Pacer in deal with Union Pacific
Pacer International Inc. reported sharply lower earnings in the third quarter, but said it has reached a new deal with the Union Pacific Railroad that will “further accelerate Pacer's transformation into a fully-integrated, door-to-door intermodal service provider.”
The intermodal company said it had net profit of about $600,000 in the quarter ending Sept. 19 compared to $29.3 million in the same 2008 period.
Third quarter revenue was $418.7 million compared to $557.8 million in the same 2008 period.
Pacer said the multiyear deal with Union Pacific provides for continued access to the entire UP intermodal rail network and establishes a new rate structure. It said it would increase focus on door-to-door integrated intermodal services.
The deal replaces the parties' current terms for domestic big-box shipments that were to expire in 2011 and resolves outstanding claims between Pacer and UP relating to domestic container transportation.
Pacer said it would utilize a $30 million cash payment received in connection with the new arrangements to reduce outstanding debt under its revolving credit facility by nearly 50 percent.
'Pacer's strategy recognizes that shippers favor direct control over each element of the transportation process,' said Michael E. Uremovich, chairman and chief executive officer. 'This is an exciting and dynamic time because intermodal has emerged as a key growth sector in the transportation industry. We are positioned for growth as one of the largest intermodal services providers with the most diverse container fleet in North America and focused on what the customer demands'seamless coordination and control of equipment, technology, and service delivery.'