Sector Snap: Truckers Slide On Weak Retail Sales

NEW YORK (AP) — The trucking sector steered lower Wednesday with the broader market as the government revealed that retail sales — a key driver for the trucking industry — were weaker than expected last month.

Investors are worried that the report means economic recovery could be further off than previously thought. The Commerce Department said earlier that retail sales fell by 0.4 percent in April, when economists expected them to be flat. Trucks haul about 70 percent of all retail and manufactured goods in the country, so when stores aren't selling or manufacturing plants aren't humming, trucks aren't moving.

Investors were also still reeling over a report late Monday by one of the largest U.S. trucking companies, YRC Worldwide Inc.

Overland Park, Kansas-based YRC said in a filing with the Securities and Exchange Commission that it needs to cut more costs and get more shipments in order to counteract the steep decline in revenue from the slumping economy. It warned it might be at risk of default if discussions with creditors aren't able to produce some sort of compromise.

Also Wednesday, Landstar System Inc. said in a mid-quarter meeting with analysts that freight demand remains weak and volumes are still troubling. Wachovia analyst Justin Yagerman suggested that there is nothing in the near future that should drive shares as the industry is still shaken from the economic downturn.

YRC shares lost 62 cents, or 17.5 percent, to $2.93 in afternoon trading. Landstar fell $1.64, or 4.5 percent, to $34.57.