UNITED STATES
                   SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C.  20549


                                FORM 10-Q


          X  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         ---            SECURITIES EXCHANGE ACT OF 1934

              For the quarterly period ended June 30, 2005

                                   OR

             TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         ---            SECURITIES EXCHANGE ACT OF 1934

                 For the transition period from   N/A   to   N/A


                      COMMISSION FILE NUMBER 1-5046

                                CNF Inc.


                  Incorporated in the State of Delaware
              I.R.S. Employer Identification No. 94-1444798

           3240 Hillview Avenue, Palo Alto, California  94304
                     Telephone Number (650) 494-2900

Indicate by check mark whether the registrant (1) has filed all  reports
required  to be filed by Section 13 or 15(d) of the Securities  Exchange
Act  of 1934 during the preceding 12 months and (2) has been subject  to
such filing requirements for the past 90 days.
Yes  X      No
    ---        ---

Indicate  by  check mark whether the registrant is an accelerated  filer
(as defined in Rule 12b-2 of the Exchange Act).
Yes  X      No
    ---        ---


           Number of shares of Common Stock, $.625 par value,
              outstanding as of July 31, 2005:  52,403,690



                                CNF INC.
                                FORM 10-Q
                       Quarter Ended June 30, 2005


                                  INDEX



PART I.   FINANCIAL INFORMATION                                       Page

  Item 1. Financial Statements

            Consolidated Balance Sheets -
              June 30, 2005 and December 31, 2004                        3

            Statements of Consolidated Income -
              Three and Six Months Ended
              June 30, 2005 and 2004                                     5

            Statements of Consolidated Cash Flows -
              Six Months Ended June 30, 2005 and 2004                    6

            Notes to Consolidated Financial Statements                   7

  Item 2. Management's Discussion and Analysis of
            Financial Condition and Results of Operations               17

  Item 3. Quantitative and Qualitative Disclosures about Market Risk    31

  Item 4. Controls and Procedures                                       32


PART II.  OTHER INFORMATION

  Item 1. Legal Proceedings                                             33

  Item 2. Unregistered Sales of Equity
            Securities and Use of Proceeds                              33

  Item 6. Exhibits                                                      34

  Signatures                                                            35


                           PART I. FINANCIAL INFORMATION



ITEM 1.  FINANCIAL STATEMENTS


                                    CNF INC.
                          CONSOLIDATED BALANCE SHEETS
                                  (Unaudited)
                             (Dollars in thousands)



                                                       June 30,    December 31,
ASSETS                                                   2005          2004
                                                     ------------  ------------
Current Assets
  Cash and cash equivalents                          $   551,673   $   386,897
  Marketable securities                                  132,261       446,300
  Trade accounts receivable, net                         481,929       425,783
  Other accounts receivable (Note 2)                      68,657       134,577
  Operating supplies, at lower of average cost
    or market                                             18,345        16,665
  Prepaid expenses                                        42,444        48,092
  Deferred income taxes                                   49,192        51,453
  Assets of discontinued operations (Note 2)               6,411         5,128
                                                     ------------  ------------
    Total Current Assets                               1,350,912     1,514,895
                                                     ------------  ------------

Property, Plant and Equipment, at cost
  Land                                                   142,857       142,857
  Buildings and leasehold improvements                   631,294       618,698
  Revenue equipment                                      726,734       677,499
  Other equipment                                        217,845       210,102
                                                     ------------  ------------
                                                       1,718,730     1,649,156
  Accumulated depreciation and amortization             (823,900)     (789,835)
                                                     ------------  ------------
                                                         894,830       859,321
                                                     ------------  ------------
Other Assets
  Deferred charges and other assets (Note 4)              38,876        56,618
  Capitalized software, net                               47,891        50,347
  Assets of discontinued operations (Note 2)              15,958        15,220
                                                     ------------  ------------
                                                         102,725       122,185
                                                     ------------  ------------

      Total Assets                                   $ 2,348,467   $ 2,496,401
                                                     ============  ============


             The accompanying notes are an integral part of these statements.



                                    CNF INC.
                          CONSOLIDATED BALANCE SHEETS
                                 (Unaudited)
                (Dollars in thousands except per share amounts)



                                                       June 30,    December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY                     2005          2004
                                                     ------------  ------------
Current Liabilities
  Accounts payable                                   $   243,076   $   252,867
  Accrued liabilities                                    216,262       226,437
  Self-insurance accruals                                 86,991        86,095
  Current maturities of long-term debt                    15,030       112,727
  Income taxes payable                                       736             -
  Liabilities of discontinued operations (Note 2)         25,644        34,705
                                                     ------------  ------------
    Total Current Liabilities                            587,739       712,831

Long-Term Liabilities
  Long-term debt and guarantees                          583,939       601,344
  Self-insurance accruals                                103,538       102,512
  Employee benefits (Note 5)                             216,299       245,989
  Other liabilities and deferred credits                  18,272        20,296
  Deferred income taxes                                   15,463        29,200
  Liabilities of discontinued operations (Note 2)            729         6,862
                                                     ------------  ------------
    Total Liabilities                                  1,525,979     1,719,034
                                                     ------------  ------------

Commitments and Contingencies (Note 8)

Shareholders' Equity
  Preferred stock, no par value; authorized
    5,000,000 shares:  Series B, 8.5% cumulative,
    convertible, $.01 stated value; designated
    1,100,000 shares; issued 666,660 and
    742,995 shares, respectively                               7             7
  Additional paid-in capital, preferred stock            101,392       113,002
  Deferred compensation, Thrift and Stock Plan           (44,743)      (49,117)
                                                     ------------  ------------
    Total Preferred Shareholders' Equity                  56,656        63,892
                                                     ------------  ------------
  Common stock, $.625 par value; authorized
    100,000,000 shares; issued 59,709,342 and
    58,544,254 shares, respectively                       37,337        36,590
  Additional paid-in capital, common stock               462,715       429,134
  Retained earnings                                      508,723       426,300
  Deferred compensation, restricted stock                 (4,463)       (5,744)
  Cost of repurchased common stock (Note 7)
    (7,676,708 and 6,364,868 shares, respectively)      (223,355)     (157,069)
                                                     ------------  ------------
                                                         780,957       729,211
  Accumulated Other Comprehensive Loss (Note 6)          (15,125)      (15,736)
                                                     ------------  ------------
    Total Common Shareholders' Equity                    765,832       713,475
                                                     ------------  ------------
      Total Shareholders' Equity                         822,488       777,367
                                                     ------------  ------------
        Total Liabilities and Shareholders' Equity   $ 2,348,467   $ 2,496,401
                                                     ============  ============


             The accompanying notes are an integral part of these statements.


                                    CNF INC.
                       STATEMENTS OF CONSOLIDATED INCOME
                                  (Unaudited)
               (Dollars in thousands except per share amounts)



                                  Three Months Ended        Six Months Ended
                                       June 30,                 June 30,
                               -----------------------  -----------------------
                                   2005        2004        2005         2004
                               ----------- -----------  ----------- -----------
REVENUES                       $1,033,875  $  924,382   $1,981,558  $1,771,302

Costs and Expenses
  Operating expenses (Note 4)     818,567     748,028    1,587,300   1,439,845
  Selling, general and
    administrative expenses        84,498      79,783      163,724     154,228
  Depreciation                     27,250      25,292       53,718      50,502
                               ----------- -----------  ----------- -----------
                                  930,315     853,103    1,804,742   1,644,575
                               ----------- -----------  ----------- -----------

OPERATING INCOME                  103,560      71,279      176,816     126,727
                               ----------- -----------  ----------- -----------

Other Income (Expense)
  Investment income                 5,535       1,408       10,162       2,135
  Interest expense                 (9,688)    (10,011)     (20,154)    (17,347)
  Miscellaneous, net               (2,012)     (3,957)      (3,616)     (4,525)
                               ----------- -----------  ----------- -----------
                                   (6,165)    (12,560)     (13,608)    (19,737)
                               ----------- -----------  ----------- -----------

Income from Continuing
  Operations Before Taxes          97,395      58,719      163,208     106,990
    Income Tax
      Provision (Note 9)           29,239      22,900       54,201      41,726
                               ----------- -----------  ----------- -----------
INCOME FROM CONTINUING
  OPERATIONS                       68,156      35,819      109,007      65,264
                               ----------- -----------  ----------- -----------

Discontinued Operations,
  net of tax (Note 2)
  Gain (Loss) from Disposal         2,951           -       (6,825)          -
  Income (Loss) from
    Discontinued Operations             -       1,686            -      (1,330)
                               ----------- -----------  ----------- -----------
                                    2,951       1,686       (6,825)     (1,330)

Net Income                         71,107      37,505      102,182      63,934
  Preferred Stock Dividends         2,036       2,022        4,025       4,044
                               ----------- -----------  ----------- -----------

NET INCOME AVAILABLE TO
  COMMON SHAREHOLDERS          $   69,071  $   35,483   $   98,157  $   59,890
                               =========== ===========  =========== ===========

Weighted-Average Common
  Shares Outstanding (Note 1)
    Basic                      52,166,814  50,319,659   52,257,396  50,075,246
    Diluted                    56,016,513  56,883,738   56,333,732  56,981,429

Earnings (Loss) per
  Common Share (Note 1)
    Basic
      Net Income from
       Continuing Operations   $     1.27  $     0.67   $     2.01  $     1.22
      Gain (Loss) from
       Disposal, net of tax          0.05           -        (0.13)          -
      Income (Loss) from
       Discontinued Operations,
       net of tax                       -        0.04            -       (0.02)
                               ----------- -----------  ----------- -----------
      Net Income Available to
       Common Shareholders     $     1.32  $     0.71   $     1.88  $     1.20
                               =========== ===========  =========== ===========

    Diluted
      Net Income from
       Continuing Operations   $     1.19  $     0.61   $     1.87  $     1.11
      Gain (Loss) from
       Disposal, net of tax          0.05           -        (0.12)          -
      Income (Loss) from
       Discontinued Operations,
       net of tax                       -        0.03            -       (0.02)
                               ----------- -----------  ----------- -----------
      Net Income Available to
       Common Shareholders     $     1.24  $     0.64   $     1.75  $     1.09
                               =========== ===========  =========== ===========


             The accompanying notes are an integral part of these statements.


                                    CNF INC.
                      STATEMENTS OF CONSOLIDATED CASH FLOWS
                                 (Unaudited)
                            (Dollars in thousands)

                                                           Six Months Ended
                                                              June 30,
                                                     --------------------------
                                                         2005          2004
                                                     ------------  ------------
Cash and Cash Equivalents, Beginning of Period       $   386,897   $    38,183
                                                     ------------  ------------

Operating Activities
Net income                                               102,182        63,934
Adjustments to reconcile net income to
  net cash provided by operating activities:
    Discontinued operations, net of tax                    6,825         1,330
    Depreciation and amortization, net of accretion       59,315        57,621
    Increase (Decrease) in deferred income taxes         (11,476)        9,560
    Amortization of deferred compensation                  5,022         6,569
    Provision for uncollectible accounts                   2,336         3,199
    Equity in earnings of joint venture                   (7,454)       (5,380)
    Loss (Gain) from sales of property and
      equipment, net                                        (351)          278
    Changes in assets and liabilities:
      Receivables                                        (26,118)      (40,887)
      Prepaid expenses                                     5,648          (995)
      Accounts payable                                   (11,307)       26,057
      Accrued incentive compensation                     (20,221)       24,628
      Accrued liabilities, excluding
        accrued incentive compensation                     8,439        11,497
      Self-insurance accruals                              1,922       (10,818)
      Income taxes                                        27,383        12,278
      Employee benefits                                  (30,871)       (8,052)
      Deferred charges and credits                        22,601        10,299
      Other                                               (7,201)       (3,355)
                                                     ------------  ------------
        Net Cash Provided by Operating Activities        126,674       157,763
                                                     ------------  ------------

Investing Activities
  Capital expenditures                                   (90,704)      (45,035)
  Software expenditures                                   (4,911)       (7,068)
  Proceeds from sales of property and equipment, net       2,347         4,429
  Net decrease (increase) in marketable securities       314,039       (16,260)
                                                     ------------  ------------
        Net Cash Provided by (Used in)
          Investing Activities                           220,771       (63,934)
                                                     ------------  ------------

Financing Activities
  Net proceeds from issuance of long-term debt                 -       292,587
  Repayment of long-term debt and guarantees            (112,715)     (142,911)
  Proceeds from exercise of stock options                 32,263        17,055
  Payments of common dividends                           (10,527)      (10,050)
  Payments of preferred dividends                         (4,861)       (5,004)
  Repurchases of common stock                            (74,568)            -
                                                     ------------  ------------
        Net Cash Provided by (Used in)
          Financing Activities                          (170,408)      151,677
                                                     ------------  ------------

        Net Cash Provided by Continuing Operations       177,037       245,506
                                                     ------------  ------------
        Net Cash Provided by (Used in)
          Discontinued Operations                        (12,261)       10,012
                                                     ------------  ------------
        Increase in Cash and Cash Equivalents            164,776       255,518
                                                     ------------  ------------
Cash and Cash Equivalents, End of Period             $   551,673   $   293,701
                                                     ============  ============

Supplemental Disclosure
  Cash paid for income taxes, net                    $    37,246   $    31,813
                                                     ============  ============
  Cash paid for interest, net of amounts capitalized $    26,197   $    16,686
                                                     ============  ============

          The accompanying notes are an integral part of these statements.




                                CNF INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               (Unaudited)

1.  Principal Accounting Policies

Basis of Presentation

Pursuant to the rules and regulations of the Securities and Exchange
Commission, the accompanying consolidated financial statements of CNF
Inc. and its wholly owned subsidiaries ("CNF") have been prepared by
CNF, without audit by an independent registered public accounting firm.
In the opinion of management, the consolidated financial statements
include all normal recurring adjustments necessary to present fairly the
information required to be set forth therein.  Certain information and
note disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United
States ("GAAP") have been condensed or omitted from these statements
pursuant to such rules and regulations and, accordingly, should be read
in conjunction with the consolidated financial statements included in
CNF's 2004 Annual Report on Form 10-K.  Results for the periods
presented are not necessarily indicative of annual results.

In December of 2004, CNF completed the sale of Menlo Worldwide
Forwarding, Inc. and its subsidiaries and Menlo Worldwide Expedite!,
Inc. (hereinafter collectively referred to as "MWF") to United Parcel
Service, Inc. and United Parcel Service of America, Inc. (collectively,
"UPS").  As a result, for the periods presented, the results of
operations, net assets, and cash flows of the Menlo Worldwide Forwarding
("Forwarding") segment have been segregated and reported as discontinued
operations, as more fully discussed in Note 2, "Discontinued
Operations."  In addition to MWF, the Forwarding segment also includes
Emery Worldwide Airlines, Inc. ("EWA"), a separate wholly owned
subsidiary of CNF, which was not sold to UPS.

Earnings per Share ("EPS")

Basic EPS is computed by dividing reported earnings (loss) by the
weighted-average common shares outstanding.  Diluted EPS is calculated
as follows:

(Dollars in thousands
 except per share data)         Three Months Ended         Six Months Ended
                                     June 30,                  June 30,
                             ------------------------  ------------------------
                                2005         2004         2005          2004
                             -----------  -----------  -----------  -----------
Numerator:
  Continuing operations
   (after preferred stock
    dividends), as reported  $   66,120   $   33,797   $  104,982   $   61,220
      Add-backs:
        Dividends on
          Series B preferred
          stock, net of
          replacement funding       297          343          561          651
        Interest expense
          on convertible
          subordinated
          debentures, net of
          trust dividend
          income                     --          636           --        1,590
                             -----------  -----------  -----------  -----------
  Continuing operations          66,417       34,776      105,543       63,461
                             -----------  -----------  -----------  -----------
  Discontinued operations         2,951        1,686       (6,825)      (1,330)
                             -----------  -----------  -----------  -----------
  Available to common
    shareholders             $   69,368   $   36,462   $   98,718   $   62,131
                             ===========  ===========  ===========  ===========

Denominator:
  Weighted-average common
    shares outstanding       52,166,814   50,319,659   52,257,396   50,075,246
  Stock options and
    restricted stock            711,059      941,041      937,696      762,311
  Series B preferred stock    3,138,640    3,539,705    3,138,640    3,539,705
  Convertible subordinated
    debentures                       --    2,083,333           --    2,604,167
                             -----------  -----------  -----------  -----------
                             56,016,513   56,883,738   56,333,732   56,981,429
                             ===========  ===========  ===========  ===========



Earnings (Loss) per Diluted
  Share:
    Continuing operations    $     1.19   $     0.61   $    1.87    $     1.11
    Discontinued operations        0.05         0.03       (0.12)        (0.02)
                             -----------  -----------  -----------  -----------
    Available to common
      shareholders           $     1.24   $     0.64   $    1.75     $    1.09
                             ===========  ===========  ===========  ===========



The periods ended June 30, 2004 include the dilutive effect of
convertible subordinated debentures, which were redeemed on June 1,
2004.

Stock-Based Compensation

Employees and non-employee directors have been granted options under
CNF's stock option plans to purchase common stock of CNF at prices equal
to the market value of the stock on the date of grant.  CNF accounts for
stock-based compensation utilizing the intrinsic-value method in
accordance with the provisions of Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" ("APB 25").
Accordingly, no compensation expense is recognized for fixed-option
plans because the exercise prices of employee stock options equal the
market prices of the underlying stock on the dates of grant.

The following table sets forth the effect on net income and earnings per
share if CNF had applied the fair-value based method and recognition
provisions of SFAS 123, " Accounting for Stock-Based Compensation," to
stock-based compensation:

(Dollars in thousands,          Three Months Ended        Six Months Ended
   except per share data)            June 30,                 June 30,
                             ------------------------  ------------------------
                                2005         2004         2005          2004
                             -----------  -----------  -----------  -----------
Net income available to
  common shareholders,
  as reported                $   69,071   $   35,483   $   98,157   $   59,890
Stock-based compensation
  cost included in
  reported income, net of
  tax                               (18)         762          395        1,410
Additional compensation
  cost, net of tax, that
  would have been included
  in net income if the fair-
  value method had been
  applied                        (1,613)      (2,401)      (3,163)      (4,843)
                             -----------  -----------  -----------  -----------
Adjusted net income as if
  the fair-value
  method had been applied    $   67,440   $   33,844   $   95,389   $   56,457
                             ===========  ===========  ===========  ===========

Earnings per share:
  Basic:
    As reported              $     1.32   $     0.71   $     1.88   $     1.20
                             ===========  ===========  ===========  ===========
    Adjusted                 $     1.29   $     0.67   $     1.83   $     1.13
                             ===========  ===========  ===========  ===========
  Diluted:
    As reported              $     1.24   $     0.64   $     1.75   $     1.09
                             ===========  ===========  ===========  ===========
    Adjusted                 $     1.21   $     0.61   $     1.70   $     1.03
                             ===========  ===========  ===========  ===========


In December 2004, the FASB issued SFAS No. 123R, "Share-Based Payment"
("SFAS 123R"), a revision of SFAS 123 that supersedes APB 25 and its
related implementation guidance.  SFAS 123R eliminates the alternative
to use APB 25's intrinsic-value method of accounting that was provided
in SFAS 123 as originally issued, and requires companies to recognize
the cost of employee services received in exchange for awards of equity
instruments based on the grant-date fair value of those awards (with
limited exceptions) over the period during which an employee is required
to provide service in exchange for the award.

SFAS 123R also amends FASB Statement No. 95, "Statement of Cash Flows,"
to require that the benefits associated with the tax deductions in
excess of recognized compensation cost be reported as financing cash
flows, rather than as a reduction of taxes paid. This requirement will
reduce net operating cash flows and increase net financing cash flows in
periods after the effective date.

The effective date of SFAS 123R is as of the beginning of the first
interim or annual reporting period of the first fiscal year beginning on
or after June 15, 2005, which for CNF is the first quarter of 2006.  CNF
is currently assessing the transition method to adopt.  The impact of
adoption of SFAS 123R cannot be predicted at this time because it will
depend on levels of share-based awards granted in the future, as well as
the assumptions and the fair value model used to value the awards, and
the market value of CNF common stock.

Foreign Currency

Adjustments resulting from translating foreign functional currency
financial statements into U.S. dollars are included in the Accumulated
Other Comprehensive Loss in the Consolidated Balance Sheets.
Transaction gains and losses that arise from exchange rate fluctuations
on transactions denominated in a currency other than the local currency
are included in results of operations.

In the first quarter of 2004, CNF concluded that it would no longer
assume indefinite reinvestment of past and future earnings of MWF's
foreign subsidiaries.  Accordingly, CNF recorded a deferred tax asset of
$9.4 million to recognize the associated tax effect of MWF's accumulated
foreign currency translation adjustment.  The deferred tax asset was
recorded in Assets of Discontinued Operations in the Consolidated
Balance Sheets, as it relates to the discontinued Forwarding segment.
In the third quarter of 2004, the accumulated foreign currency
translation adjustment associated with the Forwarding segment was
included in CNF's third-quarter impairment charge, as more fully
discussed in Note 2, "Discontinued Operations."  CNF did not change its
assumptions regarding the repatriation of the foreign earnings of its
other subsidiaries.

Reclassification

Certain amounts in the prior-period financial statements have been
reclassified to conform to the current-period presentation.

2.  Discontinued Operations

Discontinued operations in the periods presented relate to the sale of
MWF and to EWA.  For the periods presented, the results of operations,
net assets, and cash flows of discontinued operations have been
segregated from continuing operations, except where otherwise noted.

As required by EITF 87-24, "Allocation of Interest to Discontinued
Operations," for periods prior to the disposition of MWF in 2004, continuing
operations has been allocated general corporate overhead charges that
were previously allocated to the discontinued Forwarding segment.  These
corporate overhead charges of $4.5 million and $8.2 million in the
second quarter and first half of 2004, respectively, were allocated from
discontinued operations to Con-Way Transportation Services ("Con-Way")
and Menlo Worldwide Logistics ("Logistics") based on segment revenue and
capital employed.

Results of discontinued operations are summarized below:

                                Three Months Ended         Six Months Ended
                                     June 30,                  June 30,
                             ------------------------  ------------------------
(Dollars in thousands)           2005        2004          2005          2004
                             -----------  -----------  -----------  -----------

Revenues                     $       --   $  520,700   $       --   $1,024,764

Income (Loss) from
  Discontinued Operations
    Income (Loss) before
      income taxes                   --        2,765           --       (2,180)
    Income tax (provision)
      benefit                        --       (1,079)          --          850
                             -----------  -----------  -----------  -----------
                             $       --   $    1,686   $       --   $   (1,330)
                             ===========  ===========  ===========  ===========

Gain (Loss) from Disposal,
  net of tax                 $    2,951   $       --   $   (6,825)  $       --
                             ===========  ===========  ===========  ===========


The assets and liabilities of discontinued operations, which are
presented in the Consolidated Balance Sheets under the captions "Assets
(or Liabilities) of Discontinued Operations," consisted of the
following:

                                                       June 30,    December 31,
(Dollars in thousands)                                   2005          2004
                                                     ------------  ------------

Assets
  Current assets                                     $     6,411   $     5,128
  Employee benefits and long-lived assets                 15,958        15,220
                                                     ------------  ------------
      Total Assets                                        22,369        20,348
                                                     ============  ============
Liabilities
  Accounts payable and accrued liabilities                24,814        33,243
  Other                                                      830         1,462
                                                     ------------  ------------
    Current Liabilities                                   25,644        34,705

  Long-term liabilities                                      729         6,862
                                                     ------------  ------------
       Total Liabilities                                  26,373        41,567
                                                     ------------  ------------

Net Liabilities                                      $     4,004   $    21,219
                                                     ============  ============


Menlo Worldwide Forwarding

Impairment Charge

On October 5, 2004, CNF and Menlo Worldwide, LLC ("MW") entered into a
stock purchase agreement with UPS to sell all of the issued and
outstanding capital stock of MWF.  CNF completed the sale on December
19, 2004, as more fully discussed below.  Although the stock purchase
agreement was entered into on October 5, 2004, decisions by CNF's
management and its Board of Directors and the third-quarter sale
negotiations with UPS established CNF's commitment to sell MWF as of
September 30, 2004.  In the process of evaluating several strategic
alternatives for Menlo Worldwide's Forwarding segment, CNF was
approached by UPS in the third quarter of 2004 with interest in
acquiring MWF.  Accordingly, in the third quarter of 2004, CNF
classified MWF as held for sale and recognized a $260.5 million
impairment charge to write down the recorded book value of MWF to its
anticipated selling price, less costs to sell.  The impairment charge
was based on the agreement to sell MWF, as described below, and
primarily represents the estimated write-down to the fair value of MWF's
goodwill and long-lived assets, including MWF's accumulated foreign
currency translation adjustment, as well as estimated selling costs.

Stock Purchase Agreement

The stock purchase agreement excludes certain assets and liabilities of
MWF and includes certain assets and liabilities of CNF or its
subsidiaries related to the business conducted by MWF.  Among the assets
and liabilities so excluded are those related to EWA, and the obligation
related to MWF employees covered under CNF's domestic pension,
postretirement medical and long-term disability plans.  Under the
agreement, UPS agreed to pay to CNF an amount equal to MWF's cash
position as of December 31, 2004, and to pay the estimated present value
of CNF's retained obligations related to MWF employees covered under
CNF's long-term disability and postretirement medical plans, as agreed
to by the parties or, in the absence of such agreement, as determined by
an independent actuary.   In addition, UPS assumed indebtedness
associated with the MWF business, including approximately $110 million
of debt owed by MWF in connection with the City of Dayton, Ohio, Special
Facilities Revenue Refunding Bonds, certain capital leases and other
debt, other letters of credit, and overdraft facilities.  Under the
stock purchase agreement, CNF has agreed to a three-year non-compete
covenant that, subject to certain exceptions, will limit CNF's annual
air freight and ocean forwarding and/or customs brokerage revenues to
$175 million through CNF's 2007 fiscal year.  CNF has also agreed to
indemnify UPS against certain losses that UPS may incur after the
closing of the sale with certain limitations.  Any losses related to
these indemnification obligations or any other costs, including any
future cash expenditures, related to the sale that have not been
estimated and recognized at this time will be recognized in future
periods as an additional loss from disposal when and if incurred.


Disposition of MWF and Forwarding Segment

Upon completion of the sale of MWF on December 19, 2004, CNF received
cash consideration of $150 million, subject to certain post-closing
adjustments, including adjustments for cash held by MWF at closing and
MWF's net working capital as of closing.  In connection with the sale,
CNF in 2004 recognized a fourth-quarter loss from disposal of $15.8
million (net of a $3.6 million tax benefit), as the adjusted carrying
value of MWF exceeded the cash consideration, including amounts received
at closing and expected to be received in the future.  Following
settlement of the MWF cash balance in March 2005, CNF received cash of
$29.4 million and recognized an additional first-quarter loss from
disposal of $9.8 million, primarily to recognize the difference between
the actual cash received and CNF's estimate of the cash position at
December 31, 2004, and to accrue additional estimated transaction costs.
In the second quarter of 2005, CNF recognized a $3.0 million net gain
due in part to the reversal of previously accrued income taxes
pertaining to EWA, which related to an IRS settlement of issues related
to tax years prior to 2002.

CNF recognized a tax benefit on its losses from the disposal of MWF,
which are treated as capital losses for tax purposes.  Under current tax
law, capital losses can only be used to offset capital gains.  CNF does
not currently forecast any significant capital gains in the tax carry-
forward period.  Based in part on the amount of capital gains actually
recognized for tax purposes, only $3.6 million of the cumulative
disposal-related tax benefit of $46.8 million was realizable, and as a
result, the remaining $43.2 million of the recognized tax benefit was
fully offset by a valuation allowance of an equal amount.

Excluded Assets and Liabilities

As described above, the stock purchase agreement excludes, and CNF has
retained, the obligations related to MWF employees covered under certain
CNF-sponsored employee benefit plans, including domestic pension,
postretirement and long-term disability plans that cover the
noncontractual employees and former employees of both continuing and
discontinued operations. These plans also include certain pension plans
that cover only the current and former employees of the discontinued
Forwarding segment (the "Forwarding Plans").  For financial reporting
purposes, the prepaid benefit cost of the Forwarding Plans is reported
in Assets of Discontinued Operations while the accrued benefit cost
related to MWF employees covered under the other legally separate CNF-
sponsored plans are reported in Employee Benefits of continuing
operations.  Under the stock purchase agreement, UPS agreed to pay to
CNF the estimated present value of CNF's retained obligations related to
MWF employees covered under CNF's long-term disability and
postretirement medical plans, as agreed to by the parties or, in the
absence of such agreement, as determined by an independent actuary.
Accordingly, CNF in December 2004 recorded in Other Accounts Receivable
a receivable for its estimate of the present value of these employee
benefit obligations.  As of June 30, 2005, UPS and CNF had not reached
agreement as to the amount to be paid by UPS for the employee benefit
obligations retained by CNF, and it is possible that the amount
ultimately paid will be based upon an estimate prepared by an
independent actuary.  CNF's estimate of the present value of these
employee benefit obligations is an actuarial determination that depends
upon a number of assumptions and factors.  If CNF's estimate is
different than the amount actually payable by UPS, that difference would
be recognized as a gain or loss from disposal when and if incurred.

EWA's restructuring reserves decreased to $25.1 million at June 30, 2005
from $33.8 million at December 31, 2004.  Restructuring reserves at June
30, 2005 were primarily reported in Liabilities of Discontinued
Operations and consisted primarily of CNF's estimated exposure related
to the labor matters described below, as well as other estimated
remaining restructuring-related obligations.

In connection with the cessation of its air carrier operations in 2001,
EWA terminated the employment of all of its pilots and crew members.
Those pilots and crew members are represented by the Air Line Pilots
Association ("ALPA") union under a collective bargaining agreement.
Subsequently, ALPA filed a grievance on behalf of the pilots and crew
members protesting the cessation of EWA's air carrier operations and
MWF's use of other air carriers.  The ALPA matters are the subject of
litigation in U.S. District Court and, depending on the outcome of that
litigation, may be subject to binding arbitration.  Based on CNF's
current evaluation, management believes that it has provided for its
estimated exposure related to the ALPA matters. However, there can be no
assurance in this regard as CNF cannot predict with certainty the
ultimate outcome of these matters.

3.  Reporting Segments

CNF discloses segment information in the manner in which the components
are organized for making operating decisions, assessing performance and
allocating resources.  For financial reporting purposes, CNF is divided
into three reporting segments: Con-Way Transportation Services ("Con-
Way"), Menlo Worldwide, and CNF Other.  Menlo Worldwide consists of the
operating results of Menlo Worldwide Logistics ("Logistics") and Vector
SCM, LLC ("Vector"), a joint venture with General Motors ("GM") that is
accounted for as an equity-method investment.    Certain corporate
activities and the results of Road Systems, a trailer manufacturer, are
reported in the CNF Other reporting segment.

In December of 2004, CNF sold MWF.  As a result, for the periods
presented, the results of operations, net assets, and cash flows of the
Forwarding segment have been segregated as discontinued operations and
excluded from the reporting segment financial data summarized below.
Prior to the reclassification, the combined operating results of MWF and
a portion of the operations of EWA were reported in continuing
operations as the Forwarding segment.  As more fully discussed in Note
2, "Discontinued Operations", for periods prior to the disposition of
MWF, continuing operations has been allocated certain corporate overhead
charges that were previously allocated to the discontinued Forwarding
segment. The additional corporate overhead charges allocated to Con-Way
and Logistics in the second quarter of 2004 were $3.9 million and $0.6
million, respectively, and in the first half of 2004, were $7.2 million
and $1.0 million, respectively.

In April 2005, Con-Way Logistics was integrated with Logistics. As a
result, for the periods presented, the operating results of Con-Way
Logistics have been reclassified to conform to the current-period
presentation.

Financial Data

Management evaluates segment performance primarily based on revenue and
operating income (loss), except for Vector, which is evaluated based on
MW's proportionate share of Vector's income before taxes.  Accordingly,
interest expense, investment income and other non-operating items are
not reported in segment results.  Corporate expenses are generally
allocated based on measurable services provided to each segment or, for
general corporate expenses, based on segment revenue and capital
employed.  Inter-segment revenue and related operating income have been
eliminated to reconcile to consolidated revenue and operating income.

(Dollars in thousands)          Three Months Ended        Six Months Ended
                                     June 30,                 June 30,
                             ------------------------  ------------------------
                                2005         2004         2005          2004
                             -----------  -----------  -----------  -----------
External Revenues
   Con-Way Transportation
     Services                $  713,939   $  640,861   $1,354,264   $1,219,341
   Menlo Worldwide
     Logistics                  317,036      282,569      618,985      550,755
   CNF Other                      2,900          952        8,309        1,206
                             -----------  -----------  -----------  -----------
                             $1,033,875   $  924,382   $1,981,558   $1,771,302
                             ===========  ===========  ===========  ===========

Intersegment Revenue
  Con-Way Transportation
    Services                 $   16,238   $   12,125   $   31,922   $   23,201
  Menlo Worldwide
    Logistics                        --           62           --          203
                                                   -
  CNF Other                      11,358        6,564       20,959       12,664
                             -----------  -----------  -----------  -----------
                             $   27,596   $   18,751   $   52,881   $   36,068
                             ===========  ===========  ===========  ===========

Total  Revenues before
  Intersegment Eliminations
    Con-Way Transportation
      Services               $  730,177   $  652,986   $1,386,186   $1,242,542
    Menlo Worldwide
      Logistics                 317,036      282,631      618,985      550,958
    CNF Other                    14,258        7,516       29,268       13,870
       Intersegment Revenue
         Eliminations           (27,596)     (18,751)     (52,881)     (36,068)
                             -----------  -----------  -----------  -----------
                             $1,033,875   $  924,382   $1,981,558   $1,771,302
                             ===========  ===========  ===========  ===========



Operating Income (Loss)

  Con-Way Transportation
    Services                 $   95,329   $   63,859   $  158,885   $  112,790
  Menlo Worldwide
    Logistics                     5,634        5,358       10,664       10,335
    Vector                        4,941        2,988        8,976        5,380
                             -----------  -----------  -----------  -----------
                                 10,575        8,346       19,640       15,715
                             -----------  -----------  -----------  -----------
 CNF Other                         (822)        (926)        (187)      (1,778)
                             -----------  -----------  -----------  -----------
                                105,082       71,279      178,338      126,727
                             -----------  -----------  -----------  -----------
Reconciliation of segments
  to consolidated amount:
    Income tax related to
     Vector, an
     equity-method
     investment (Note 4)         (1,522)          --       (1,522)          --
                             -----------  -----------  -----------  -----------
                             $  103,560   $   71,279   $  176,816   $  126,727
                             ===========  ===========  ===========  ===========


4.   Investment in Unconsolidated Joint Venture

Vector is a joint venture formed with GM in December 2000 for the
purpose of providing logistics management services on a global basis for
GM, and ultimately for customers in addition to GM.  Although Menlo
Worldwide, LLC ("MW") owns a majority interest in Vector, MW's portion
of Vector's operating results are reported in the Menlo Worldwide
reporting segment as an equity-method investment based on GM's ability
to control certain operating decisions.  Vector is organized as a
limited liability company that has elected to be taxed as a partnership.
In the United States, the joint venture partners are responsible for
income taxes applicable to their share of Vector's U.S. federal taxable
income.  Accordingly, MW's portion of U.S federal income taxes on
Vector's domestic income is reported in CNF's tax provision.  In foreign
tax jurisdictions, Vector is responsible for income taxes on its foreign
income rather than the joint venture partners.  In accordance with GAAP,
MW's portion of Vector's income taxes on its foreign income is reported
in operating income as a component of equity-method income rather than
in CNF's tax provision.  MW's portion of Vector's net income, which is
reported as a reduction of operating expenses in the accompanying
Statements of Consolidated Income, does not include any provision for
U.S. federal income taxes on income that will be incurred by CNF, but
does include a $1.5 million provision for MW's portion of Vector's
income taxes on foreign income.  MW's undistributed earnings from Vector
at June 30, 2005 and December 31, 2004, before provision for CNF's
related parent income taxes, were $34.6 million and $27.2 million,
respectively.

Vector participates in CNF's centralized cash management system, and,
consequently, Vector's domestic trade accounts payable are paid by CNF
and settled through Vector's affiliate accounts with CNF.  In addition,
excess cash balances in Vector's bank accounts, if any, are invested by
CNF and settled through affiliate accounts, which earn interest income
based on a rate earned by CNF's cash-equivalent investments and
marketable securities.  As a result of Vector's excess cash invested by
CNF, Vector's affiliate receivable from CNF as of June 30, 2005 and
December 31, 2004 was $34.6 million and $15.5 million, respectively.

As required by the Vector Agreements, CNF provides Vector with a $20
million line of credit for Vector's working capital and capital
expenditure requirements.  Under the credit facility, which matures on
December 13, 2005, Vector may obtain loans with an annual interest rate
based on the rate CNF pays under its $400 million revolving credit
facility.  At June 30, 2005, CNF provided a portion of its $20 million
credit commitment to Vector through CNF's guarantee of $2.5 million of
uncommitted local currency overdraft facilities available to Vector by
international banks.  At June 30, 2005 and December 31, 2004, there was
no balance outstanding under Vector's uncommitted local currency
overdraft facilities and no borrowings were directly payable to CNF.

CNF's capital transactions with Vector, including cash advances to and
from Vector under CNF's centralized cash management system and credit
facility described above, are reported as adjustments to MW's investment
in Vector in Deferred Charges and Other Assets in CNF's Consolidated
Balance Sheets.


5.  Employee Benefit Plans

Employees of CNF and its subsidiaries in the U.S. are covered under the
CNF Postretirement Medical Plan (the "Postretirement Plan") and several
defined benefit pension plans (the "Pension Plans").  The Pension Plans
consist of a plan that covers the non-contractual employees and former
employees of CNF's continuing and discontinued operations (the "CNF
Retirement Plan"), as well as certain pension plans that cover only the
current and former employees of the discontinued Forwarding segment (the
"Forwarding Plans").  As more fully discussed in Note 2, "Discontinued
Operations," CNF completed the sale of MWF in December 2004.
Accordingly, amounts related to the legally separate Forwarding Plans
are not included in the employee benefit disclosures below and are
reported as discontinued operations.  As a result, the employee benefit
plan interim disclosures presented below are provided only for the CNF
Retirement Plan and the Postretirement Plan (collectively "the CNF
Benefit Plans").  Based on CNF's intention to retain the CNF Benefit
Plans following the sale of MWF, the obligation related to employees of
MWF and EWA covered by these plans is included in Employee Benefits of
continuing operations in CNF's Consolidated Balance Sheets at June 30,
2005 and December 31, 2004.

The following table summarizes the components of net periodic benefit
expense for the CNF Retirement Plan:


                                 Three Months Ended       Six Months Ended
                                      June 30,                 June 30,
                             ------------------------  ------------------------
(Dollars in thousands)          2005          2004         2005         2004
                             -----------  -----------  -----------  -----------

Service cost - benefits
  earned during the quarter  $   12,120   $   12,083   $   24,004   $   27,474
Interest cost on benefit
  obligation                     12,924       12,445       25,788       28,297
Expected return on plan
  assets                        (14,122)     (12,227)     (28,726)     (27,802)
Net amortization and
  deferral                        1,173        1,677        1,734        3,814
                             -----------  -----------  -----------  -----------
    Net periodic benefit
      expense                $   12,095   $   13,978   $   22,800   $   31,783
                             ===========  ===========  ===========  ===========


In the presentation above, the portion of benefit expense that relates
to discontinued operations was immaterial in the second quarter and
first half of 2005 and was $1.9 million and $7.2 million for the second
quarter and first half of 2004, respectively.

CNF currently estimates that it will contribute $75 million to its
Pension Plans in 2005, including $55.0 million already contributed
through July 2005.

The following table summarizes the components of net periodic benefit
expense for the Postretirement Plan:

                                 Three Months Ended       Six Months Ended
                                      June 30,                 June 30,
                             ------------------------  ------------------------
(Dollars in thousands)          2005          2004         2005         2004
                             -----------  -----------  -----------  -----------

Service cost - benefits
  earned during the quarter  $      121   $      550   $      262   $    1,037
Interest cost on benefit
  obligation                        535        1,666        1,098        3,143
Net amortization and
  deferral                          347           79          377          149
                             -----------  -----------  -----------  -----------
    Net periodic benefit
      expense                $    1,003   $    2,295   $    1,737   $    4,329
                             ===========  ===========  ===========  ===========


In the presentation above, the portion of benefit expense that relates
to discontinued operations was immaterial in the second quarter and
first half of 2005 and was $1.8 million and $2.8 million in the second
quarter and first half of 2004, respectively.

6.  Comprehensive Income

Comprehensive income, which is a measure of all changes in equity except
those resulting from investments by owners and distributions to owners,
was as follows:

(Dollars in thousands)          Three Months Ended        Six Months Ended
                                    June 30,                  June 30,
                             ------------------------  ------------------------
                                2005         2004          2005         2004
                             -----------  -----------  -----------  -----------
Net income                   $   71,107   $   37,505   $  102,182   $   63,934

Other comprehensive income
 (loss):
   Unrealized loss on
     marketable securities           --       (1,833)          --       (2,044)
   Foreign currency
     translation adjustment
     (Note 1)                       223       (1,741)         611        8,118
                             -----------  -----------  -----------  -----------
                                    223       (3,574)         611        6,074
                             -----------  -----------  -----------  -----------
Comprehensive income         $   71,330   $   33,931   $  102,793   $   70,008
                             ===========  ===========  ===========  ===========

The following is a summary of the components of Accumulated Other
Comprehensive Loss, net of tax:

                                        June 30,     December 31,
(Dollars in thousands)                    2005           2004
                                       ------------  ------------
Accumulated foreign
  currency translation
  adjustments (Note 1)                 $      (445)  $    (1,056)
Minimum pension liability
  adjustment                               (14,680)      (14,680)
                                       ------------  ------------
    Accumulated other
      comprehensive loss               $   (15,125)  $   (15,736)
                                       ============  ============



7.  Common Stock Repurchase Program

In January 2005, CNF's Board of Directors authorized a two-year stock
repurchase program providing for the repurchase of up to $300 million in
common stock in open market purchases and privately negotiated
transactions.  As of June 30, 2005, CNF repurchased a total of 1,655,500
shares at a cost of $74.6 million.  CNF generally expects the remaining
purchases to be made ratably throughout the remainder of the program.


8.  Commitments and Contingencies

Purchase Commitments

At June 30, 2005, Con-Way was obligated under purchase commitments to
acquire $24.0 million of revenue equipment for delivery in 2005.

Spin-Off of CFC

On December 2, 1996, CNF completed the spin-off of Consolidated
Freightways Corporation ("CFC") to CNF's shareholders.  CFC was, at the
time of the spin-off, a party to certain multiemployer pension plans
covering some of its current and former employees.  The cessation of its
U.S. operations in 2002 resulted in CFC's "complete withdrawal" (within
the meaning of applicable federal law) from these multiemployer plans,
at which point it became obligated, under federal law, to pay its share
of any unfunded vested benefits under those plans.

It is possible that the trustees of CFC's multiemployer pension plans
may assert claims that CNF is liable for amounts owing to the plans as a
result of CFC's withdrawal from those plans and, if so, there can be no
assurance that those claims would not be material.  CNF has received
requests for information regarding the spin-off of CFC from
representatives from some of the pension funds, and, in accordance with
federal law, CNF has responded to those requests.

CNF believes that it would ultimately prevail if any such claims were
made, although there can be no assurance in this regard.  CNF believes
that the amount of those claims, if asserted, could be material, and a
judgment against CNF for all or a significant part of these claims could
have a material adverse effect on CNF's financial condition, cash flow
and results of operations.

Prior to the enactment in April 2004 of the Pension Funding Equity Act
of 2004, if the multiemployer funds had asserted such claims against
CNF, CNF would have had a statutory obligation to make cash payments to
the funds prior to any arbitral or judicial decisions on the funds'
determinations.  Under the facts related to the CFC withdrawals and the
law in effect after enactment of the Pension Funding Equity Act of 2004,
CNF would no longer be required to make such payments to the
multiemployer funds unless and until final decisions in arbitration
proceedings, or in court, upheld the funds' determinations.

As a result of the matters discussed above, CNF can provide no assurance
that matters relating to the spin-off of CFC will not have a material
adverse effect on CNF's financial condition, cash flows or results of
operations.

Other

In February 2002, a lawsuit was filed against EWA in the District Court
for the Southern District of Ohio, alleging violations of the Worker
Adjustment and Retraining Notification Act (the "WARN Act") in
connection with  employee layoffs and ultimate terminations due to the
August 2001 grounding of EWA's airline operations and  the shutdown of
the airline operations in December 2001.  The court subsequently
certified the lawsuit as a class action on behalf of affected employees
laid off between August 11 and August 15, 2001.  The WARN Act generally
requires employers to give 60-days notice, or 60-days pay and benefits
in lieu of notice, of any shutdown of operations or mass layoff at a
site of employment.  The estimated range for potential loss on this
matter is zero to approximately $8 million.  CNF intends to continue to
vigorously defend the lawsuit.

In September 2003, CNF received notice from the United States Attorney's
Office for the District of Columbia that EWA is being considered for possible
civil action under the False Claims Act for allegedly submitting false
invoices to the U.S. Postal Service ("USPS") for payment under the Priority
Mail contract.  EWA subsequently entered into a tolling agreement with the
government in order to give the parties more time to investigate the
allegations.  In November 2004, CNF representatives met with the government
to discuss the government's allegations, and at that time received certain
information relating to the government's investigation.  In addition, CNF, on
behalf of EWA, conducted its own investigation into the allegations.  CNF is
currently unable to predict the outcome of this matter.  Under the False
Claims Act, the government would be entitled to recover treble damages, plus
penalties, if a court were to ultimately conclude that EWA knowingly
submitted false invoices to the USPS.

CNF is a defendant in various other lawsuits incidental to its
businesses.  It is the opinion of management that the ultimate outcome
of these actions will not have a material impact on CNF's financial
condition, cash flows, or results of operations.

9.  Income Taxes

CNF's effective tax provision rate of 30.0% and 33.2% in the second
quarter and first half of 2005, respectively, declined from 39.0% in the
same periods of last year, due primarily to a $7.0 million second-
quarter reversal in 2005 of previously accrued income taxes that related
to an IRS settlement of issues related to tax years prior to 2002.
Excluding the effect of the second-quarter reversal of accrued taxes,
the effective tax provision rate in the second quarter and first half of
2005 was 37.2% and 37.7%, respectively, compared to 39.0% in the same
periods of last year.  The lower effective tax rates in 2005 were also
due to an increase in tax-exempt interest income and the effect of the
GAAP classification of income taxes on Vector's increasing foreign
income.  As more fully discussed in Note 4, "Investment in
Unconsolidated Joint Venture," of Item 1, "Financial Statements," MW's
portion of U.S. federal income taxes on Vector's domestic income is
reported in CNF's tax provision.  However, under GAAP, MW's portion of
Vector's income taxes on its foreign income is reported in operating
income as a component of equity-method income and is not a component of
CNF's tax provision.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

                              Introduction

Management's Discussion and Analysis of Financial Condition and Results
of Operations (referred to as "Management's Discussion and Analysis") is
intended to assist in a historical and prospective understanding of
CNF's results of operations, financial condition and cash flows,
including a discussion and analysis of the following:

     *  Overview of Business
     *  Results of Operations
     *  Liquidity and Capital Resources
     *  Estimates and Critical Accounting Policies
     *  Other Matters

This discussion and analysis should be read in conjunction with the
information included in CNF's 2004 Annual Report on Form 10-K.

                          Overview of Business

CNF provides transportation, logistics and supply chain management
services for a wide range of manufacturing, industrial, and retail
customers.  For financial reporting purposes, CNF is divided into three
reporting segments: Con-Way Transportation Services ("Con-Way"),
primarily a provider of regional less-than-truckload ("LTL") freight
services; Menlo Worldwide, a provider of integrated contract logistics
solutions; and CNF Other, which includes certain corporate activities
and Road Systems, a trailer manufacturer.  Menlo Worldwide consists of
the operating results of Menlo Worldwide Logistics ("Logistics") and
Vector, a joint venture with GM that is accounted for as an equity-
method investment.

CNF's operating unit results are generally expected to depend on the
number and weight of shipments transported, the prices received on those
shipments, and the mix of services provided to customers, as well as the
fixed and variable costs incurred by CNF in providing the services and
the ability to manage those costs under changing shipment levels. Con-
Way primarily transports shipments through a freight service center
network while Logistics and Vector manage the logistics functions of
their customers and primarily utilize third-party transportation
providers for the movement of customer shipments.

As more fully discussed under "Results of Operations - Discontinued
Operations," CNF and Menlo Worldwide, LLC ("MW") in 2004 sold Menlo
Worldwide Forwarding ("MWF") to UPS.   Accordingly, the results of
operations, net assets, and cash flows of the Menlo Worldwide Forwarding
("Forwarding") segment have been segregated and reported as discontinued
operations.

                          Results of Operations

The following table compares CNF's consolidated operating results
(dollars in thousands, except per share amounts):

                                Three Months Ended       Six Months Ended
                                      June 30,                June 30,
                            ------------------------- ------------------------
                                 2005         2004        2005         2004
                            ------------ ------------ ------------ -----------

Net Income (Loss)
 Continuing
  Operations (1),(2)        $    66,120  $    33,797  $   104,982  $   61,220
 Discontinued
  Operations (2)                  2,951        1,686       (6,825)     (1,330)
                            ------------ ------------ ------------ -----------
 Available to Common
  Shareholders              $    69,071  $    35,483  $    98,157  $   59,890
                            ============ ============ ============ ===========

Diluted Earnings (Loss)
 per Share
  Continuing Operations     $      1.19  $      0.61  $      1.87  $     1.11
  Discontinued Operations          0.05         0.03        (0.12)      (0.02)
                            ------------ ------------ ------------ -----------
  Available to Common
   Shareholders             $      1.24  $      0.64  $      1.75  $     1.09
                            ============ ============ ============ ===========

1    After preferred stock dividends

2    As required by EITF 87-24, "Allocation of Interest to Discontinued
Operations," for periods prior to the disposition of MWF in 2004,
continuing operations has been allocated general corporate overhead
charges that were previously allocated to the discontinued Forwarding
segment.  These corporate overhead charges of $4.5 million in the second
quarter and $8.2 million in the first half of 2004 were allocated from
discontinued operations to Con-Way and Logistics based on segment
revenue and capital employed.

CNF's second-quarter net income available to common shareholders
increased 94.7% from the same period last year to $69.1 million ($1.24
per diluted share), as net income from continuing operations rose 95.6%
to $66.1 million ($1.19 per diluted share). In the first half of the
year, net income available to common shareholders grew 63.9% to $98.2
million ($1.75 per diluted share), as net income from continuing
operations rose 71.5% to $105.0 million ($1.87 per diluted share).
First-half net income from continuing operations in 2005 was offset by a
$6.8 million net loss ($0.12 per diluted share) from discontinued
operations, which reflects a $9.8 million first-quarter loss related to
the disposition of MWF and a $3.0 million second-quarter gain ($0.05 per
diluted share) due in part to the reversal of accrued taxes pertaining to EWA.

Continuing Operations

The following table compares CNF's segment operating results (dollars in
thousands):

(Dollars in thousands)         Three Months Ended       Six Months Ended
                                     June 30,                June 30,
                           ------------------------- -------------------------
                                 2005        2004         2005        2004
                           ------------ ------------ ------------ ------------
Revenues
 Con-Way Transportation
  Services                 $   713,939  $   640,861  $ 1,354,264  $ 1,219,341
 Menlo Worldwide
  Logistics                    317,036      282,569      618,985      550,755
 CNF Other                       2,900          952        8,309        1,206
                           ------------ ------------ ------------ ------------
                           $ 1,033,875  $   924,382  $ 1,981,558  $ 1,771,302
                           ============ ============ ============ ============


Operating Income(Loss)
 Con-Way Transportation
  Services                 $    95,329  $    63,859  $   158,885  $   112,790
 Menlo Worldwide
    Logistics                    5,634        5,358       10,664       10,335
    Vector                       4,941        2,988        8,976        5,380
                           ------------ ------------ ------------ ------------
                                10,575        8,346       19,640       15,715
                           ------------ ------------ ------------ ------------
 CNF Other                        (822)        (926)        (187)      (1,778)
                           ------------ ------------ ------------ ------------
                               105,082       71,279      178,338      126,727
                           ------------ ------------ ------------ ------------
Reconciliation of segments
 to consolidated amount:
  Income tax related
   to Vector, an
   equity-method
   investment (Note 4)          (1,522)          --       (1,522)          --
                           ------------ ------------ ------------ ------------
                           $   103,560  $    71,279  $   176,816  $   126,727
                           ============ ============ ============ ============

CNF's revenue for the second quarter and first half of 2005 increased
11.8% and 11.9%, respectively, from the same periods last year, with
higher revenue at all reporting segments.  Consolidated operating income
in 2005 rose 45.3% in the second quarter and grew 39.5% in the first
half of the year on significantly higher operating income from Con-Way
and improved operating results from Menlo Worldwide.  Con-Way's second-
quarter and first-half operating income in 2005 increased 49.3% and
40.9%, respectively, due largely to revenue growth of 11.4% and 11.1%,
respectively, and improved regional-carrier operating margins. Con-Way's
revenue increases in 2005 reflect regional-carrier tonnage growth and
yield improvement on increased fuel surcharges.  Improved operating
margins at Con-Way primarily reflect a decline in employee costs as a
percentage of revenue, due largely to lower incentive compensation that
resulted from variations in operating income and other performance
factors relative to plan.  Menlo Worldwide's operating income in the
second quarter and first half of 2005 increased 26.7% and 25.0%,
respectively, due primarily to an increase in income from Vector's
foreign operations.  Reported segment income from Vector increased 65.4%
to $4.9 million in the second quarter of 2005 and grew 66.8% to $9.0
million in the first half of 2005.  Logistics' operating income in the
second quarter and first half of 2005 increased 5.2% and 3.2%,
respectively, on revenue growth of 12.2% and 12.4%, respectively.

Other net expense decreased $6.4 million in the second quarter of 2005
and $6.1 million in the first half of 2005 due primarily to increases in
investment income, which rose $4.1 million and $8.0 million,
respectively, on increased average cash equivalents and marketable
securities.  Interest expense in the second quarter of 2005 decreased
$0.3 million and increased in the first half of 2005 by $2.8 million,
due largely to the net effect on interest from financing transactions,
including the $292.6 million net issuance in April 2004 of 6.7% Senior
Debentures, the $128.9 million redemption in June 2004 of 5% Convertible
Debentures, and the $100.0 million repayment in June 2005 of 7.35%
Notes.  In 2005, second-quarter and first-half net decreases in other
miscellaneous non-operating expenses reflect $2.7 million of costs in
2004 associated with the redemption of the Convertible Debentures.

CNF's effective tax provision rate of 30.0% and 33.2% in the second
quarter and first half of 2005, respectively, declined from 39.0% in the
same periods of last year, due primarily to a $7.0 million second-
quarter reversal in 2005 of previously accrued income taxes that related
to an IRS settlement of issues related to tax years prior to 2002.
Excluding the effect of the second-quarter reversal of accrued taxes,
the effective tax provision rate in the second quarter and first half of
2005 was 37.2% and 37.7%, respectively, compared to 39.0% in the same
periods of last year.  The lower effective tax rates in 2005 were also
due to an increase in tax-exempt interest income and the effect of the
GAAP classification of income taxes on Vector's increasing foreign
income.  As more fully discussed in Note 4, "Investment in
Unconsolidated Joint Venture," of Item 1, "Financial Statements," MW's
portion of U.S. federal income taxes on Vector's domestic income is
reported in CNF's tax provision.  However, under GAAP, MW's portion of
Vector's income taxes on its foreign income is reported in operating
income as a component of equity-method income and is not a component of
CNF's tax provision.

Con-Way Transportation Services

The following table compares operating results (dollars in thousands),
operating margins, and the percentage increase in selected operating
statistics of the Con-Way reporting segment:

                               Three Months Ended       Six Months Ended
                                     June 30,                 June 30,
                           ------------------------- -------------------------
                                 2005        2004         2005        2004
                           ------------ ------------ ------------ ------------
Summary of Operating
 Results
  Revenues                 $   713,939  $   640,861  $ 1,354,264  $ 1,219,341
  Operating Income              95,329       63,859      158,885      112,790
  Operating Margin                13.4%        10.0%        11.7%         9.3%

                            2005 vs.2004              2005 vs.2004
                           --------------            --------------
Selected Regional-Carrier
 Operating Statistics
  Revenue per day                 +11.7%                    +11.7%
  Yield                            +6.1                      +5.4
  Weight per day                   +5.3                      +5.9
  Weight per shipment              +2.0                      +3.0

Con-Way's revenue in the second quarter and first half of 2005 rose
11.4% and 11.1%, respectively, from the same periods in 2004 due to
higher revenue from Con-Way's regional carriers and continued growth
from the Con-Way Supply Chain Group, which includes Con-Way NOW, Con-Way
Air Express, and Con-Way Truckload.  Revenue per day from the regional
carriers in the second quarter of 2005 rose 11.7% from the second
quarter of 2004 on a 5.3% increase in weight per day ("weight") and a
6.1% increase in revenue per hundredweight ("yield").  For the first
half of 2005, revenue per day from the regional carriers rose 11.7% from
the same period last year on a 5.9% increase in weight and a 5.4%
increase in yield.  Management believes a portion of the weight
improvement in 2005 was from market-share gains.  Yield increases in the
second quarter and first half of 2005 primarily reflect an increase in
fuel surcharges.  Excluding fuel surcharges, yields in 2005 increased
1.8% and 1.3% from the second quarter and first half of 2004,
respectively. Yields in 2005 also benefited from continued growth in
higher-rated interregional joint services and general rate increases in
June 2004 and April 2005.  Yields in 2005 were adversely affected by
2.0% and 3.0% increases in weight per shipment in the second quarter and
first half of 2005, respectively, which were largely driven by a spot-
quote program that contributed to an increase in the number of shipments
in excess of 10,000 pounds.  Rates generally decline when weight per
shipment increases, as freight with a higher weight per shipment
generally has a lower transportation cost per unit of weight.

Con-Way's second-quarter and first-half operating income in 2005
increased 49.3% and 40.9%, respectively, due largely to higher revenue
and improved operating margins from the regional carriers.  Fuel costs
in the second quarter and first half of 2005 increased 59.7% and 56.0%,
respectively, and purchased transportation costs in the same comparative
periods increased 11.7% and 15.7%, respectively.  However, fuel costs
and the effect of fuel-related increases in purchased transportation
costs were recovered through the fuel surcharges discussed above.
Second-quarter and first-half employee costs in 2005 increased 4.1% and
4.5%, respectively, but declined as a percent of revenue.  Employee
costs in 2005 reflect increases in base compensation and employee
benefits, partially offset by lower incentive compensation.  Base
compensation in the second quarter and first half of 2005 rose 8.8% and
8.3%, respectively, due primarily to headcount increases attributable to
higher business volumes, and to a lesser extent, wage and salary rate
increases.  Second-quarter and first-half incentive compensation in 2005
declined by $10.3 million and $11.9 million, respectively, based on
variations in operating income and other performance measures relative
to plan.  Employee benefits expense increased 4.2% and 2.5% in the
second quarter and first half of 2005, respectively, due largely to
growth in headcount.


Menlo Worldwide

The Menlo Worldwide reporting segment consists of the operating results
of Logistics and Vector.  Menlo Worldwide in 2005 reported second-
quarter operating income of $10.6 million, an increase of 26.7% over
last year.  In the first half of 2005, segment income was $19.6 million,
a 25.0% improvement over the same prior-year period.  Although MW owns a
majority equity interest, the operating results of Vector are reported
as an equity-method investment based on GM's ability to control certain
operating decisions.  Accordingly, CNF's Consolidated Statements of
Income do not include any revenue from Vector and only MW's
proportionate share of the net income from Vector is reported as a
reduction of operating expenses.


The following table compares operating results (dollars in thousands)
and operating margins of the Menlo Worldwide reporting segment:

                               Three Months Ended       Six Months Ended
                                     June 30,                 June 30,
                           ------------------------- -------------------------
                                 2005        2004         2005        2004
                           ------------ ------------ ------------ ------------
Summary of Operating
 Results

Logistics
  Revenues                 $   317,036  $   282,569  $   618,985  $   550,755
  Purchased Transportation    (226,013)    (199,064)    (438,896)    (385,682)
                           ------------ ------------ ------------ ------------
  Net Revenues                  91,023       83,505      180,089      165,073


  Operating Income               5,634        5,358       10,664       10,335
  Operating Margin
   on Revenue                      1.8%         1.9%         1.7%         1.9%
  Operating Margin on
   Net Revenue                     6.2%         6.4%         5.9%         6.3%

Vector
  Operating Income          $    4,941  $     2,988  $     8,976  $     5,380




Menlo Worldwide - Logistics

Logistics' revenue in the second quarter and first half of 2005
increased 12.2% and 12.4%, respectively, due to increases in revenue
from carrier-management and warehouse-management services.  In 2005,
revenue from carrier-management services in the second quarter and first
half grew 13.6% and 12.5%, respectively, while revenue from warehouse-
management services rose 10.8% and 14.3%, respectively.  Carrier-
management revenue is attributable to contracts for which Logistics
manages the transportation of freight but subcontracts the actual
transportation and delivery of products to third parties, which
Logistics refers to as purchased transportation.  Logistics' net revenue
(revenue less purchased transportation) in the second quarter and first
half of 2005 increased 9.0% and 9.1%, respectively, as purchased
transportation costs grew at a higher rate than revenue.

Logistics' operating income in the second quarter and first half of 2005
increased 5.2% and 3.2%, respectively, over the same periods of last
year, as revenue growth was partially offset by margin declines, which
were due primarily to higher purchased transportation costs on increased
carrier-management services and, to a lesser degree, lower customer
shipment volumes on certain transaction-based warehouse-management
contracts.  In 2005, second-quarter and first-half purchased
transportation costs grew 13.5% and 13.8%, respectively.  The effect of
fuel-related increases in purchased transportation costs were largely
recovered through customer pricing.  Margins in the second quarter and
first half of 2005 were also adversely affected by higher administrative
costs, which were due in part to executive termination benefits and
expansion in international markets, partially offset by cost reductions
from the integration of Con-Way Logistics, as described below.

Beginning in the second quarter of 2005, Logistics integrated the Con-
Way Logistics business into its operations.  Accordingly, the operating
results of Con-Way Logistics are reported in the Menlo Worldwide
Logistics' reporting segment and prior periods have been reclassified to
conform to the current-period presentation.  The integration of the two
businesses is intended to provide an enterprise solution offering for
Logistics' customers who want to use Con-Way as a primary transportation
provider in addition to those customers who want a vendor-neutral
transportation solution.  The integration is also expected to expand Con-
Way Logistics' multi-client warehousing service to Logistics' larger
warehouse network.

Menlo Worldwide - Vector

Operating Results

Second-quarter segment income reported from MW's equity investment in
Vector increased to $4.9 million in 2005 from $3.0 million in 2004, and
for the six-month period, improved to $9.0 million in 2005 from $5.4
million last year.  Higher reported segment income from Vector was due
primarily to higher income earned in GM's international regions,
partially offset by a decline in income from GM's North America region.
Improved income in GM's international regions was substantially due to
increased business levels and the revised compensation principles in
GM's European region, as described below.

North America

In August 2003, the Vector Agreements were amended, primarily to
expedite the transition of logistics services in the North America
region from GM to Vector, as more fully discussed in Note 3, "Investment
in Unconsolidated Joint Venture," of Item 8, "Financial Statements and
Supplementary Data," in CNF's 2004 Annual Report on Form 10-K.  Prior to
the 2003 amendment, agreements pertaining to Vector provided that Vector
would be compensated by sharing in efficiency gains and cost savings
achieved through the implementation of Approved Business Cases ("ABCs")
and other special projects in GM's North America region and GM's three
international regions.  An ABC is a project, developed with and approved
by GM, aimed at reducing costs, assuming operational responsibilities,
and/or achieving operational changes.

