8.6 percent, to $2.03.