Exhibit 13

           CONSOLIDATED FREIGHTWAYS CORPORATION AND SUBSIDIARIES
                  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
               FINANCIAL CONDITION AND RESULTS OF OPERATIONS


      On  December  3,  1996,  Consolidated  Freightways  Corporation  (the
Company)  began  operating  as  an independent,  separately  traded  public
company.   The  Company  was spun off from its former parent,  Consolidated
Freightways,  Inc.,  now called CNF Transportation  Inc.,  in  a  tax  free
distribution (the Distribution) to shareholders of the former parent  at  a
rate  of  one Company share for every two shares outstanding of the  former
parent.   The  Company consists of Consolidated Freightways Corporation  of
Delaware  (CFCD), a nationwide motor carrier, and its Canadian  operations,
including  Canadian  Freightways,  Ltd.  (CFL),  Epic  Express,   Milne   &
Craighead,  Canadian Sufferance Warehouses and other related businesses  as
well  as  the  Leland James Service Corporation, an administrative  service
provider.

      The  Company  completed its first full year of operations  under  its
Business  Accelerator  System  (BAS),  resulting  in  a  1.9%  increase  in
revenues  over  the prior year.   BAS, implemented in October  1995,  is  a
redesign of the freight system whereby freight is moved directionally  from
point-to-point,  reducing miles and handling, thereby  lowering  costs  and
average  transit times.  Although implementation of BAS ultimately improved
on-time  performance and reduced transit times, system implementation  took
longer  than  expected and utilization during the first half  of  1996  was
below  expected levels.  During the first half of the year, total and less-
than-truckload  (LTL)  tonnage  decreased  7.2%  and  4.4%,   respectively,
compared  with the prior year as shippers withheld freight due  to  service
interruptions  during  implementation.    Operational  refinements  in  the
second  half  of  the  year and an increased acceptance  of  the  Company's
improved  service  resulted in total and LTL tonnage  for  the  year  ended
December  31,  1996  increasing 1.0% and 2.5% over  the  prior  year.   The
Company also benefited from a gradual lessening of excess industry capacity
and  a stabilization of rates, although rates remained slightly below  1995
levels.   The  Company's 1995 revenues increased 8.8% over  strike-affected
1994  levels, despite the loss of business in the fourth quarter  following
implementation of BAS.  In 1995, total tonnage increased 6.4%  with  higher
rated LTL tonnage increasing 10.6% over 1994 levels.

      Operating  expenses for the year ended December  31,  1996  increased
$63.7  million or 3.4% over the prior year as a result of higher  operating
costs following the implementation of BAS and a 3.5% contractual labor wage
and  benefit increase on April 1, 1996. The implementation of BAS  resulted
in higher operating costs in relation to revenue levels during most of 1996
because  of  costs associated with completing operational  refinements  and
improving  service levels in the new system.  The results  also  include  a
previously  disclosed  $15.0 million non-cash charge to  increase  workers'
compensation reserves. The Company also experienced a significant  increase
in  fuel costs during 1996, as fuel prices rose 20.9% over the prior  year.
To  partially offset this increase, the Company instituted a fuel surcharge
program  in  the  second  half of the year, recovering  approximately  $9.2
million or 80% of total increased fuel costs.    Operating expenses for the
year ended 1995 increased $148.9 million or 8.7% over 1994 due primarily to
the implementation of BAS in the fourth quarter of 1995 and the absence  in
1994 of certain operating expenses during the 1994 strike.

      Selling and administrative expenses in 1996 increased $5.6 million or
2.5% over  the  prior year while  1995  expenses increased $22.9 million or
11.3% over 1994.  These   increases  are  consistent  with  the  respective
increases in revenues.

      Depreciation increased a marginal 1.0% over 1995 to $64.1 million due
to  the Company incurring significantly lower capital expenditures in  1996
compared  to the prior year.   Depreciation was $63.6 million  in  1995,  a
decrease of $6.6 million or 9.4% from $70.2 million in 1994.  This decrease
is  primarily  attributable to aging of the fleet and an  increase  in  the
leasing of equipment which supplemented capital expenditures.

      Management expects to restore profitability by enhancing revenues and
productivity.    To grow revenues,  management is initiating programs  that
aggressively  market  its  value-added services and  international  service
offerings  and  emphasize  business  with  a  higher  profit  contribution.
Additionally,  the  Company  announced  an  average  5.65%  rate   increase
effective  January  1,  1997.    To enhance productivity,  management  will
continue   to  refine  BAS  by  initiating  programs  to  improve  linehaul
efficiency   and freight handling in its linehaul, dock and city operations
and  increase  its  use  of rail.  High leverage  areas  such  as  workers'
compensation and cargo claims will receive special attention in  an  effort
to achieve lower overall costs.


Other Income (Expense)

      Other  net expense increased from 1995 to 1996 and from 1994 to  1995
primarily  due to interest expense on increased borrowings from the  former
parent  which  is  included  in Miscellaneous, net  in  the  Statements  of
Consolidated  Operations. Gains from dispositions of properties  and  other
miscellaneous  income  have  partially offset  the  increases  in  interest
expense.

Net Loss

        The 1996 net loss of $55.6 million increased $25.7 million over the
$29.9 million net loss in 1995.    The 1995 net loss was a 6.9% improvement
over  the net loss in 1994 of $32.1 million, which included a $1.9  million
charge  for  the write-off of intrastate operating rights.  For  the  years
ended  December 31, 1996, 1995 and 1994,  the effective income tax  benefit
rates  were 28.5%, 31.7% and 32.1%, respectively.  The rates are  different
from  the  statutory  federal rate due to foreign taxes and  non-deductible
items.


