For the green shoots believers, a dose of reality: The Journal of Commerce reports that the Cass Freight Systems Index (Cass is a company that tracks freight spending) fell by a whopping 25% in April 2009 (hat tip to ZH).

This comes on the heels of a strong run-up in transports. The IYT Index that tracks this segment dipped below $40 in early March. At close of day on Tuesday it logged $59.54. Freight shipments and freight spending are the lifeblood of the U.S. economy and a key leading indicator for economic activity as both retailers use them to replenish inventories and durable goods.

FedEx Corp. (NYSE: FDX) is up a creek without a paddle.

The second-largest delivery company reported today a net loss of $241 million, or 78 cents per share, compared with net income of $610 million, or $1.96 per share, a year earlier. Excluding an $891 million charge for its Kinko's unit, profit would have been $1.45 per share, missing the $1.47 estimate of analysts surveyed by Bloomberg News.

Wall Street, though, gave a thumbs down to FedEx's lackluster guidance which heightened concerns about the health of the overall economy. Shares of FedEx and its rival United Parcel Service Inc. (NYSE: UPS) slumped in early trading.

YRC Worldwide (Nasdaq: YRCW) is the largest U.S. operator of motor carriers that offer less-than-truckload freight services.

Just because a sector is down doesn't mean that there aren't opportunities within the business category. Trucking transport has been a sector under pressure, and with the above in mind, YRC Worldwide is worth a review.

Analysts expect road freight sector conditions to improve gradually in 2008, with a slight revenue increase for YRCW, on mild tonnage gains and some pricing power. Margins should also improve in 2008.

Longer term, analysts expect YRCW to improve operational performance via ongoing efforts to rightsize its fleet and eliminate operational overlaps. The Reuters F2008/F2009 EPS consensus estimates for YRCW are $1.64/$2.42.

To be sure, YRCW's stock carries considerable risk, but the argument here is that improved operations and a pull-back in average oil prices for 2008 to the 'low' $75-80-level will provide enough tailwind to improve bottom-line results. Those facts, combined with a p/e of 8 make the YRCW risk/return favorable.

The risks? A U.S. recession would (obviously) hurt YRCW's results. Analysts also have an eye on the company's pension costs.

The First Call mean rating for YRCW is: Hold. [13 firms.] Mean 2008 target: $18.00. [high: $25, low: $15.]

Stock Analysis: YRC Worldwide is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from YRCW's shares. Sell / Stop Loss if you were to purchase shares in this company: $8.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.

Ryder System (NYSE: R) today announced it is dropping its forecast for third-quarter earnings per share from $1.20-$1.23 to $1.12-$1.14. The company also revealed that third-quarter results will be impacted by a $10 million sale of property, more than offset by a $12 million charge for restructuring, the benefits of which won't be realized until 2008. Its end-of-year projections are now for EPS of $4.10-$4.15, down from previous expectations of $4.30-$4.35, but still above 2006 figures.

Ryder blames general softening of demand beyond the housing sector for declining revenue in its Fleet Management Solutions segment, which accounts for about 60% of its revenue. The company has a fleet of more than 140,000 vehicles and employs almost 30,000 people.

One area to keep an eye on with Ryder is its Supply Chain Solutions sector, which accounts for 32% of revenue. This sector is closely tied to the automobile industry -- in fact, GM (NYSE: GM) accounted for 40% of Ryder's SCS revenue in 2006. Slack times at GM could show up on Ryder's bottom line.

As early as this weekend, Labor Day weekend, the Bush administration could open the U.S. roadways to Mexican trucks. The Teamsters Union and three public-interest groups: The Sierra Club, Public Citizen and Environmental Law Foundation, asked a federal court yesterday for an emergency injunction to prohibit Mexican trucks on the roads.

The union has fought for 13 years to stop Mexican trucks from entering into the U.S., a promise given by Bill Clinton under the North American Free Trade Agreement, or NAFTA. They argue that the introduction of these trucks would compromise highway safety and cost U.S. jobs.

