Orange-based Transcon, struggling to survive a yearlong rate war among freight haulers, said Thursday that it posted a $4.3-million loss for the third quarter and has reshuffled its top officers.
But the appointment of Transcon director Orin S. Neiman to replace Burke G. Piper as chairman and Joe Hall as chief executive officer may not bring about the changes that one Transcon executive said are needed "to turn the company around."
Paul R. Schlesinger, a trucking industry analyst at Donaldson Lufkin & Jenrette in New York, agreed that the management reshuffling may not be enough. "It may be a moot point," Schlesinger said. "They may not survive long."
Transcon's $4.3-million loss contrasts with a $1.6-million profit in last year's third quarter and increases the company's deficit for the first nine months of 1987 to $12.9 million. Transcon earned $2.9 million in the first nine months of 1986.
Quarterly revenues were $86.3 million, down from $88.6 million last year. Revenues for the first nine months fell 6% to $247.1 million from $262 million in 1986.
After Neiman's appointment as chairman and chief executive, Piper, 72, became Transcon's vice chairman, and Hall, 48, was reassigned to the position of chief operating officer while retaining the title of president, Neiman said.
Neiman, 54, has been a member of Transcon's board since 1979. He is chairman of Sierra Federal Savings & Loan in Beverly Hills and president of NCO Inc., a Beverly Hills-based real estate development firm.
Neiman also is a partial owner of Ohio Fast Freight, a small freight-hauling firm based in Canton, Ohio. Transcon, however, said it has no merger plans, and Neiman said the financially troubled company "would never merge" with the Ohio company.
But Schlesinger said a merger with another freight hauler--though potentially difficult to arrange--might be Transcon's best bet to survive the industry shakeout.
Neiman would not discuss his plans for Transcon. Asked why he was taking over, he replied, "The board asked me." He said Transcon's nationwide activities do not compete with Ohio Fast Freight's regional operations.
Transcon and many freight haulers have been hurt by a rate war that began last year when one of the three largest haulers, Yellow Freight System in Overland Park, Kan., slashed its rates. Other major firms soon followed.
"Business is fine, (but) we just can't charge enough to make any money," said James E. Fox, Transcon's vice president.
Since last year, larger trucking firms have posted sharply lower profits while several smaller firms such as Transcon are awash in red ink. About half a dozen freight haulers already have collapsed in the rate battle.
"Several of the larger truckers probably are not going to last through the winter," said Dennis Hudson, director of research at George K. Baum, a regional brokerage firm in Kansas City, Mo.
Schlesinger said that Transcon and the other smaller companies are trying to compete nationwide but that they don't have strong distribution lines or the economies of a scale that the larger firms have.
In an effort to become healthier, large and small haulers increased rates an average of 3.5% last month, but "a lot of people aren't sure whether the rate increase is even going to stick," said Tony Ginsberg, a trucking industry analyst at Fourteen Research, a New York investment banking firm.
Despite its mounting losses, Transcon has maintained a relatively strong balance sheet, analysts noted. On Oct. 31, the company's assets totaled $145.9 million, while liabilities were $90.4 million.
"I give them credit for a remarkable job of hanging on," Schlesinger said.