Liquidity and Capital Resources

      As  of  December 31, 1996, the Company had $48.7 million in cash  and
cash  equivalents.  Prior to the Distribution, the Company participated  in
the  former  parent's centralized cash management system and, consequently,
its  operating and capital expenditures needs were met by the former parent
to  the  extent  that  cash from operations was insufficient.   During  the
period  January  1,  1996 until the Distribution date,  the  former  parent
provided funds to the Company of $59.5 million compared with $67.1  million
for  the  year ended December 31, 1995.  As of the Distribution  date,  the
Company  no  longer has any similar financial arrangements with the  former
parent.   Net cash flow from operations during the year ended December  31,
1996,  of  $2.5  million  was  primarily the  result  of  depreciation  and
amortization  and  changes in working capital which offset  the  net  loss.
This compares to  $41.8 million  provided by  operations  in  1995. Capital
expenditures for the year ended December 31, 1996, were $48.2  million,  a
decrease  of $63.8 million from 1995.   Capital expenditures decreased  due
to  the  Company making significant fleet replacements in 1995 compared  to
1996.    The  Company expects capital expenditures to be $29.0  million  in
1997  and  expects to fund these with cash from operations supplemented  by
financing arrangements if necessary.

      In  November 1996,  the Company entered into a $225.0 million secured
credit  facility  with  several banks to provide for  working  capital  and
letter  of credit needs.  Borrowings under the agreement, which expires  in
2000,  bear  interest  based upon either prime  or  LIBOR,  plus  a  margin
dependent  on the Company's financial performance.  Borrowings and  letters
of credit are secured by substantially all of the assets of CFCD (excluding
real  property and certain rolling stock), all of the outstanding stock  of
CFCD  and 65% of the outstanding capital stock of CFL.  As of December  31,
1996,  the Company had no short-term borrowings and $50 million of  letters
of  credit  outstanding under this facility. The continued availability  of
funds  under  this  credit  facility  will  require  that  CFCD  remain  in
compliance   with  certain   financial  covenants.   The  most  restrictive
covenants  require  the  Company to maintain a minimum  level  of  earnings
before  interest, taxes, depreciation and amortization, minimum amounts  of
tangible   net   worth  and  fixed  charge  coverage,  and  limit   capital
expenditures.   The Company is in compliance as of December  31,  1996  and
expects to be in compliance in 1997.

      As  of  December  31,  1996, the Company's ratio  of  long-term  debt
obligations  to  total  capital (including long-term  obligations)  was  7%
compared with 6% as of December 31, 1995.  The current ratio was 1.1  to  1
and 1.0 to 1 at December 31, 1996 and 1995, respectively.


Inflation

      Significant  increases in fuel prices, to the extent  not  offset  by
increases in transportation rates, would have a material adverse effect  on
the profitability of the Company.  Historically,  the Company has responded
to  periods  of  sharply higher fuel prices by implementing fuel  surcharge
programs or base rate increases, or both, to recover additional costs,  but
there  can  be  no assurance that the Company will be able to  successfully
implement such surcharges or increases in response to increased fuel  costs
in  the  future.   As  discussed  above, the  Company  implemented  a  fuel
surcharge  program  in  the second half of 1996  to  partially  offset  the
significant increase in fuel prices during the year.


Other

       The  Company's  operations  necessitate  the  storage  of  fuel   in
underground  tanks  as  well  as the disposal of  substances  regulated  by
various federal and state laws. The Company adheres to a stringent site-by-
site   tank   testing  and  maintenance  program  performed  by   qualified
independent parties to protect the environment and comply with regulations.
Where clean-up is necessary, the Company takes appropriate action.

      The  Company  has received notices from the Environmental  Protection
Agency  and others that it has been identified as a potentially responsible
party (PRP) under the Comprehensive Environmental Response Compensation and
Liability Act (CERCLA) or other Federal and state environmental statues  at
various Superfund sites.   Based upon cost studies performed by independent
third  parties, the Company believes its obligations with respect  to  such
sites  would  not  have  a material adverse effect  on  the  its  financial
condition or results of operations.

      CFCD and the International Brotherhood of Teamsters (IBT) are parties
to  the National Master Freight Agreement which expires on March 31,  1998.
Although CFCD believes that it will be able to successfully negotiate a new
contract with the IBT, there can be no assurances that it will be  able  to
do  so or that work stoppages will not occur, or that the terms of any such
contract  will  not  be  substantially less favorable  than  those  of  the
existing  contract, any of which could have a material  adverse  effect  on
CFCD's business, financial condition or results of operations.

       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.  In that regard, the following factors, among others,  could
cause  actual results and other matters to differ materially from those  in
such  statements:  changes  in general business  and  economic  conditions;
increasing  domestic  and international competition and  pricing  pressure;
changes  in  fuel  prices; uncertainty regarding the Company's  ability  to
improve  results of operations; labor matters, including changes  in  labor
costs,  renegotiation of labor contracts and the risk of work stoppages  or
strikes;  changes  in  governmental regulation, and environmental  and  tax
matters.   As  a result of the foregoing, no assurance can be given  as  to
future results of operations or financial condition.





                          CONSOLIDATED FREIGHTWAYS CORPORATION
                                    AND SUBSIDIARIES
                             CONSOLIDATED BALANCE SHEETS
                                     December 31,
                               (Dollars in thousands)



                                                           1996          1995

ASSETS

Current Assets
  Cash and cash equivalents                            $   48,679   $   26,558
  Trade accounts receivable, net of
    allowances  (Note 2)                                  285,410      252,105
  Other accounts receivable (Note 10)                       3,339        4,397
  Operating supplies, at lower of average cost
    or market (Note 10)                                    11,511       19,312
  Prepaid expenses (Note 10)                               35,848       35,192
  Deferred income taxes  (Note 6)                          35,470       18,059
    Total Current Assets                                  420,257      355,623


Property, Plant and Equipment, at cost  (Note 10)
  Land                                                     78,989      103,432
  Buildings and improvements                              343,023      386,920
  Revenue equipment                                       559,823      575,528
  Other equipment and leasehold improvements              115,317      145,374
                                                        1,097,152    1,211,254
  Accumulated depreciation and amortization              (680,464)    (709,943)
                                                          416,688      501,311

Other Assets (Note 10)
  Deposits and other assets                                10,808        9,764
  Deferred income taxes  (Note 6)                           9,334            -
                                                           20,142        9,764

Total Assets                                           $  857,087   $  866,698



          The accompanying notes are an integral part of these statements.



