Looking for an Overnite success

Looking for an Overnite success

Overnite Transportation's (www.overnite.com) initial public offering on October 31, 2003, raised its visibility in the investment community and sparked some questions in the shipping community as well.

Overnite sits between the unionized national less-than-truckload (LTL) carriers and the major regional carriers in a number of respects. On the one hand, its labor cost is lower than its unionized national LTL counterparts. But on the other, transit times are not at the same level as its non-union regional cousins, limiting its ability to command a premium price for its service and, hence, limiting the trickle-down to the bottom line.

With slim operating margins typical in the LTL segment (Overnite has an operating ratio of 95) and looming pension costs, the carrier will have to work hard to improve overall earnings. Battles with Teamsters are over, after the union tied the carrier up for three years fighting to organize its drivers and terminals. Overnite emerged on top of that issue and can now focus its attention on improving its network and its service.

Overnite could gain from Yellow's acquisition of Roadway if shippers' experience with the combined Yellow Roadway isn't up to expectations, leading them to seek alternatives.

In short, Overnite should see slow, steady improvements both operationally and financially.

Logistics Today logo
January, 2004

Feedback on this article?

© Want to use this article?
Click here for options!

Copyright© 2003 Penton Media, Inc.

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish