Emery’s Future Clouded By Loss of USPS
With the loss of two major postal shipping contracts and increasing competition in the heavyweight airfreight market, Emery Worldwide faces a critical test in the coming months to replace lost revenue and shore up lagging profits.Although company officials say they are working on the problem, investment analysts seem to be divided about the future of Emery and its parent CNF Inc. (CNF), a Palo Alto, Calif.-based holding company that also controls regional less-than-truckload carrier Con-Way Transportation Services, Menlo Logistics and trailer manufacturer Road Systems.
On Jan. 10, the U.S. Postal Service announced it was giving FedEx (FDX) a seven-year, $6.3 billion contract to carry Priority, Express and first-class mail between airports. USPS also said that it would terminate existing contracts with Emery to carry Express mail and operate 10 Priority Mail distribution centers along the East Coast (1-15, p. 1).
The decisions represent a setback for Emery, which has been battling a decline in demand for its domestic air freight business for several years.
