Arkansas Best profit falls on low tonnage
Arkansas Best Corp., parent of less-than-truckload carrier AFB Freight System, said third quarter net profit fell 40 percent to $18.9 million, compared to $31.5 million in the year earlier period.
ABF’s revenue was down 6.5 percent to $462 million. The company said its income was affected by lower tonnage levels.
The Fort Smith, Ark.-based company’s results mirror the LTL sector as a whole. In recent days, companies such as Con-way, and YRC Worldwide reported sharp drops in revenue and earnings. YRC’s profits were down more than 50 percent.
The downturn for trucking began around September 2006 as the economy began to soften. ABF said that it’s tonnage levels stayed consistent since volumes plummeted at that time through August. But tonnage for October appears to be running 4 percent to 4.5 percent lower than last October, and ABF said it is idling more trucks and taking other measures to reduce costs while demand is slow.
Carriers have also suggested they’ve had to scale back freight pricing to remain competitive, but that most of the industry is still charging compensatory rates. ABF said it is supplementing its LTL business with more spot-market truckload moves to increase utilization of its assets.
ABF said it plans to begin labor negotiations with its unionized employees next month. The current labor contract expires on March 31, 2008.
ABF has indicated it wants to withdraw from the Central States multiemployer plan that covers workers at a number of trucking companies, and the company noted Friday it would cost $800 million to $850 million to withdraw from the plan.