WOODSTOCK, Ont. — Contrans Income Fund suffered a $3.1 million drop in net earnings in the first quarter of 2008 compared to the same period last year.

Net earnings for the company were $5 million in Q1, compared to $8.1 million in 07. Transportation-related revenue was $120.5 million (including fuel surcharges) compared to $119.4 million in the same period of 07. However, remove the fuel surcharge revenue and Contrans experienced a $4.1 million drop in transportation revenue. Part of this was attributed to the closure of a plant that contributed a lot of business.

“It is quite evident from recent earnings reports that the North American economy, which we felt has been in trouble for quite some time, has continued to deteriorate,” said Chairman and CEO Stan Dunford. “A strong Canadian dollar has compounded this effect on this country’s manufacturing activity, adversely affecting exports and southbound truck traffic. These factors have had an impact on everyone in our industry, some far more than others.”

Contrans said in its Q1 financial report that reduced freight volumes, especially into the US, have put pressure on rates and impacted traffic patterns. Rising fuel prices are also a concern. Because of the current over-capacity, Contrans said equipment utilization is suffering and to top it all off, an unusually harsh winter impacted expenses.

Despite all that, Dunford remains upbeat.

“Although we are not completely immune from recessionary pressures, we believe that Contrans remains well-positioned in the current economic circumstances,” said Dunford. “We have built a solid, diversified group of customers who value good service and compensate us fairly for rising fuel costs. Over the years we have grown at a respectable and manageable pace, resisting the temptation to grow too fast.”