                  CONSOLIDATED FREIGHTWAYS CORPORATION
                            AND SUBSIDIARIES
                      CONSOLIDATED BALANCE SHEETS
                              December 31,
                        (Dollars in thousands)



                                                        1996            1995

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities (Note 10)
  Accounts payable                              $       87,511     $    92,584
  Accrued liabilities  (Note 3)                        187,267         189,669
  Accrued claims costs  (Note 2)                        95,780          81,955
  Federal and other income taxes  (Note 6)               4,083           1,349
    Total Current Liabilities                          374,641         365,557

Long-Term Liabilities (Note 10)
  Long-term debt   (Note 4)                             15,100          15,100
  Accrued claims costs  (Note 2)                       110,200         103,070
  Employee benefits (Note 7)                           113,312         105,096
  Other liabilities                                     33,136           9,878
  Deferred income taxes  (Note 6)                            -           8,889
    Total Liabilities                                  646,389         607,590

Shareholders' Equity
Preferred stock, $.01 par value;
   authorized 5,000,000 shares; issued none                  -               -
Common stock, $.01 par value;
   authorized 50,000,000 shares; issued
   and outstanding 22,025,323 shares                       220             220
Additional paid-in capital                              57,174          57,174
Cumulative translation adjustment                       (4,910)         (5,611)
Retained earnings                                      158,214         207,325
  Total Shareholders' Equity                           210,698         259,108

Total Liabilities and Shareholders' Equity        $    857,087      $  866,698




The accompanying notes are an integral part of these statements.



<TABLE>


<CAPTION>
                                    CONSOLIDATED FREIGHTWAYS CORPORATION
                                             AND SUBSIDIARIES
                                   STATEMENTS OF CONSOLIDATED OPERATIONS
                                          Years Ended December 31,
                                (Dollars in thousands except per share data)



                                                  1996              1995             1994
<S>                                           <C>               <C>               <C>
REVENUES                                      $ 2,146,172       $ 2,106,529       $ 1,936,412

COSTS AND EXPENSES
    Operating expenses                          1,923,260         1,859,513         1,710,640
    Selling and administrative expenses           231,876           226,246           203,338
    Depreciation                                   64,102            63,556            70,177
                                                2,219,238         2,149,315         1,984,155
OPERATING LOSS                                    (73,066)          (42,786)          (47,743)

OTHER INCOME (EXPENSE)
  Investment income                                   263               756               497
  Interest expense                                   (843)             (918)             (880)
  Miscellaneous, net  (Note 10)                    (4,131)             (850)            3,648
                                                   (4,711)           (1,012)            3,265

Loss before income tax benefits
  and extraordinary charge                        (77,777)          (43,798)          (44,478)
Income tax benefits (Note 6)                      (22,201)          (13,889)          (14,274)

Loss before extraordinary charge                  (55,576)          (29,909)          (30,204)

Extraordinary charge from write-off of
  intrastate operating rights, net of
  related income tax benefits of $1,229                 -                 -              1,912

NET LOSS                                          (55,576)      $   (29,909)      $    (32,116)

Average shares outstanding (Note 2)            22,025,323        22,025,323         22,025,323

LOSS PER SHARE
   Loss before extraordinary charge           $     (2.52)      $     (1.36)      $     (1.37)
   Extraordinary charge                                 -                 -             (0.09)
   Loss per share                             $     (2.52)      $     (1.36)      $     (1.46)

<FN>
                  The accompanying notes are an integral part of these statements.

</TABLE>

<TABLE>


<CAPTION>
                                CONSOLIDATED FREIGHTWAYS CORPORATION
                                           AND SUBSIDIARIES
                               STATEMENTS OF CONSOLIDATED CASH FLOWS
                                      Years Ended December 31,
                                      (Dollars in thousands)

                                                          1996         1995         1994
<S>                                                  <C>          <C>          <C>
Cash and Cash Equivalents, Beginning
  of Period                                          $   26,558   $   23,116   $   10,764

Cash Flows from Operating Activities
  Net loss                                              (55,576)     (29,909)     (32,116)
  Adjustments to reconcile net loss to
    cash provided by operating activities:
    Depreciation and amortization                        64,565       63,902       73,443
    Increase (decrease) in deferred income
        taxes (Note 6)                                  (27,203)      18,556      (17,734)
    Gains from property disposals, net                   (3,089)      (2,360)        (749)
    Changes in assets and liabilities:
      Receivables                                       (34,484)      (4,851)     (21,362)
      Accounts payable                                    1,199        5,677          851
      Accrued liabilities                                 4,612       (1,883)      19,110
      Accrued claims costs                               22,531        4,811        1,622
      Income taxes                                        2,715         (791)         185
      Employee benefits                                   7,216      (13,515)      13,553
      Other                                              20,059        2,135       (3,064)
Net Cash Provided by Operating Activities                 2,545       41,772       33,739

Cash Flows from Investing Activities
  Capital expenditures                                  (48,203)    (111,962)     (32,120)
  Proceeds from sales of property                         8,329        6,529        4,942
Net Cash Used by Investing Activities                   (39,874)    (105,433)     (27,178)

Cash Flows from Financing Activities
  Former parent investment and advances, net (Note 10)   59,450       67,103        5,791
Net Cash Provided by Financing Activities                59,450       67,103        5,791

Increase in Cash and Cash Equivalents                    22,121        3,442       12,352

Cash and Cash Equivalents, End of Period             $   48,679   $   26,558   $   23,116


<FN>
                   The accompanying notes are an integral part of these statements.


</TABLE>
<TABLE>



<CAPTION>

                                              CONSOLIDATED FREIGHTWAYS CORPORATION
                                                       AND SUBSIDIARIES
                                        STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY
                                                  (Dollars in thousands)



                                                      Common Stock       Additional     Cumulative
                                                  Number of                 Paid-in    Translation      Retained
                                                   Shares       Amount      Capital     Adjustment      Earnings       Total

<S>                                              <C>          <C>         <C>            <C>            <C>         <C>
Balance, December 31, 1993                       22,025,323   $    220    $  57,174      $  (3,533)     $ 213,213   $   267,074

 Net cash infusion from former parent (Note 10)           -          -            -              -          5,791         5,791
 Net asset transfers to former parent                     -          -            -              -         (2,790)       (2,790)
 Dividend of equity interest in affiliates                -          -            -              -        (23,250)      (23,250)
 Net loss                                                 -          -            -              -        (32,116)      (32,116)
 Translation adjustment                                   -          -            -         (1,130)             -        (1,130)

