YRC counts on “Velocity Network” for return to profitability
John D. Schulz, Contributing Editor -- Logistics Management, 8/1/2008
WASHINGTON — 
WASHINGTON—YRC Worldwide, parent of three of the nation’s largest LTL carriers accounting to more than one-fourth of the $33.6 billion LTL sector, is counting on speed to return to profitability after two quarters of losses.
With the launch of its new “Velocity Network,” designed to enable YRC to compete with the best non-union regional carriers, the carrier said it is cutting transit times on more than 30,000 lanes at Yellow Transportation, Roadway, and USF Holland. Most of the service improvements are east of the Mississippi River, but YRC officials say an expansion on the West Coast is coming as well.
Mike Smid, president and CEO of YRC North American Transportation, said that these changes position the YRC-affiliated companies to better compete better in a changing LTL environment. According to Smid, only 30 percent of its business currently comes from “traditional” LTL freight that is suited to the old hub-and-spoke network system. Today, Smid added, customers are increasingly asking for additional services, tighter delivery windows, or consolidation or other services.
“Our entire network moves on a time-based system,” Smid explained. “That does two things. It makes us more consistent and it gives us tremendous support for our premium services. It also makes us considerably more nimble and considerably more reliable.”
As part of the new plan, service is cut by at least one day for more than 15 percent of YRC’s 150,000 daily shipments handled by all of its operating companies. YRC officials say the new configuration reduces shipment handling and eliminates approximately 20 million line-haul miles annually for a savings of $40 million. “We’re moving away from the traditional, outdated hub-and-spoke system where, in a lot of situations, we had to go east to go west,” he said.
YRC’s changes evolved from its most recent labor negotiations with the Teamsters union, which represents some 66,000 YRC workers. YRC Chairman, President, and CEO William Zollars called the new labor pact “a game-changer” that has forced many internal changes.
One is the creation of a new “utility worker” category. For $1-an-hour more in wages, these workers can drive a truck one day and work the dock the next—flexibility long sought by unionized carriers to compete with the likes of Con-way, Estes Express, Southeastern, and other top non-union regional specialists. “The labor contract was a big enabler for us,” Zollars added.
YRC won the right to hire part-time workers on four-hour shifts to handle peak freight periods. The carrier also won the right to use non-union truckload service for some of the 28 percent of its total freight loads that can contractually go by railroads. Some of that freight will go on Glen Moore, a non-union TL carrier that YRC owns.
To hear Zollars tell it, Glen Moore and other TL carriers may be getting as much business as YRC can give them. Simply put, he is not satisfied with some rail service on routes other than Chicago-Los Angeles or Chicago-Portland—top-flight intermodal lanes frequented by UPS and other LTL carriers.
“Rail has been a real challenge for us,” Zollars added. “Service has deteriorated significantly. We can now use substitute truckload service for some of that freight that used to go on rails.”
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