Under the amended Vector Agreements, Vector is compensated for its
management of logistics for all of GM's North America operations rather
than through its sharing in efficiency gains and cost savings under
individual ABCs.  In each year of a five-year period retroactive to
January 1, 2003, Vector will be compensated with a management fee based
on shipment volumes ("volume-based compensation") and, beginning in
2004, can earn additional compensation if certain performance criteria
are achieved ("performance-based compensation").  In accordance with
GAAP, compensation under the volume-based management fee is recognized
as vehicles are shipped while performance-based compensation is
recognized on the achievement of specified levels of cost savings, which
will generally not be determinable until the fourth quarter of each
contract year.  Vector will also be compensated by GM for its direct and
administrative costs in North America, subject to certain limitations.
For other special projects in GM's North America region, Vector is
compensated under ABCs.  CNF expects a declining amount of volume-based
compensation in each successive year covered under the amended Vector
agreements for North America.  CNF does not currently expect to earn
performance-based compensation in 2005, except for special projects
compensated under ABCs, based primarily on current-year increases in
fuel and other transportation costs that CNF believes will prevent the
attainment of performance criteria in 2005.

International

Compensation earned from GM's European region in the second quarter and
first half of 2005 increased $2.2 million and $4.8 million,
respectively, from the same periods last year, due primarily to
increased business levels and an amendment to ABCs for GM's European
region.  Effective January 1, 2005, for the 2005 calendar year, all of
the ABCs for GM's European region were amended to compensate Vector with
cost reimbursement and a management fee based on vehicle production
volumes, rather than through separately approved ABCs.  After 2005,
Vector's compensation for GM's European region will again be based on
separately approved ABCs, unless further amendments are negotiated.  The
compensation principles for GM's Latin America and Asia/Pacific regions
are unaffected by the 2005 amendments in the European region.

Call Right and Put Right

Under the Vector Agreements, GM has the right to purchase MW's
membership interest in Vector ("Call Right") and MW has the right to
require GM to purchase MW's membership interest in Vector ("Put Right").
The Call Right and Put Right are exercisable at the sole discretion of
GM and MW, respectively.  Under the amended Vector Agreements, the
amount payable by GM to MW under the Put Right is based on a mutually
agreed-upon estimated value for MW's membership interest as of the
contract amendment date and will decline on a straight-line basis over
an 8-year period beginning January 1, 2004.  Exercise of MW's Put Right
or GM's Call Right would result in MW retaining any commercialization
contracts involving customers other than GM.



CNF Other Segment

The CNF Other segment consists of the results of Road Systems and
certain corporate activities.  A majority of the revenue from Road
Systems was from sales to Con-Way.  The CNF Other second-quarter
operating loss decreased to $0.8 million in 2005 from $0.9 million in
2004, while the $0.2 million operating loss in the first half of 2005
decreased from $1.8 million in 2004.  The first half of 2005 primarily
reflects a $1.4 million first-quarter gain from corporate insurance
activities, while the same period of last year included a $1.5 million
operating loss from sales of corporate properties.

Discontinued Operations

Discontinued operations in the periods presented relate to the sale of
MWF and to EWA.  For the periods presented, the results of operations,
net assets, and cash flows of discontinued operations have been
segregated from continuing operations, except where otherwise noted.
The operating results and net assets of discontinued operations are
summarized in Note 2, "Discontinued Operations," of Item 1, "Financial
Statements."

Menlo Worldwide Forwarding

Impairment Charge

On October 5, 2004, CNF and MW entered into a stock purchase agreement
with UPS to sell all of the issued and outstanding capital stock of MWF.
CNF completed the sale on December 19, 2004, as more fully discussed
below.  Although the stock purchase agreement was entered into on
October 5, 2004, decisions by CNF's management and its Board of
Directors and the third-quarter sale negotiations with UPS established
CNF's commitment to sell MWF as of September 30, 2004.  In the process
of evaluating several strategic alternatives for Menlo Worldwide's
Forwarding segment, CNF was approached by UPS in the third quarter of
2004 with interest in acquiring MWF.  Accordingly, in the third quarter
of 2004, CNF classified MWF as held for sale and recognized a $260.5
million impairment charge to write down the recorded book value of MWF
to its anticipated selling price, less costs to sell.  The impairment
charge was based on the agreement to sell MWF, as described below, and
primarily represents the estimated write-down to the fair value of MWF's
goodwill and long-lived assets, including MWF's accumulated foreign
currency translation adjustment, as well as estimated selling costs.

Stock Purchase Agreement

The stock purchase agreement excludes certain assets and liabilities of
MWF and includes certain assets and liabilities of CNF or its
subsidiaries related to the business conducted by MWF.  Among the assets
and liabilities so excluded are those related to EWA, and the obligation
related to MWF employees covered under CNF's domestic pension,
postretirement medical and long-term disability plans.  Under the
agreement, UPS agreed to pay to CNF an amount equal to MWF's cash
position as of December 31, 2004, and to pay the estimated present value
of CNF's retained obligations related to MWF employees covered under
CNF's long-term disability and postretirement medical plans, as agreed
to by the parties or, in the absence of such agreement, as determined by
an independent actuary.   In addition, UPS assumed indebtedness
associated with the MWF business, including approximately $110 million
of debt owed by MWF in connection with the City of Dayton, Ohio, Special
Facilities Revenue Refunding Bonds, certain capital leases and other
debt, other letters of credit, and overdraft facilities.  Under the
stock purchase agreement, CNF has agreed to a three-year non-compete
covenant that, subject to certain exceptions, will limit CNF's annual
air freight and ocean forwarding and/or customs brokerage revenues to
$175 million through CNF's 2007 fiscal year.  CNF has also agreed to
indemnify UPS against certain losses that UPS may incur after the
closing of the sale with certain limitations.  Any losses related to
these indemnification obligations or any other costs, including any
future cash expenditures, related to the sale that have not been
estimated and recognized at this time will be recognized in future
periods as an additional loss from disposal when and if incurred.  For
additional details, refer to the stock purchase agreement filed as an
exhibit to CNF's Form 8-K dated October 5, 2004 and the amendment to the
stock purchase agreement filed as an exhibit to CNF's Form 8-K dated
December 21, 2004.

Disposition of MWF and Forwarding Segment

Upon completion of the sale of MWF on December 19, 2004, CNF received
cash consideration of $150 million, subject to certain post-closing
adjustments, including adjustments for cash held by MWF at closing and
MWF's net working capital as of closing.  In connection with the sale,
CNF in 2004 recognized a fourth-quarter loss from disposal of $15.8
million (net of a $3.6 million tax benefit), as the adjusted carrying
value of MWF exceeded the cash consideration, including amounts received
at closing and expected to be received in the future.  Following
settlement of the MWF cash balance in March 2005, CNF received cash of
$29.4 million and recognized an additional first-quarter loss from
disposal of $9.8 million, primarily to recognize the difference between
the actual cash received and CNF's estimate of the cash position at
December 31, 2004, and to accrue additional estimated transaction costs.
In the second quarter of 2005, CNF recognized a $3.0 million net gain
due in part to the reversal of previously accrued income taxes
pertaining to EWA, which related to an IRS settlement of issues related
to tax years prior to 2002.

CNF recognized a tax benefit on its losses from the disposal of MWF,
which are treated as capital losses for tax purposes.  Under current tax
law, capital losses can only be used to offset capital gains.  CNF does
not currently forecast any significant capital gains in the tax carry-
forward period.  Based in part on the amount of capital gains actually
recognized for tax purposes, only $3.6 million of the cumulative
disposal-related tax benefit of $46.8 million was realizable, and as a
result, the remaining $43.2 million of the recognized tax benefit was
fully offset by a valuation allowance of an equal amount.

Excluded Assets and Liabilities

As described above, the stock purchase agreement excludes, and CNF has
retained, the obligations related to MWF employees covered under certain
CNF-sponsored employee benefit plans, including domestic pension,
postretirement and long-term disability plans that cover the
noncontractual employees and former employees of both continuing and
discontinued operations. These plans also include certain pension plans
that cover only the current and former employees of the discontinued
Forwarding segment (the "Forwarding Plans").  For financial reporting
purposes, the prepaid benefit cost of the Forwarding Plans is reported
in Assets of Discontinued Operations while the accrued benefit cost
related to MWF employees covered under the other legally separate CNF-
sponsored plans are reported in Employee Benefits of continuing
operations.  Under the stock purchase agreement, UPS agreed to pay to
CNF the estimated present value of CNF's retained obligations related to
MWF employees covered under CNF's long-term disability and
postretirement medical plans, as agreed to by the parties or, in the
absence of such agreement, as determined by an independent actuary.
Accordingly, CNF in December 2004 recorded in Other Accounts Receivable
a receivable for its estimate of the present value of these employee
benefit obligations.  As of June 30, 2005, UPS and CNF had not reached
agreement as to the amount to be paid by UPS for the employee benefit
obligations retained by CNF, and it is possible that the amount
ultimately paid will be based upon an estimate prepared by an
independent actuary.  As more fully discussed below under "Estimates and
Critical Accounting Policies," CNF's estimate of the present value of
these employee benefit obligations is an actuarial determination that
depends upon a number of assumptions and factors.  If CNF's estimate is
different than the amount actually payable by UPS, that difference would
be recognized as a gain or loss from disposal when and if incurred.

EWA's restructuring reserves decreased to $25.1 million at June 30, 2005
from $33.8 million at December 31, 2004.  Restructuring reserves at June
30, 2005 were primarily reported in Liabilities of Discontinued
Operations and consisted primarily of CNF's estimated exposure related
to the labor matters described below, as well as other estimated
remaining restructuring-related obligations.

In connection with the cessation of its air carrier operations in 2001,
EWA terminated the employment of all of its pilots and crew members.
Those pilots and crew members are represented by the Air Line Pilots
Association ("ALPA") union under a collective bargaining agreement.
Subsequently, ALPA filed a grievance on behalf of the pilots and crew
members protesting the cessation of EWA's air carrier operations and
MWF's use of other air carriers.  The ALPA matters are the subject of
litigation in U.S. District Court and, depending on the outcome of that
litigation, may be subject to binding arbitration.  Based on CNF's
current evaluation, management believes that it has provided for its
estimated exposure related to the ALPA matters. However, there can be no
assurance in this regard as CNF cannot predict with certainty the
ultimate outcome of these matters.


                     Liquidity and Capital Resources

Cash and cash equivalents rose to $551.7 million at June 30, 2005 from
$386.9 million at December 31, 2004, as $126.7 million provided by
operating activities and $220.8 million provided by investing activities
exceeded $170.4 million used in financing activities.  Cash provided by
investing activities primarily reflects a $314.0 million decrease in
short-term marketable securities, partially offset by capital
expenditures of $90.7 million.  CNF's cash flows are summarized in the
table below.

                                                   Six Months Ended
                                                        June 30,
                                             -----------------------------
(Dollars in thousands)                            2005           2004
                                             -------------- --------------
Operating Activities
  Net income                                 $     102,182  $      63,934
  Discontinued operations                            6,825          1,330
  Non-cash adjustments (1)                          47,392         71,847
                                             -------------- --------------
                                                   156,399        137,111
  Changes in assets and liabilities
   Receivables                                     (26,118)       (40,887)
   Accounts payable and accrued
    liabilities, excluding accrued
    incentive compensation                          (2,868)        37,554
   Accrued incentive compensation                  (20,221)        24,628
   Income taxes                                     27,383         12,278
   Employee benefits                               (30,871)        (8,052)
   Deferred charges and credits                     22,601         10,299
   All other changes in assets
    and liabilities                                    369        (15,168)
                                             -------------- --------------
                                                   (29,725)        20,652


Net Cash Provided by Operating Activities          126,674        157,763
                                             -------------- --------------

Net Cash Provided by (Used in)
 Investing Activities                              220,771        (63,934)
                                             -------------- --------------

Net Cash Provided by (Used in)
 Financing Activities                             (170,408)       151,677
                                             -------------- --------------

Net Cash Provided by Continuing Operations         177,037        245,506

Net Cash Provided by (Used in)Discontinued
 Operations                                        (12,261)        10,012
                                             -------------- --------------
Increase in Cash and Cash Equivalents        $     164,776  $     255,518
                                             ============== ==============

(1) "Non-cash adjustments" refer to depreciation, amortization, deferred
income taxes,provision for uncollectible accounts, equity in earnings of
joint venture, and non-cash gains and losses.