 Balance, December 31, 1994                      22,025,323        220       57,174         (4,663)       160,848       213,579

 Net cash infusion from former parent (Note 10)           -          -            -              -         67,103        67,103
 Net asset transfers from former parent                   -          -            -              -          9,283         9,283
 Net loss                                                 -          -            -              -        (29,909)      (29,909)
 Translation adjustment                                   -          -            -           (948)             -          (948)

 Balance, December 31, 1995                      22,025,323        220       57,174         (5,611)       207,325       259,108

 Net cash infusion from former parent (Note 10)           -          -            -              -         59,450        59,450
 Net asset transfers to former parent (Note 10)           -          -            -              -        (52,985)      (52,985)
 Net loss                                                 -          -            -              -        (55,576)      (55,576)
 Translation adjustment                                   -          -            -            701              -           701

Balance, December 31, 1996                       22,025,323    $   220    $  57,174     $   (4,910)     $ 158,214   $   210,698


<FN>
                                 The accompanying notes are an integral part of these statements.
</TABLE>




                   CONSOLIDATED FREIGHTWAYS CORPORATION
                             AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. Organization

      Consolidated  Financial Statements and Basis  of  Presentation:   The
accompanying  consolidated financial statements  include  the  accounts  of
Consolidated  Freightways Corporation (the Company) and  its  wholly  owned
subsidiaries.   The Company was a wholly owned subsidiary  of  Consolidated
Freightways,  Inc.,  (the  former parent) through  December  1,  1996.   On
December 2, 1996, the Company was spun-off in a tax free distribution  (the
Distribution) to shareholders of the former parent at a rate of one Company
share for every two shares outstanding of the former parent.

      The  Company,  incorporated in the state  of  Delaware,  consists  of
Consolidated Freightways Corporation of Delaware (CFCD), a nationwide motor
carrier, and its Canadian operations, including Canadian Freightways,  Ltd.
(CFL), Epic Express, Milne & Craighead, Canadian Sufferance Warehouses  and
other  related  businesses as well as the Leland James Service  Corporation
(LJSC), an administrative service provider.  The Company provides less-than-
truckload transportation and logistics services nationwide and in parts  of
Canada,  Mexico, the Caribbean area, Latin and Central America, Europe  and
Pacific  Rim  countries.   Approximately 95% of the Company's revenues  are
domestic.

      The  amounts  included  in  the accompanying  consolidated  financial
statements  through  December  1, 1996 are based  upon  historical  amounts
included  in  the consolidated financial statements of the  former  parent.
The  consolidated financial statements are presented as if the Company  had
operated  as  an independent stand-alone entity prior to the  Distribution,
except  that  it has not been allocated any portion of the former  parent's
consolidated  borrowings or interest expense thereon.   These  consolidated
financial  statements  include the net assets  and  results  of  operations
directly related to the Company for all periods presented.

2.  Principal Accounting Policies

       Recognition  of  Revenues:   Transportation  freight   charges   are
recognized as revenue when freight is received for shipment.  The estimated
costs  of  performing the total transportation services are  then  accrued.
This  revenue  recognition method does not result in a material  difference
from in-transit or completed service methods of recognition.

      Cash  and  Cash  Equivalents:  The Company  considers  highly  liquid
investments with an original maturity of three months or less  to  be  cash
equivalents.

      Trade Accounts Receivable, Net:  Trade accounts receivable are net of
allowances  of  $9,692,000 and $9,349,000 at December 31,  1996  and  1995,
respectively.


      Property,  Plant  and Equipment:  Property, plant and  equipment  are
depreciated  on  a straight-line basis over their estimated  useful  lives,
which  are generally 25 years for buildings and improvements, 6 to 10 years
for  tractor  and  trailer  equipment and 3 to  10  years  for  most  other
equipment.   Leasehold improvements are amortized over the shorter  of  the
terms of the respective leases or the useful lives of the assets.

      Expenditures  for equipment maintenance and repairs  are  charged  to
operating  expenses  as  incurred; betterments are capitalized.   Gains  or
losses on sales of equipment are recorded in operating expenses.

     Income Taxes:   The Company follows the liability method of accounting
for  income taxes.  Prior to the Distribution, the Company was included  in
the  consolidated federal income tax return and consolidated unitary  state
income tax returns of the former parent.  Income tax benefits presented  in
periods prior to the Distribution represent a pro-rata share of the  former
parent's  consolidated income tax expense and approximate those that  would
have  been recorded had the Company filed separate tax returns. Income  tax
payments  related  to  domestic operations prior to the  Distribution  were
settled  in the current period through the advance account with the  former
parent.    Deferred  income  taxes  presented  for  periods  prior  to  the
Distribution  represent  a pro-rata share of the former  parent's  deferred
income tax accounts and approximate those that would have been recorded had
the Company filed separate income tax returns.

     Accrued Claims Costs:  The Company provides for the uninsured costs of
medical,  casualty,  liability, vehicular, cargo and workers'  compensation
claims.  Such costs are estimated each year based on historical claims  and
unfiled  claims relating to operations conducted through December 31.   The
actual costs may vary from estimates based upon trends of losses for  filed
claims  and  claims  estimated to be incurred.  The  long-term  portion  of
accrued  claims  costs  relates primarily to workers'  compensation  claims
which are payable over several years.

     Interest Expense:  The interest expense presented in the Statements of
Consolidated Operations is primarily related to industrial revenue bonds as
discussed  in Note 4.  The interest expense as presented is not necessarily
intended  to  reflect  the expense that would have been  incurred  had  the
Company been an independent stand-alone company prior to the Distribution.

      Earnings  per Share:  Earnings per share are based upon the  weighted
average number of common shares outstanding.   The number of shares used to
compute  earnings per share was 22,025,323 for all periods presented  which
represents the number of shares issued in the Distribution.

      Estimates:  Management makes estimates and assumptions when preparing
the  financial statements in conformity with generally accepted  accounting
principles.  These estimates and assumptions affect the amounts reported in
the  accompanying financial statements and notes thereto.   Actual  results
could differ from those estimates.



       Reclassification:   Certain  amounts  in  prior   year's   financial
statements   have  been  reclassified  to  conform  to  the  current   year
presentation.


3. Accrued Liabilities

     Accrued liabilities consisted of the following as of December 31:

                                                      1996           1995
    (Dollars in thousands)

     Accrued holiday and vacation pay              $  70,728    $  67,515
     Other accrued liabilities                        40,579       45,425
     Wages and salaries                               27,287       24,150
     Accrued union health and welfare                 21,296       21,667
     Accrued taxes other than income taxes            18,040       19,757
     Estimated revenue adjustments                     9,337       11,155
       Total accrued liabilities                    $187,267     $189,669


4. Long-Term Debt

      As  of  December  31,  1996  and 1995, long-term  debt  consisted  of
$15,100,000 of industrial revenue bonds with rates between 7.0% and  7.25%,
due at various dates in 2003 and 2004.

      In  November 1996,  the Company entered into a $225.0 million secured
credit  facility  with  several banks to provide for  working  capital  and
letter  of credit needs.  Borrowings under the agreement, which expires  in
2000,  bear  interest  based upon either prime  or  LIBOR,  plus  a  margin
dependent  on the Company's financial performance.  Borrowings and  letters
of  credit  are secured by substantially all of the assets (excluding  real
property  and certain rolling stock) of CFCD, all of the outstanding  stock
of  CFCD  and 65% of the outstanding capital stock of CFL.  As of  December
31,  1996,  the  Company had no short-term borrowings and  $50  million  of
letters   of   credit  outstanding  under  this  facility.  The   continued
availability  of  funds under this credit facility will require  that  CFCD
remain   in  compliance  with  certain   financial  covenants.   The   most
restrictive  covenants require the Company to maintain a minimum  level  of
earnings  before  interest, taxes, depreciation and  amortization,  minimum
amounts  of tangible net worth and fixed charge coverage, and limit capital
expenditures.   The Company is in compliance as of December  31,  1996  and
expects to be in compliance with these covenants in 1997.

      Cash  paid  for  interest was $877,000, $1,485,000,  and  $1,084,000,
including $339,000, $361,000 and $249,000 of interest capitalized, for  the
years ended December 31, 1996, 1995 and 1994, respectively.


      Based  on interest rates currently available to the Company for  debt
with  similar  terms  and  maturities, the fair  value  of  long-term  debt
exceeded  book  value  at December 31, 1996 and 1995 by  11.6%  and  11.3%,
respectively.


      There are no aggregate annual maturities or sinking fund requirements
of long-term debt for each of the next five years ending December 31, 2001.

5. Leases

      The  Company  is obligated under various non-cancelable leases  which
expire at various dates through 2003.

      Future  minimum  lease  payments under all  leases  with  initial  or
remaining  non-cancelable lease terms in excess of one year as of  December
31, 1996, are $25,234,000 in 1997, $20,207,000 in 1998, $3,953,000 in 1999,
$2,386,000 in 2000, $1,388,000 in 2001, and $1,205,000 thereafter.

     Rental expense for operating leases is comprised of the following:

                                     1996      1995        1994
      (Dollars in thousands)

       Minimum rentals              $47,146   $56,118     $49,452
       Less sublease rentals         (1,029)   (5,768)     (5,641)
                                    $46,117   $50,350     $43,811


6. Income Taxes

     The components of pretax income (loss) and income taxes (benefits) are
as follows:

                                      1996      1995       1994
     (Dollars in thousands)

     Pretax income (loss)
       U.S. corporations           $(86,829)  $(53,674)  $(53,144)
       Foreign corporations           9,052      9,876      8,666
       Total pretax  loss          $(77,777)  $(43,798)  $(44,478)

     Income taxes (benefits)
       Current
         U.S. Federal              $ 11,014  $ (32,078)   $(2,656)
         State and local             (2,048)    (4,630)     1,439
         Foreign                      4,467      4,263      4,677
                                     13,433    (32,445)     3,460

      Deferred
         U.S. Federal               (35,098)    16,183    (16,834)
         State and local               (536)     1,861       (705)
         Foreign                         -         512       (195)
                                    (35,634)    18,556    (17,734)
      Total income tax benefits    $(22,201)  $(13,889)  $(14,274)


     Deferred tax assets and liabilities in the Consolidated Balance Sheets
are  classified  based  on  the related asset  or  liability  creating  the
deferred  tax.  Deferred taxes not related to a specific asset or liability
are  classified  based  on  the  estimated period  of  reversal.   Although
realization  is  not assured, management believes it more likely  than  not
that all deferred tax assets will be realized.

      The  components  of  deferred  tax  assets  and  liabilities  in  the
Consolidated Balance Sheets at December 31 relate to the following:

                                                     1996       1995
     (Dollars in thousands)

     Deferred taxes - current
     Assets
       Reserves for accrued claims costs        $  29,434   $ 16,224
       Other reserves not currently deductible     16,573     11,822

     Liabilities
        Unearned revenue, net                     (10,537)    (9,987)
     Total deferred taxes - current                35,470     18,059

     Deferred taxes - non current
     Assets
       Reserves for accrued claims costs           42,477     31,326
       Employee benefits                           20,452     14,953
       Retiree health benefits                     23,539     22,216
       Federal net operating loss and foreign tax
          credit carryovers                         5,418      2,744

     Liabilities
       Depreciation                               (63,939)   (59,717)
       Tax benefits from leasing transactions     (15,166)   (18,047)
       Other                                       (3,447)    (2,364)
     Total deferred taxes - non current             9,334     (8,889)

         Net deferred taxes                     $  44,804  $   9,170


      For income tax reporting purposes, the Company has net operating loss
carryovers  of   $9.0  million as of December 31, 1996.   The  related  tax
benefit of  $3.2 million expires in 2011.  The Company has $2.2 million  of
foreign tax credit carryovers as of December 31, 1996 which expire in 1998.



