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Sector Snap: Logistics Firms Fall, Hub Jumps

NEW YORK (AP) ¿ An analyst with investment bank R.W. Baird said Wednesday that a recent strategic move by trucking and logistics company Hub Group Inc. should position it well for the future, while it will likely hurt business at rival Pacer International Inc.

Analyst Jon A. Langenfeld said in a note to clients that Hub Group is turning to railroad operator Union Pacific Corp. to carry most of its cargo ¿ about 90 percent. Hub now ships about 60 percent of its rail freight with Union Pacific and the other 40 percent with fellow Western rail Burlington Northern Santa Fe Corp. He thinks this move should allow Downers Grove, Ill.-based Hub Group to be more efficient and drive down costs.

Langenfeld kept his "Neutral" rating on Hub, saying the transition might mean some loss of customers and higher initial costs. He lowered his estimates for this year but increased his price target on the deal's long-term opportunities.

But what's good for Hub will likely be negative for rival Pacer, Langenfeld said. He cut his rating on the company to "Underperform" or "Sell," saying Hub's shift and Concord, Calif.-based Pacer's current business model might hurt its competitive ability in the future.

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