Continuing Operations

Operating Activities

Cash flow from continuing operations in the first half of 2005 was
$126.7 million, a $31.1 million decline from the same prior-year period.
Net income before non-cash items in the first half of 2005 exceeded the
same period of last year; however, in 2005, that improvement was offset
by a net use of cash from changes in assets and liabilities.
Receivables in the first half of 2005 used $26.1 million as a revenue-
driven increase in receivables was partially offset by a $29.4 million
first-quarter payment received from UPS in connection with the sale of
MWF.  Accrued incentive compensation decreased $20.2 million in the
first half of 2005, while the prior-year period reflects a $24.6 million
increase.  In both periods, changes in accrued incentive compensation
reflect CNF's payment schedule for its employee incentive plans, under
which total incentive compensation earned in an award year is paid to
employees with a partial payment in December of the award year and a
final payment in February of the next award year.  In 2005, $55.1
million in February payments for incentive compensation exceeded first-
half expense accruals of $34.9 million, while in 2004, $47.3 million in
first-half expense accruals exceeded $22.7 million in February payments.
Based primarily on taxable income, CNF's current tax accounts changed by
$27.4 million, as CNF accrued a $0.7 million income tax payable at June
30, 2005, compared to a $26.7 million income tax receivable at December
31, 2004, as reported in Other Receivables in CNF's financial
statements. The net use of cash from the net decreases in employee
benefit liabilities for the first half of 2005 and 2004 reflects the net
effect of defined benefit pension plan funding contributions of $52.5
million and $40.0 million, respectively, as described below under "-
Defined Benefit Pension Plans," partially offset by expense accruals for
CNF's defined benefit plan obligation.  Cash provided by changes in
deferred charges and credits in the first half of 2005 primarily
reflects a $19.1 million decline in Vector's affiliate receivable from
CNF, as more fully discussed in Note 4, "Investment in Unconsolidated
Joint Venture," in Item 1, "Financial Statements."  In the same period
of last year, Vector's affiliate receivable from CNF declined by $4.8
million.

Investing Activities

Investing activities in the first half of 2005 provided $220.8 million
compared to $63.9 million used in the first half of 2004.  In both
periods presented, investing activities consisted primarily of capital
expenditures and fluctuations in short-term marketable securities.
Capital expenditures in the first half of 2005 increased $45.7 million
from the first half of 2004 due substantially to expenditures at Con-
Way, which acquired $63.5 million of tractors and trailers in the first
half of 2005, compared to $23.8 million in the first half of 2004.
Investments in marketable securities decreased in the first half of 2005
by $314.0 million, primarily from the conversion of auction-rate
securities into cash, while the same period of 2004 reflects a $16.3
million increase in marketable securities.

Financing Activities

Financing activities in the first half of 2005 used cash of $170.4
million compared to $151.7 million provided in the first half of 2004.
In the first half of 2005, cash used in financing activities includes
$74.6 million used for the repurchase of common stock under CNF's
repurchase program described below.  Financing activities in 2005
reflect the repayment at maturity on June 1 of $100 million 7.35% Notes,
while 2004 reflects the $292.6 million net issuance of 6.7% Senior
Debentures and the $128.9 million redemption of 5% Convertible
Debentures.  Financing activities in both periods presented also reflect
dividend payments and scheduled principal payments for the Thrift and
Stock Plan notes guaranteed by CNF.  Cash provided by the exercise of
stock options increased to $32.3 million in the first half of 2005 from
$17.1 million in the same period last year, due primarily to an increase
in the market price for CNF's common stock.

In January 2005, the Board of Directors authorized the repurchase of up
to $300 million in CNF's common stock from time to time during a two-
year period in open market purchases and privately negotiated
transactions.  CNF currently estimates it will repurchase approximately
$150 million of CNF's common stock annually in each of 2005 and 2006.

CNF has a $400 million revolving credit facility that matures on March
11, 2010.  The revolving credit facility is available for cash
borrowings and for the issuance of letters of credit up to $400 million.
At June 30, 2005, no borrowings were outstanding under the facility and
$219.2 million of letters of credit were outstanding, leaving $180.8
million of available capacity for additional letters of credit or cash
borrowings, subject to compliance with financial covenants and other
customary conditions to borrowing.  CNF had other uncommitted unsecured
credit facilities totaling $35.0 million at June 30, 2005, which are
available to support letters of credit, bank guarantees, and overdraft
facilities; at that date, a total of $12.4 million was outstanding under
these facilities.  Of the total letters of credit outstanding at June
30, 2005, $218.7 million provided collateral for CNF workers'
compensation and vehicular self-insurance programs.  See "Other Matters
- Forward-Looking Statements" below, and Note 5, "Debt and Other
Financing Arrangements," in Item 8, "Financial Statements and
Supplementary Data," of CNF's 2004 Annual Report on Form 10-K for
additional information concerning CNF's $400 million credit facility and
some of its other debt instruments.

Defined Benefit Pension Plans

CNF periodically reviews the funding status of its defined benefit
pension plans for non-contractual employees, and makes contributions
from time to time as necessary in order to comply with the funding
requirements of the Employee Retirement Income Security Act ("ERISA").
CNF applies the recognition and measurement criteria of GAAP in
reporting the effect of its pension plans in its consolidated financial
statements.  However, pension funding requirements are determined by
ERISA rather than GAAP.  CNF currently estimates that it will contribute
$75 million in 2005, including $55.0 million already contributed through
July 2005.  CNF also made defined benefit pension plan contributions of
$90.8 million in 2004, $75.0 million in 2003, and $76.2 million in 2002,
and $13.1 million in 2001 but made no contributions from 1996 through
2000, due in part to the high rate of return realized on plan assets and
for the lack of tax deductibility of funding during that period.

Contractual Cash Obligations

CNF's contractual cash obligations as of December 31, 2004 are
summarized in CNF's 2004 Annual Report on Form 10-K under Item 7,
"Management's Discussion and Analysis - Liquidity and Capital Resources
- Contractual Cash Obligations."  In the first half of 2005, there have
been no material changes in CNF's contractual cash obligations outside
the ordinary course of business.  As discussed above, CNF repaid its
$100 million 7.35% Notes on June 1, 2005.

At June 30, 2005, Con-Way was obligated under purchase commitments to
acquire $24.0 million of revenue equipment for delivery in 2005.  CNF
currently anticipates capital expenditures of approximately $235 million
in 2005, including its obligations under purchase commitments described
above.

Other

CNF's ratio of total debt to capital decreased to 42.1% at June 30, 2005
from 47.9% at December 31, 2004, due primarily to the increase in
retained earnings resulting from net income earned in the first half of
2005 and the repayment in June of $100 million 7.35% Notes.

In June 2005, Standard & Poor's affirmed its investment-grade rating on
CNF's senior unsecured debt and upgraded its outlook to "positive" from
"stable."

Discontinued Operations

On December 19, 2004, CNF completed the sale of MWF to UPS for $150
million in cash, subject to adjustment for cash held by MWF at closing
and the net capital of MWF as of closing.  In March 2005, CNF received
$29.4 million from UPS for the reimbursable cash held by MWF at closing,
with no adjustment for net capital.

As more fully discussed under " Results of Operations - Discontinued
Operations,"  UPS agreed to pay to CNF an amount equal to CNF's retained
obligations related to MWF employees covered under CNF's long-term
disability and postretirement medical plans, as agreed to by parties or,
in the absence of such agreement, as determined by an independent
actuary.  Accordingly, CNF in December 2004 recorded in Other Accounts
Receivable a receivable for its estimate of the present value of these
employee benefit obligations.  As of June 30, 2005, UPS and CNF had not
reached agreement as to the amount to be paid by UPS for the employee
benefit obligations retained by CNF, and it is possible that the amount
ultimately paid will be based upon an estimate prepared by an
independent actuary.



               Estimates and Critical Accounting Policies

The preparation of financial statements in accordance with accounting
principles generally accepted in the U.S. requires management to adopt
accounting policies and make significant judgments and estimates.  In
many cases, there are alternative policies or estimation techniques that
could be used.  CNF maintains a process to evaluate the appropriateness
of its accounting policies and estimation techniques, including
discussion with and review by the Audit Committee of its Board of
Directors and its independent auditors.  Accounting policies and
estimates may require adjustment based on changing facts and
circumstances and actual results could differ from estimates.  The
policies and estimates discussed below include those that are most
critical to the financial statements.

Self-Insurance Reserves

CNF uses a combination of insurance and self-insurance programs to
provide for the costs of medical, casualty, liability, vehicular, cargo
and workers' compensation claims. In the measurement of these costs, CNF
considers historical claims experience, medical costs, demographic and
severity factors and other assumptions.  Self-insurance accruals are
developed based on the estimated, undiscounted cost of claims, including
those claims incurred but not reported as of the balance sheet date.
The long-term portion of self-insurance accruals relates primarily to
workers' compensation and vehicular claims that are payable over several
years.  The actual costs may vary from estimates.

Income Taxes

In establishing its deferred income tax assets and liabilities, CNF
makes judgments and interpretations based on the enacted tax laws and
published tax guidance that are applicable to its operations.  CNF
records deferred tax assets and liabilities and periodically evaluates
the need for a valuation allowance to reduce deferred tax assets to
realizable amounts.  The likelihood of a material change in CNF's
expected realization of these assets is dependent on future taxable
income, future capital gains, its ability to use foreign tax credit
carry forwards and carry backs, final U.S. and foreign tax settlements,
and the effectiveness of its tax planning strategies in the various
relevant jurisdictions.  CNF is also subject to examination of its
income tax returns for multiple years by the IRS and other tax
authorities.  CNF periodically assesses the likelihood of adverse
outcomes resulting from these examinations to determine the adequacy of
its provision and related accruals for income taxes.

Disposition and Restructuring Estimates

As more fully discussed under "Results of Operations - Discontinued
Operations," CNF's management made significant estimates and assumptions
in connection with the restructuring of EWA in 2001 and the disposition
of MWF in 2004.  Actual results could differ from estimates, which could
affect related amounts reported in the financial statements.

Uncollectible Accounts Receivable

CNF and its subsidiaries report accounts receivable at net realizable
value and provide an allowance for uncollectible accounts when
collection is considered doubtful.  Con-Way provides for uncollectible
accounts based on various judgments and assumptions, including revenue
levels, historical loss experience, and composition of outstanding
accounts receivable.  Logistics, based on the size and nature of its
client base, performs a frequent and periodic evaluation of its
customers' creditworthiness and accounts receivable portfolio and
recognizes expense from uncollectible accounts when losses are both
probable and reasonably estimable.

Defined Benefit Pension Plans

CNF has defined benefit pension plans that cover employees and former
non-contractual employees in the United States.  The amount recognized
as pension expense and the accrued pension liability depend upon a
number of assumptions and factors, the most significant being the
discount rate used to measure the present value of pension obligations,
the assumed rate of return on plan assets, which are both affected by
economic conditions and market fluctuations, and the rate of
compensation increase.

CNF assumed a discount rate of 6.25% for purposes of calculating its
pension expense in both 2005 and 2004.  CNF adjusts its discount rate
periodically by taking into account changes in high-quality corporate
bond yields and the guidance of its outside actuaries.  In determining
the appropriate discount rate for 2005, CNF began utilizing a bond model
that incorporates expected cash flows of plan obligations.  The bond
model uses a selected portfolio of Moody's Aa-or-better rated bonds with
cash flows and maturities that match the projected benefit payments of
CNF's pension plans.  CNF's discount rate is equal to the yield on the
portfolio of bonds, which will typically exceed the Moody's Aa corporate
bond index due to the long duration of expected benefit payments from
CNF's plan.  If all other factors were held constant, a 0.25% decline in
the discount rate would result in an estimated $6 million increase in
2005 annual pension expense.

CNF adjusts its assumed rate of return on plan assets based on
historical returns and current market expectations.  The rate of return
is based on an expected 20-year return on the current asset allocation
and the effect of actively managing the plan, net of fees and expenses.
For purposes of calculating its pension expense, CNF assumed a rate of
return on plan assets of 8.5% in 2005, a decline from an assumption of
9.0% in 2004.  Using year-end plan asset values, a 0.5% decline in the
assumed rate of return on plan assets would result in an estimated $4
million increase in 2005 annual pension expense.

The determination of CNF's accrued pension benefit cost includes an
unrecognized actuarial loss that results from the cumulative difference
between estimated and actual values for the year-end projected pension
benefit obligation and the fair value of plan assets.  Under GAAP, any
portion of the unrecognized actuarial loss or gain that exceeds ten
percent of the greater of the projected benefit obligation or fair value
of plan assets must be amortized as an expense over the average service
period for employees, approximately eleven years for CNF.  Lower
amortization of the unrecognized actuarial loss will reduce the annual
pension expense in 2005 by approximately $6 million from the annual
pension expense in 2004.

Goodwill and Other Long-Lived Assets

CNF performs an impairment analysis of long-lived assets whenever
circumstances indicate that the carrying amount may not be recoverable.
For assets that are to be held and used, an impairment charge is
recognized when the estimated undiscounted cash flows associated with
the asset or group of assets is less than carrying value.  If impairment
exists, a charge is recognized for the difference between the carrying
value and the fair value.   Fair values are determined using quoted
market values, discounted cash flows, or external appraisals, as
applicable.  Assets held for disposal are carried at the lower of
carrying value or estimated net realizable value.