     Income tax benefits varied from the amounts calculated by applying the
U.S.  statutory  income tax rate to the pretax loss as  set  forth  in  the
following reconciliation:

                                              1996      1995      1994

     U.S. statutory tax rate                 (35.0)%   (35.0)%   (35.0)%
     State income taxes (benefits), net of
       federal income tax benefit             (2.0)     (3.0)      0.4
     Foreign taxes in excess of
       U.S. statutory rate                     1.7       3.0       3.3
     Non-deductible operating
       expenses                                2.6       4.1       4.0
     Fuel tax credit                          (0.4)     (1.1)     (0.6)
     Foreign tax credit effects                0.7        --      (2.8)
     Other, net                                3.9       0.3      (1.4)
      Effective income tax rate              (28.5)%   (31.7)%   (32.1)%


      The  cumulative  undistributed  earnings  of  the  Company's  foreign
subsidiaries  (approximately $61 million at December 31,  1996),  which  if
remitted  are subject to withholding tax, have been reinvested indefinitely
in  the  respective  foreign  subsidiaries' operations  unless  it  becomes
advantageous  for tax or foreign exchange reasons to remit these  earnings.
Therefore, no withholding or U.S. taxes have been provided.  The amount  of
withholding  tax  that would be payable on remittance of the  undistributed
earnings would approximate $3 million.


     7. Employee Benefit Plans

      Effective  December  2, 1996, the Company withdrew  from  the  former
parent's   pension  plan  and  established  the  Consolidated   Freightways
Corporation  Pension  Plan, (the Pension Plan), a defined  benefit  pension
plan.   The Pension Plan covers the Company's non-contractual employees  in
the United States. The actuarial present value of projected and accumulated
benefit  obligations  and the related components of pension  cost  for  the
Company's  active and inactive non-contractual employees were allocated  to
the Company.

     The Company's funding policy is to contribute the minimum required tax-
deductible  contribution  for  the year.   However,  it  may  increase  its
contribution above the minimum if appropriate to its tax and cash  position
and  the Pension Plan's funded status.  Benefits under the Pension Plan are
based on a career average final five-year pay formula.



      The  Company's  annual pension provision is based on  an  independent
actuarial  computation. Approximately 89% of the Pension  Plan  assets  are
invested in publicly traded stocks and bonds.  The remainder is invested in
temporary cash investments, real estate funds and investment capital funds.

     Following is additional information relating to the Pension Plan as of
December 31:

                                                       1996           1995
     (Dollars in thousands)

     Accumulated benefit obligation, including
       vested benefits of $183,600 in 1996 and
       $180,901 in 1995                             $(191,225)     $(192,450)

     Effect of projected future compensation
         levels                                       (22,767)       (35,060)

     Projected benefit obligation                    (213,992)      (227,510)

     Pension Plan assets at market  value             213,787        192,450

     Pension Plan assets less than
      projected benefit obligation                       (205)       (35,060)
     Unrecognized prior service costs                   9,841         13,440
     Unrecognized net gain                            (49,123)        (3,370)
     Unrecognized net asset at transition, being
        amortized over 18 years                        (7,725)       (11,760)
       Pension Plan liability                       $ (47,212)     $ (36,750)

     Weighted average discount rate                       8.0%          7.25%
     Expected long-term rate of return
      on assets                                           9.5%           9.5%
     Rate of increase in future
      compensation levels                                 5.0%           5.0%

      Net  pension cost was allocated from the former parent's Pension Plan
on an actuarially determined pro-rata basis and included the following:

                                            1996        1995       1994
     (Dollars in thousands)

     Cost of benefits earned during
      the year                          $  7,055     $ 5,610    $ 8,408
     Interest cost on projected
      benefit obligation                  16,596      15,130      9,707
     Actual gain arising from
      plan assets                        (32,163)    (34,490)    (1,330)
     Net amortization and deferral        13,628      20,330     (8,837)
     Net pension cost                   $  5,116     $ 6,580   $  7,948

      Approximately 85% of the Company's domestic employees are covered  by
union-sponsored, collectively bargained, multi-employer pension plans.  The
Company   contributed  and  charged  to  expense  $116,712,000   in   1996,
$104,042,000  in  1995,  and $89,470,000 in 1994  for  such  plans.   Those
contributions  were made in accordance with negotiated labor contracts  and
generally were based on time worked.

      Prior  to  the Distribution, the Company's non-contractual  employees
participated in the former parent's retiree health plan.  The  Company  has
subsequently established its own retiree health plan similar to the  former
parent's.    The  Company was allocated a portion of  the  former  parent's
liability based upon an actuarial computation.  The plan provides  benefits
to non-contractual employees at least 55 years of age with 10 years or more
of  service.  The retiree health plan limits benefits for participants  who
were  not  eligible to retire before January 1, 1993, to a  defined  dollar
amount  based  on  age and years of service and does not provide  employer-
subsidized  retiree health care benefits for employees hired  on  or  after
January 1, 1993.

      The  following  information sets forth the Company's allocated  total
post  retirement  benefit  amounts included in  Employee  Benefits  in  the
Consolidated Balance Sheets as of  December 31:

                                                       1996         1995
     (Dollars in thousands)

   Accumulated post retirement benefit obligation
     Retirees and other inactives                     $38,681      $37,828
     Participants  currently eligible  to  retire       8,237        8,115
     Other active participants                          6,456        9,681
                                                       53,374       55,624
     Unrecognized valuation gain                       11,629        5,693
     Accrued post retirement benefit cost             $65,003      $61,317

     Weighted average discount rate                       8.0%        7.25%
     Average health care cost trend rate
        First year                                        9.0%        10.0%
        Declining to (year 1999)                          6.0%         6.0%


      Net  periodic  post retirement benefit costs were  allocated  to  the
Company  from  the former parent's plan on an actuarially determined  basis
and included the following components:

                                              1996      1995       1994
     (Dollars in thousands)

     Cost of benefits earned during
      the year                             $   540   $   432    $   894
     Interest cost on accumulated post
      retirement obligation                  4,000     3,768      3,602
     Net   amortization   and   deferral      (103)     (526)      (246)
     Net periodic post retirement
      benefit cost                         $ 4,437   $ 3,674    $ 4,250

     The increase in the accumulated post retirement benefit obligation and
the net periodic post retirement benefit cost, given a one percent increase
in  the health care cost trend rate assumption, would be 10.4% for the year
ended  December 31, 1996, 9.2% for the year ended December  31,  1995,  and
9.6% for the year ended December 31, 1994.

