I’m still catching up from my brief vacation. But here is what caught our attention this week:

The big news this week is Dematic announcing its intent to acquire HK Systems. These are two heavyweights in the material handling arena, with total combined revenues of $1.2 billion (based on 2009 figures). In the press release, Roar Isaksen, President and CEO of Dematic Group, states:

“With the addition of HK Systems and its highly complementary market focus, Dematic will be able to provide customers throughout the world an enhanced solutions offering. We can now leverage our respective expertise and experience in serving the supply chain logistics market not only in North America but globally, to deliver added value to both existing and potential customers.”

My colleague Steve Banker had this reaction: “I agree with the rationale that this will allow HK Systems to compete globally; the company had previously competed only in North America. HK Systems is primarily a material handling vendor, but it also sells WMS and TMS. We will have to wait and see whether the combined entity intends to continue to compete in those markets.”

Con-way’s second quarter revenues increased 23.7 percent compared to Q2 2009. The company’s Menlo Worldwide Logistics unit posted a solid quarter, with year-over-year improvements in revenue (up 17.8 percent), net revenue (12.1 percent) and operating income (66.8 percent). Some interesting comments from the press release about the transportation market:

Commenting on the quarter’s results, Douglas W. Stotlar, Con-way’s president and CEO, noted that seasonally stronger demand and rebounding economic activity supported revenue growth in all reporting segments, particularly at Con-way Freight.

Stotlar added that spot pricing strength seen in the first quarter has now begun to show up in longer-term truckload contract pricing, as customers take steps to ensure access to capacity. “The market fundamentals have changed dramatically over the past quarter, improving Con-way Truckload’s prospects for the rest of the year,” Stotlar said.

The last statement underscores the point I wrote about recently in “Revisiting a Shipper’s Decision on Transportation Rates.” Simply put, carriers now view the pendulum swinging in their favor when it comes to pricing leverage.

YRC also reported its second quarter 2010 results this week. Due to all of the financial transactions the company has undertaken the past couple of years, it’s a bit difficult to compare year-over-year results without accounting for one-time charges, divestures, and other items. But here are some operations-related statistics the company reported for Q2 2010 compared to the same period last year:

  • YRC National Transportation tons per day and shipments per day down 18.6%, and revenue per hundredweight and revenue per shipment, both up 3.9%.
  • YRC Regional Transportation tons per day up 4.6%, shipments per day down 3.1%, revenue per hundredweight down 2.8% and revenue per shipment up 4.9%

Here’s what Bill Zollars, Chairman, President and CEO of YRC Worldwide had to say about the quarter and the outlook for Q3: “We are pleased with the sequential improvement in our business volumes and earnings as our pricing discipline, customer mix management and cost initiatives gain significant traction. For the quarter, the Regional companies reported positive operating income, and YRC National achieved positive adjusted EBITDA. With the significant operating momentum we achieved throughout the second quarter and experienced in July, the company is positioned for further growth, and we expect to achieve positive adjusted EBITDA in the third quarter of 2010 in excess of the second quarter.”

SAP is among the few (only?) software vendors that publishes a sustainability report. According to the press release, SAP’s worldwide CO2 emissions “slightly decreased to 115 kilotonnes from 120 kilotons in the previous quarter. Despite a surge in business travel prompted by the economic recovery, SAP was able to lower its overall carbon footprint in the second quarter from the levels of the first quarter by reducing its energy consumption and increasing the purchase of renewable electricity. Compensating travel needs will be instrumental to meet SAP’s 2010 objective of staying below 460 kilotons CO2.”

Finally, on a lighter note: This past Sunday, Brad Falchuk threw out the ceremonial first pitch at the Red Sox game. Brad is the executive producer of the TV show Nip/Tuck, and co-creator and executive producer of the TV show Glee. He is also the brother of my good friend Evan Falchuk (I highlighted Evan’s company, Best Doctors, in “Healthcare and the Trucking Industry: Interview with J.B. Hunt”). I was not able to watch the game on Sunday, but I did get near real-time updates and pictures via Evan’s Facebook postings. Every kid who grows up playing baseball dreams of running the bases or taking the pitcher’s mound at a major league field. I’m sure some form of the phrase “lucky guy” passed through the minds of many people as they watched Brad release the ball towards home plate. And it’s true, Brad is a lucky guy, but for a very different reason than you might think. You can read the rest of the story (and watch the video) at Evan’s blog.

Have a great weekend!

(Note: Con-way and SAP are ARC clients)

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