Hector Marquez, head of the Mexican Economic Ministry's Trade and NAFTA Office, disagrees. "It's very unfortunate because certainly the governments of Mexico and the United States have put forth a tremendous effort to put in place all the requirements, all the mechanisms, all the personnel and the resources to make this work and to guarantee the security and safety," the Houston Chronicle reported today. The Transportation Department's Federal Motor Carrier Safety Administration dismissed the suit as "without merit."

Rolando Ortega, a delegate from the National Confederation of Mexican Carriers, doesn't believe Mexican truckers want to travel into the United States.

It's been a month since YRC Worldwide's (NASDAQ: YRCW) annual shareholder meeting, when CEO Bill Zollars said that he would look to the East for future expansion. Look no further:

Yesterday, YRC announced that it has entered a preliminary deal to acquire Shanghai Jiayu Logistics Limited, one of the largest providers of less-than-truckload ground transportation services in China.

The push into China more than doubles the size of YRC Worldwide in that country, from 1,400 employees to more than 3,000. While details of the transaction were not provided, Zollers said earlier this year that acquisitions in China would cost up to $100 million. With more than 30,000 customers, 1,600 employees, 300 tractors and a network of over 3,000 vehicles in Shanghai's possession, YRC Worldwide found a steal.

When comparing the assets to MeridianIQ, the Company's logistics segment -- now called YRC Logistics -- it's monumental. YRC Logistics has 18,000 transactional and 350 contractual customers around the globe and accounted for 6% of YRC Worldwide's total operating revenue in 2006 ($162.5B). Today's acquisition more than doubles the assets and overall customers of the Logistics segment alone, with the bulk now in China. Zollers said he expects to see significant revenues from China to hit the bottom line in 2008.

The transportation giant already has a jointly-owned air freight importer and a jointly-owned logistics' company in the region, but the acquisitions are far from over. Zollars told analysts back in March to expect two acquisitions this year, a ground hauler and a logistics company.

One down, one to go.

Kevin Shult is a writer for TheFlyOnTheWall.com (subscription required)

U.S. Xpress Enterprises (NASDAQ: XPRSA) is the fourth largest publicly owned truckload carrier in the US in terms of revenues. But that won't be the case for long. That is, the company wants to go private.

The buyer is Mountain Lake Acquisition Company, which is backed by Patrick E. Quinn and Max L. Fuller. Quinn is US Xpress's president and Fuller is the CEO. Both are co-founders of the company and own 42% of the outstanding Class A and Class B common shares. So, with majority control, they have lots of leverage to get the deal done.

In its fiscal Q1 report, the company reported a 20% increase in revenues to $360.9 million. But there was a net loss of $2.6 million. There have been some problems with freight demand, severe weather, and rising fuel prices.

On news of the buyout, US Xpress's shares spiked 33.80% to $19 per share. The buyout offer is for $20.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Twelve years ago the United States put the trucking provision of the North American Free Trade Agreement, or NAFTA, on hold.

In February of this year Transportation Secretary Mary Peters announced the U.S. will grant a maximum of 1,000 Mexican trucks access to U.S. highways for up to three years under a new pilot program. At the moment, Mexican trucking companies are allowed to transport goods within a 25-mile buffer zone from its borders into the United States. American trucks are currently not allowed into Mexico.

In the past three months there has been a great debate in Washington about what this trucking provision should allow and how much of an impact it would have on America's truck drivers.

In my Battle of the Brands: UPS vs. FedEx, many people commented on how one company handled remote locations better than the other. If you think Avoca, Minnesota is a "remote location" check out this study.

Each year, students at the Supply Chain & Logistics Institute at Georgia Tech in Atlanta, GA send packages to locations around the world through different parcel carriers and observe the results. This year, the students chose United Parcel Service (NYSE: UPS), FedEx Corp (NYSE: FDX) and Deutsche Post's DHL to deliver five packages to five of the most remote locations on globe:

• Apia, the only city on Upulu, one of the islands of Samoa. Upulu lacks something important for parcel carriers - street addresses.