       The  Company's  non-contractual employees in the United  States  are
eligible to participate in the Company's Stock and Savings Plan.   This  is
a 401(k) plan which allows employees to make contributions that the Company
matches  with  common  stock up to 50% of the  first  three  percent  of  a
participant's basic compensation.  Prior to the Distribution, the Company's
non-contractual  employees participated in the former parent's  Thrift  and
Stock  Plan.   The Company's contribution, which is charged as an  expense,
vests  immediately  with  the  employee and  totaled  $1,926,000  in  1996,
$1,990,000 in 1995, and $2,600,000 in 1994.


8.   Stock  Compensation Plans

      The Company has adopted the Consolidated Freightways Corporation 1996
Stock  Option  and  Incentive Plan (the Plan).  The  Company  has  reserved
3,303,798  shares for the Plan.  Under the Plan, restricted  stock  can  be
granted   to   officers,  non-employee  directors  and  certain  designated
employees.  The  shares vest over three years and are contingent  upon  the
Company's  stock price achieving pre-determined increases  over  the  grant
price  for 10 consecutive trading days following each year.  All restricted
stock  awards  entitle  the participant credit for  any  dividends.    Upon
issuance  of  the restricted shares, unearned compensation  is  charged  to
shareholders'  equity.  Compensation expense is recognized based  upon  the
current market price and the extent to which performance criteria are being
met.   The  Company had 2,146,450 granted but unissued shares of restricted
stock for which compensation expense will be recognized over future vesting
periods  as  appropriate.   As of December 31, 1996  those  shares  had  an
aggregate market value of $19,049,700.    The weighted average market value
of the shares on the grant date was $7.475 per share.

      The Plan also allows for officers, non-employee directors and certain
designated employees to be granted options to purchase common stock of  the
Company.   The terms of the options will be set at the date of  grant.   No
options have been granted as of December 31, 1996.

      In 1995, the Financial Accounting Standards Board issued Statement of
Financial   Accounting  Standards  No.  123,  "Accounting  for  Stock-Based
Compensation"  (SFAS  123).  Adoption of SFAS  123  is  optional,  and  the
Company  has  opted to account for stock-based compensation  in  accordance
with  APB 25, "Accounting for Stock Issued to Employees."  The Company will
make all disclosures required by SFAS 123.

9.  Contingencies

      The  Company  and  its subsidiaries are involved in various  lawsuits
incidental to their businesses.  It is the opinion of management  that  the
ultimate  outcome of these actions will not have a material impact  on  the
Company's financial position or results of operations.

      The  Company  has received notices from the Environmental  Protection
Agency  (EPA)  and  others  that it has been identified  as  a  potentially
responsible  party  ("PRP") under the Comprehensive Environmental  Response
Compensation  and  Liability  Act ("CERCLA") or  other  Federal  and  state
environmental statutes at various Superfund sites.  Based upon cost studies
performed   by   independent  third  parties,  the  Company  believes   its
obligations  with  respect to such sites would not have a material  adverse
effect on the its financial condition or results of operations.

      CFCD and the International Brotherhood of Teamsters (IBT) are parties
to  the National Master Freight Agreement  which expires on March 31, 1998.
Although CFCD believes that it will be able to successfully negotiate a new
contract with the IBT, there can be no assurances that it will be  able  to
do  so or that work stoppages will not occur, or that the terms of any such
contract  will  not  be  substantially less favorable  than  those  of  the
existing  contract, any of which could have a material  adverse  effect  on
CFCD's business, financial condition or results of operations.

10.  Related Party Transactions

      Prior  to  the Distribution,  the Company participated in the  former
parent's   centralized  cash  management  system  and,  consequently,   its
operating  and capital expenditure needs were met by the former  parent  to
the  extent  that  cash  from operating activities was  insufficient.   The
related   interest   income  (expense)  on  these  advances   included   in
Miscellaneous,  net  in  the  Statements  of  Consolidated  Operations  was
approximately  ($6,115,000), $(1,729,000), and  $8,731,000  for  the  years
ended December 31 1996, 1995 and 1994, respectively.

      The Company also received certain corporate support services from the
former  parent,  namely accounting, finance, legal and  treasury  services.
Costs were allocated to the Company using both incremental and proportional
methods  on  a  revenue  and capital basis.  The resulting  charge  to  the
Company  was  $10,600,000  for  the period  January  1,  1996  through  the
Distribution  date.  For the years ended December 31, 1995  and  1994,  the
charges  were $11,946,000, and $14,749,000, respectively. These  costs  are
included  in  Selling  and Administrative Expenses  in  the  Statements  of
Consolidated  Operations.     The  Company  believes  that  the  allocation
methods  used provided the Company with a reasonable share of such expenses
and  approximate  amounts which would have been incurred  had  the  Company
operated on an independent, stand-alone basis.

     LJSC provided various administrative services to the former parent and
its  subsidiaries  under  service  contracts  at  an  aggregate  charge  of
$64,228,000  for the period January 1, 1996 through the Distribution  date.
The  aggregate charges for the years ended December 31, 1995 and 1994  were
$84,471,000   and   $71,237,000,  respectively.   At  the   time   of   the
Distribution,  certain  administrative service  departments  of  LJSC  that
provided   services  to  the  former  parent  and  its  subsidiaries   were
transferred to a subsidiary of the former parent.  In connection  with  the
transfer of these departments, certain net assets and liabilities,  in  the
amounts  of  $11,163,000 and $13,795,000, respectively,   were  transferred
from LJSC to the former parent.

      In  connection with the Distribution, certain real properties of CFCD
with  an  aggregate net  book  value  of  $57,574,000  were transferred  to
the  former parent.  Additionally, $1,957,000 of net liabilities were  also
transferred from CFCD to the former parent.

      The  Company  entered into a Transition Services Agreement  with  its
former  parent  under  which  the former parent  will  provide  information
systems,  data processing, computer and communications, payroll  and  other
administrative  services. Services will be paid for by the  Company   based
upon an arm's length

negotiated basis.  The agreement is for three years but contains provisions
that  are  cancelable  by the Company on six months written  notice.    The
former  parent  can  cancel any and all services, except telecommunications
and  data processing, after the first anniversary of the agreement  on  six
months  notice.  For the period from the Distribution date to December  31,
1996, the Company was charged $2,600,000 for services under this agreement.
The  Company also entered into agreements with its former parent to provide
for  the  allocation of taxes and certain liabilities arising from  periods
prior to the Distribution.

