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Issue #583 | Forest Products

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Forest Products

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2014 Media Kit
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Pacer to focus on retail intermodal

By: | at 07:00 PM | Channel(s): Intermodal  

Logistics company Pacer International expects its retail intermodal business to be the primary driver of growth as it transitions away from wholesale business, its finance chief said.

“Assuming we achieve our key objectives, and we believe we will, I think we will be a very strong retail intermodal player that can face up to competition such as Hub Group and JB Hunt Transport Services, “CFO Brian Kane told Reuters in an interview.

Though the company expects overall intermodal volume to decline 20 percent in 2010, Kane expects retail to grow throughout the year. Retail volumes for the recent fourth quarter increased almost 11 percent.

Kane said the company was also starting to see some turnaround in the logistics segment and automotive intermodal business.

In November, Pacer reached new arrangements with its railroad partner Union Pacific that called for Pacer’s exit from wholesale intermodal business and resolved outstanding claims between the companies.

That business has been a significant part of Pacer’s profitability historically. Analysts have raised concerns over the operational risk that the loss of business could bring to the company.

CFO Kane said the company is looking at additional cost reductions, including job cuts.

The company has already cut about 550 jobs, suspended its dividend and reduced wage levels, as the economic downturn has taken a toll on profit and revenue.

Kane said the company is not considering reinstating dividend at this point.

“I think we are at least a year away before we reconsider that,” Kane said. “The focus is on managing our business and return to profitability.”

On Tuesday, Pacer posted better-than-expected quarterly results, helped by lower costs, and forecast positive cash flow in 2010. (Reuters)