• Florianopolis, an island off the Brazil near Uraguay, which is considered a "remote area" by carriers.

Putting the first quarter behind us, as many wish we would, gives us pause to look ahead in hopes of finding the gems of success that wait for us. Here are some of my areas of interest as dictated by gut instinct. Please, before you groan and wretch and move on to the next post, remember that in defiance of one major writer's claim that no one warned you of the bear(ish) market that passed by this way ... I did.

I had also suggested steering clear of big pharma quite some time ago. You may take note that all but a few of them have, at least temporarily, splattered on the wall. The clear exception I see at this time is Pfizer Inc. (NYSE: PFE), which I consider to be in turn-around mode. I'll even be so bold as to hint that you may want to watch it for some acquisition movement of some kind. Pfizer has a sharp, well-run operation with some fine projects on the table. I like Pfizer and have no reason to change my attitude towards it.

Here are some of my watch words for at least the next two quarters:

• Watch natural fibers including cotton, glass derivations, carbon, and cellulose. Apply liberal amounts of nano-technologies and your world vastly increases in breadth and scope.
• Pay attention to water in all it's forms and applications. You shall benefit if you move it ,use it ,split it, spend it, clean it, or own it.
• Continue to avoid bonds unless your slopping around with bundles of loose cash that you have nothing better to do with.
• Scrap metals remain solid and steady. Beware of mining, at least temporarily.
• Watch for increased use of wood as raw material in things other than home construction. In cost of materials, the dynamics are changing. Stay on top of what the manufacturing sector is hinting towards.
• Look hard at the building and maintenance of diesel engines. I'm receiving reports that biodiesel is having some negative impact on the current trucking fleet. Adaptations in materials and design will be needed soon to accommodate the changes in fuel make up. Be there and be ready.

That's what I have to offer you for right now. At this time I need to make one small apology. I hope those fine people who hold shares in General Electric (NYSE: GE) haven't lost faith in me yet. I promised you $40 per share and I still believe it's coming. Hold tight my friends, nothing good ever comes easy.

MOST NOTEWORTHY: The trucking sector, PepsiCo (PEP) and Electronic Arts (ERTS) were the most notable upgrades today.

• Wachovia upgraded the trucking sector to Market Weight from Underweight, as they believe the negative sentiment towards the group is starting to bottom, also noting that trucking stocks tend to rally before fundamentals fully bottom. Wachovia upgraded Con-Way Inc (NYSE: CNW) and Covenant Transport 'A' NASDAQ: CVTI) to Outperform from Market Perform, and Arkansas Best (NASDAQ: ABFS), Heartland Express Inc (NASDAQ: HTLD), Werner Enterprises (NASDAQ: WERN), US Xpress Enterprises 'A' (NASDAQ: XPRSA) to Market Perform from Underperform.

• JP Morgan added PepsiCo (NYSE: PEP) to their Focus List, as the firm believes the recent pullback due to concerns over commodities costs and margins is overdone.

• Janco upgraded Electronic Arts (NASDAQ: ERTS) to Buy from Hold with a $69 target, citing valuation.

OTHER UPGRADES:

• Amgen Inc (NASDAQ: AMGN) was upgraded to Outperform from Peer Perform with a $77 target at Bear Stearns; the firm views Amgen's risk/reward as favorable as the most reasonable of CERA's launch scenarios, owned by Roche Holdings AG (OTC: RHHBY), are priced into valuation, and sees significant upside if CERA does not launch.

• Caris upgraded LSI Logic (NYSE: LSI) to Buy from Above Average with a $12 target; they believe investors are underestimating the synergies involved with the Agere Systems (NYSE: AGR) deal. The broker sees upside to earnings estimates and raised their target of LSI Logic to $12 from $11.

• Merrill Lynch upgraded shares of ImClone Systems (NASDAQ: IMCL) to Neutral from Sell, and sees a short-term trading opportunity due to the overly negative sentiment into the upcoming sales figures. The broker thinks Imclone could meet its Erbitux sales estimates despite weak prescription data.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).