      As  described in Note 2, the Company provides for the uninsured costs
of   workers' compensation, vehicular, medical, casualty and cargo  claims.
Prior  to  the  Distribution, the former parent  administered  claims  made
against  the  Company and, where required by law or contract, provided  the
necessary  guarantees or collateral for the performance  of  the  Company's
obligations in each state.  The former parent  indemnified certain  states,
insurance companies and sureties against the failure of the Company to  pay
judgments  for  workers' compensation and casualty claims.  In some  cases,
these indemnities are supported by letters of credit under which the former
parent is liable to the issuing bank.

      It  is  not  feasible for the former parent to be  removed  from  its
indemnification  obligations to the states in which  the  Company  operates
with  respect  to  workers'  compensation and employer's  liability  claims
arising prior to the Distribution date. The former parent will continue  to
administer  these  claims  for the Company. The  Company  entered  into  an
indemnification  agreement with the former parent with  respect  to  claims
incurred  prior  to the Distribution date which provides that  the  Company
will  provide  security  to  the former parent for  its  obligations.   The
Company has pledged real properties and letters of credit in the amounts of
$50.0 million and $30.0 million, respectively, to secure those obligations.
The  potential liabilities required to be indemnified by the former  parent
should  be  reduced  over  time  following the  Distribution  date  as  the
Company's pending claims are resolved.



<TABLE>

<CAPTION>

                                       CONSOLIDATED FREIGHTWAYS CORPORATION
                                                AND SUBSIDIARIES
                                            Quarterly Financial Data
                                                  (Unaudited)
                                  (Dollars in thousands except per share data)


                                                       March 31          June 30          September 30       December 31

1996 - Quarter Ended
<S>                                                    <C>              <C>                <C>               <C>
     Revenues                                          $502,544         $529,997           $559,605          $554,026
     Operating loss                                     (24,557)         (13,667)            (2,301)          (32,541)(a)
     Loss before income tax benefits                    (26,342)         (14,498)            (2,683)          (34,254)
     Income tax benefits                                 (6,206)          (6,566)              (928)           (8,501)
     Net loss                                           (20,136)          (7,932)            (1,755)          (25,753)
     Net loss per share (c)                               (0.91)           (0.36)             (0.08)            (1.17)


                                                        March 31        June 30           September 30       December 31

1995 - Quarter Ended

     Revenues                                          $546,662         $535,473           $525,357          $499,037
     Operating income (loss)                              6,518              767             (7,907)          (42,164)(b)
     Income (loss) before income taxes (benefits)         6,188            1,324             (6,919)          (44,391)
     Income taxes (benefits)                              1,980              424             (2,214)          (14,079)
     Net income (loss)                                    4,208              900             (4,705)          (30,312)
     Net income (loss) per share (c)                       0.19             0.04              (0.21)            (1.38)

<FN>
(a)  Includes previously disclosed $15 million charge for the increase in workers' compensation reserve.
(b)  Includes approximately $26 million of costs related to the implementation of BAS.
(c)  Earnings per share are calculated based upon 22,025,323 shares, which represents the number of shares
     issued in the Distribution.
</TABLE>

 <TABLE>




<CAPTION>
Five Year Financial Summary

Consolidated Freightways Corporation
   And Subsidiaries
Years Ended December 31
(Dollars in thousands except per share data)
(Unaudited)
                                                 1996         1995         1994          1993         1992
SUMMARY OF OPERATIONS
<S>                                         <C>          <C>          <C>             <C>          <C>
Revenues                                    $ 2,146,172  $ 2,106,529  $ 1,936,412     $ 2,074,323  $ 2,154,697
Operating income (loss)                         (73,066)     (42,786)     (47,743)         29,403       23,665(b)
Depreciation and amortization                    64,565       63,902       73,443          83,739       83,650
Investment income                                   263          756          497             459        1,315
Interest expense                                    843          918          880             443        5,870
Income (loss) before income taxes (benefits)    (77,777)     (43,798)     (44,478)         36,769       30,190
Income taxes (benefits)                         (22,201)     (13,889)     (14,274)         16,628        4,496
Net income (loss)                               (55,576)     (29,909)     (32,116)(a)      20,141       (9,192)(c)
Cash from operations                              2,545       41,772       33,739          67,186      117,282

PER SHARE
Net income (loss)                                 (2.52)       (1.36)       (1.46)(a)        0.91        (0.42)(c)
Shareholders' equity                               9.57        11.76         9.70           12.13        12.30

FINANCIAL POSITION
Cash and cash equivalents                        48,679       26,558       23,116          10,764        7,287
Property, plant and equipment, net              416,688      501,311      452,878         500,866      543,245
Total assets                                    857,087      866,698      852,510         878,934      885,450
Capital expenditures                             48,203      111,962       32,120          49,395       90,307
Long-term debt                                   15,100       15,100       15,100          15,100       15,100
Shareholders' equity                            210,698      259,108      213,579         267,074      270,802

RATIOS AND STATISTICS
Current ratio                                  1.1 to 1     1.0 to 1     1.1 to 1        1.0 to 1     1.1 to 1
Net income (loss) as % of revenues               (2.6)%       (1.4)%       (1.7)%            1.0%       (0.4)%
Effective income tax rate                       (28.5)%      (31.7)%      (32.1)%           45.2%        14.9%
Long-term debt as % of
    total capitalization                             7%           6%           7%              5%           6%
Return on average invested capital                (22)%        (11)%        (11)%              6%         (3)%
Return on average shareholders' equity            (24)%        (13)%        (13)%              8%         (4)%
Average shares outstanding                   22,025,323   22,025,323   22,025,323      22,025,323   22,025,323
Number of shareholders                           13,500          n/a          n/a             n/a          n/a
Number of employees                              20,300       20,200       22,000          22,100       23,200


<FN>
(a) Includes $1.9 million ($.09 per share) extraordinary charge, net of related tax benefits, for the write-off of intrastate
     operating rights.
(b) Includes special charges of $17.3 million related to operation changes at CFCD and the write-off of Canadian operating
     rights.
(c) Includes $30.2 million ($1.37 per share) cumulative effect of change in method of accounting for post retirement benefits
     and $4.7 million ($.21 per share) extraordinary charge from early retirement of debt.
</TABLE>