                              Other Matters

Cyclicality and Seasonality

CNF's businesses operate in industries that are affected directly by
general economic conditions and seasonal fluctuations, which affect
demand for transportation services.  In the transportation industry, for
a typical year, the months of September and October usually have the
highest business levels while the months of December, January and
February usually have the lowest business levels.

Business Interruption

CNF and its subsidiaries rely on CNF Service Company for the performance
of shared administrative and technology services in the conduct of their
businesses.  CNF's computer facilities and its administrative and
technology employees are located at the Administrative and Technology
("AdTech") Center, a centralized shared-service facility in Portland,
Oregon.  Although CNF maintains backup systems and has disaster recovery
processes and procedures in place, a sustained interruption in the
operation of these facilities, whether due to terrorist activities,
earthquakes, floods or otherwise, could have a material adverse effect
on CNF's financial condition, cash flows, and results of operations.

Homeland Security

CNF is subject to compliance with cargo security and transportation
regulations issued by the Department of Homeland Security and the
Department of Transportation.  CNF is not able to accurately predict how
new governmental regulation will affect the transportation industry.
However, CNF believes that any additional security measures that may be
required by future regulations could result in additional costs and
could have an adverse effect on its ability to serve customers and on
its financial condition, results of operations, and cash flows.

Employees

The workforce of CNF and its subsidiaries is not affiliated with labor
unions.  Consequently, CNF believes that the operations of its
subsidiaries have advantages over comparable unionized competitors in
providing reliable and cost-competitive customer services, including
greater efficiency and flexibility.  There can be no assurance that
CNF's subsidiaries will be able to maintain their current advantages
over certain of their competitors.


New Accounting Standards

In December 2004, the FASB issued SFAS No. 123R, "Share-Based Payment"
("SFAS 123R"), a revision of SFAS 123 that supersedes APB 25 and its
related implementation guidance.  SFAS 123R eliminates the alternative
to use APB 25's intrinsic-value method of accounting that was provided
in SFAS 123 as originally issued, and requires companies to recognize
the cost of employee services received in exchange for awards of equity
instruments based on the grant-date fair value of those awards (with
limited exceptions) over the period during which an employee is required
to provide service in exchange for the award.

SFAS 123R also amends FASB Statement No. 95, "Statement of Cash Flows,"
to require that the benefits associated with the tax deductions in
excess of recognized compensation cost be reported as financing cash
flows, rather than as a reduction of taxes paid.  This requirement will
reduce net operating cash flows and increase net financing cash flows in
periods after the effective date.

The effective date of SFAS 123R is as of the beginning of the first
interim or annual reporting period of the first fiscal year beginning on
or after June 15, 2005, which for CNF is the first quarter of 2006.  CNF
is currently assessing the transition method to adopt.  The impact of
adoption of SFAS 123R cannot be predicted at this time because it will
depend on levels of share-based awards granted in the future, as well as
the assumptions and the fair value model used to value the awards, and
the market value of CNF common stock.

Forward-Looking Statements

Certain statements included herein constitute "forward-looking
statements" within the meaning of Section 21E of the Securities Exchange
Act of 1934, as amended, and are subject to a number of risks and
uncertainties, and should not be relied upon as predictions of future
events.  All statements other than statements of historical fact are
forward-looking statements, including any projections of earnings,
revenues, weight, yield, volumes, income or other financial or operating
items, any statements of the plans, strategies, expectations or
objectives of CNF or its management for future operations or other
future items, any statements concerning proposed new products or
services, any statements regarding CNF's estimated future contributions
to pension plans, any statements as to the adequacy of reserves, any
statements regarding the outcome of any claims that may be brought
against CNF by CFC's multi-employer pension plans or any statements
regarding future economic conditions or performance, any statements
regarding the outcome of legal and other claims and proceedings against
CNF; any statements of estimates or belief and any statements or
assumptions underlying the foregoing.

Certain such forward-looking statements can be identified by the use of
forward-looking terminology such as "believes," "expects," "may,"
"will," "should," "seeks," "approximately," "intends," "plans,"
"estimates" or "anticipates" or the negative of those terms or other
variations of those terms or comparable terminology or by discussions of
strategy, plans or intentions.  Such forward-looking statements are
necessarily dependent on assumptions, data and methods that may be
incorrect or imprecise and there can be no assurance that they will be
realized.  In that regard, the following factors, among others and in
addition to the matters discussed elsewhere in this document and other
reports and documents filed by CNF with the Securities and Exchange
Commission, could cause actual results and other matters to differ
materially from those discussed in such forward-looking statements:

  *    changes in general business and economic conditions, including
       the global economy;

  *    the creditworthiness of CNF's customers and their ability to
       pay for services rendered;

  *    increasing competition and pricing pressure;

  *    changes in fuel prices;

  *    the effects of the cessation of EWA's air carrier operations;

  *    the possibility that CNF may, from time to time, be required
       to record impairment charges for long-lived assets;

  *    the possibility of defaults under CNF's $400 million credit
       agreement and other debt instruments, including defaults
       resulting from additional unusual charges or from any costs or
       expenses that CNF may incur, and the possibility that CNF may be
       required to repay certain indebtedness in the event that the ratings
       assigned to its long-termsenior debt by credit rating agencies are
       reduced;

  *    labor matters, including the grievance by furloughed pilots and
       crew members, labor organizing activities, work stoppages or
       strikes;enforcement of and changes in governmental regulations,
       including the effects of new regulations issued by the Department
       of Homeland Security;

  *    environmental and tax matters;

  *    matters relating to CNF's 1996 spin-off of CFC, including the
       possibility that CFC's multi-employer pension plans may assert
       claims against CNF, that CNF may not prevail in those proceedings and
       may not have the financial resources necessary to satisfy amounts
       payable to those plans, and matters relating to CNF's defined
       benefit pension plans;

  *    matters relating to the sale of MWF, including CNF's
       obligation to indemnify UPS for certain losses in connection
       with the sale;

As a result of the foregoing, no assurance can be given as to future
financial condition, cash flows, or results of operations.  See Note 8,
"Commitments and Contingencies" in Item 1, "Financial Statements."

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

CNF is exposed to a variety of market risks, including the effects of
interest rates, fuel prices, and foreign currency exchange rates.  CNF
enters into derivative financial instruments only in circumstances that
warrant the hedge of an underlying asset, liability or future cash flow
against exposure to some form of interest rate, commodity or currency-
related risk.  Additionally, the designated hedges should have high
correlation to the underlying exposure such that fluctuations in the
value of the derivatives offset reciprocal changes in the underlying
exposure.

CNF is subject to the effect of interest rate fluctuations on the fair
value of its long-term debt.  Based on the fixed interest rates and
maturities of its long-term debt, fluctuations in market interest rates
would not significantly affect operating results or cash flows, but may
have a material effect on the fair value of long-term debt, as more
fully discussed in Note 5, "Debt and Other Financing Arrangements," in
Item 8, "Financial Statements and Supplementary Data," in CNF's 2004
Annual Report on Form 10-K.

CNF has market risk for changes in the price of diesel fuel.  When fuel
costs exceed certain specified thresholds, CNF seeks to charge customers
a fuel surcharge that is adjusted weekly based on a national index.
Fuel surcharges are common in the transportation industry and generally
have been accepted by customers.  However, although CNF's risk
associated with fuel price increases is currently eliminated by revenue
from fuel surcharges, competitive pressures may limit CNF's ability to
continue to maintain or increase its fuel surcharges in response to
rising fuel prices.  In addition, the relationship between revenue
recognized from CNF's fuel surcharges and fuel costs incurred by CNF may
vary, and as a result, fluctuations in the market price of fuel may have
a positive or negative effect on CNF's operating margins.

The assets and liabilities of CNF's foreign subsidiaries are denominated
in foreign currencies, which create exposure to changes in foreign
currency exchange rates.  However, the market risk related to foreign
currency exchange rates is not material to CNF's financial condition,
results of operations, or cash flows.


ITEM 4.  CONTROLS AND PROCEDURES

(a) Disclosure Controls and Procedures.

CNF's management, with the participation of CNF's Chief Executive
Officer and Chief Financial Officer, has evaluated the effectiveness of
CNF's disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) as of the end of the period covered by
this report.  Based on such evaluation, CNF's Chief Executive Officer
and Chief Financial Officer have concluded that CNF's disclosure
controls and procedures are effective as of the end of such period.

(b) Internal Control Over Financial Reporting.

There have not been any changes in CNF's internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act) during the fiscal quarter to which this report
relates that have materially affected, or are reasonably likely to
materially affect, CNF's internal control over financial reporting.

                       PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

Certain legal proceedings of CNF are also discussed in Note 2,
"Discontinued Operations," and Note 8, "Commitments and Contingencies,"
of Part 1, Item 1, "Financial Statements."

EWA, MWF, Inc., MW and CNF Inc. are named as defendants in a lawsuit
filed in state court in California by approximately 140 former EWA
pilots and crew members.  The lawsuit alleges wrongful termination in
connection with the termination of EWA's air carrier operations, and
seeks $500 million and certain other unspecified damages. CNF believes
that the lawsuit's claims are without merit, and is vigorously defending
the lawsuit.

In 2003, prior to the sale of MWF to UPS, CNF became aware of
information that Emery Transnational, a Philippines-based joint venture
in which MWF, Inc. may be deemed to be a controlling partner, may have
made certain payments in violation of the Foreign Corrupt Practices Act.
CNF promptly notified the Department of Justice and the Securities and
Exchange Commission of this matter, and MWF, Inc. instituted policies
and procedures in the Philippines designed to prevent such payments from
being made in the future.  CNF was subsequently advised by the
Department of Justice that it is not pursuing an investigation of this
matter.  CNF has conducted an internal investigation of approximately 40
other MWF, Inc. international locations and has shared the results of
the internal investigation with the SEC.  The internal investigation
revealed that Menlo Worldwide Forwarding (Thailand) Limited, a Thailand-
based joint venture, also may have made certain payments in violation of
the Foreign Corrupt Practices Act.  MWF, Inc. made certain personnel
changes and instituted policies and procedures in Thailand designed to
prevent such payments from being made in the future.  In December 2004,
CNF completed the sale of its air freight forwarding business (including
the stock of MWF, Inc., Emery Transnational and Menlo Worldwide
Forwarding (Thailand) Limited) to an affiliate of UPS.  In connection
with that sale, CNF agreed to indemnify UPS for certain losses resulting
from violations of the Foreign Corrupt Practices Act.  CNF is currently
unable to predict whether it will be required to make payments under the
indemnity.


ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides a summary of shares repurchased by the CNF
during the quarter ended June 30, 2005:


                                              Total Number     Maximum Dollar
                     Total      Average   of Shares Purchased  Value of Shares
                   Number of     Price         as Part of      that May Yet Be
                    shares      Paid per   Publicly Announced  Purchased Under
                 Purchased[1]   Share         Program [1]      the Program[1]
                 -------------------------------------------------------------


April 1, 2005 -
 April  30, 2005    189,000     $ 43.61         189,000        $  259,493,440
May 1, 2005 -
 May 31, 2005       510,500     $ 43.95         510,500        $  237,059,471
June 1, 2005 -
 June 30, 2005      262,000     $ 44.38         262,000        $  225,432,306
                 -----------                 -----------

Total               961,500     $ 44.00         961,500        $  225,432,306
                 ===========                 ===========

[1] In January 2005, CNF's Board of Directors authorized a two-year
stock repurchase program providing for the repurchase of up to $300
million in common stock in open market purchases and privately
negotiated transactions.


ITEM 6.  EXHIBITS

Exhibit No.

(10)      Material Contracts

     10.1 Summary of Material Executive Employee Agreements (Item 1.01
          to CNF's Report on Form 8-K filed on June 6, 2005.*#)

     10.2 Employment Agreement between the Company and John H. Williford
          dated June 4, 2005 (Exhibit 99.1 to CNF's Report on Form 8-K
          filed on June 6, 2005.*)

     10.3 Severance Agreement between the Company and David S. McClimon
          dated June 3, 2005. #

     10.4 Severance Agreement between CTS and David S. McClimon dated
          June 3, 2005. #

     10.5 Severance Agreement between the Company and Bryan M. Millican
          dated June 3, 2005. #

     10.6 Letter dated June 2, 2005 terminating Severance Agreement
          between CTS and Douglas W. Stotlar dated March 1, 2005. #

(31) Certification of Officers pursuant to Section 302 of the Sarbanes-
     Oxley Act of 2002

(32) Certification of Officers pursuant to Section 906 of the Sarbanes-
     Oxley Act of 2002


*  Previously filed with the Securities and Exchange Commission and
incorporated herein by reference.

#  Designates a contract or compensation plan for Management or
Directors.
                               SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company (Registrant) has duly
caused this Form 10-Q Quarterly Report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                          CNF Inc.
                                          (Registrant)

August 5, 2005                            /s/Kevin Schick
                                          ---------------------
                                          Kevin Schick
                                          Senior Vice President and
                                          Chief Financial Officer