LTL news: YRC set to propose change of operations plan to Teamsters Union

Taking the next steps to make its less-than-truckload (LTL) network more fluid for its largest unit, YRC, which began in earnest in October, YRC’s parent company YRC Worldwide is taking further steps that are designed to streamline and improve YRC’s efficiency.

These further steps, which YRCW would like to implement by April, are contingent on approval by the Teamsters Union and were initially reported on a trucking industry message board, which had YRCW documentation regarding this initiative.

Among the various action items YRC is proposing are:
-reducing corridor hubs and freight handling;
-eliminating and reducing end of line road domiciles;
-eliminating a distribution center;
-reversing specified road primaries;
-closing a sleep road domicile; and
-adding additional sleeper runs to current sleeper domiciles.

YRC said in an operating statement that the design of the present day freight handling structure currently in place within the YRC network is to handle in excess of 70,000 shipments on a daily basis, with a marketing strategy to provide same day, next day, two day, three day, and four day service.

“The reality of the economic climate is that the company is handling, on average, 48,000 shipments per day with a linehaul network domiciled at approximately 150 locations,” said YRC. “The vast number of these domicile locations and the excessive number of freight re-handle locations must be restructured to continue the strengthening of the company’s financial position to better provide job security to its employees while at the same time growing the business and increasing employment opportunities. This change of operations request is also intended to return YRC to what it does best—to provide world class service to its customers in to 500 mile to 3,500 mile market.”

In an interview with LM, YRC President Jeff Rogers said that by focusing on what YRC does really well, which is long haul in the 500 mile to 3,500 mile market, and focusing on two- and three-day transit times and taking handles out and doing more direct loading, which he said will speed up its service and subsequently reduce freight claims and freight handling.

“It is in a way about de-emphasizing or not doing next-day as much, which is not a core focus, and we want to focus on what we do better and put our resources there,” said Rogers.

What’s more, he explained that YRC has short-haul covered well with its New Penn, Holland, and Reddaway regional LTL units, whom he said are the best next-day carriers in their footprints and the best use of company assets.

As part of this initiative, YRC is also proposing to eliminate its Velocity Network, an effort it launched in 2008 focused on reducing transit times significantly in more than 30,000 lanes. Should this go through, the company would nix the Velocity Network in all 16 designated service centers it runs in, with the changes occurring in the conjunction with its proposed 2012 network service restructure change of operations.

“We are not closing any terminals,” said Rogers. “The Velocity Network hubs we are talking about are where we actually had a next-day network built within the network. For example, if you had one terminal that was a Velocity center but also a regular end of the line or distribution center, what we are doing is taking down the Velocity portion of that network and moving freight to the next distribution center or a corridor hub or an end of the line distribution center. No centers are being closed completely or permanently renovated; they are just being changed or reduced back to the core long-haul freight movement.”

Satish Jindel, president of Pittsburgh-based SJ Consulting, told LM that this move by YRC is good in that it signals that the company is getting back to the basics.

“YRC has units that are better suited to do next-day,” he said. “Focusing on long-haul creates better efficiency and more productivity than trying to run everything within the YRC national network. It is good to see the company focus on longer distance freight. Those who say there is no more short-haul LTL freight and that it is all regional are misguided. This allows them the improve quality of service, reduce the number of handlings and reduce the related. Jeff Rogers is bringing good, focused leadership to YRC, and I am happy to see that.” 

Jindel added that it remains to be seen if YRC is making the proper changes and improvements in its pricing under the assumption that LTL pricing does not collapse as it did in 2009. If pricing does hold up at current levels, he said 2012 could shape up to be a bullish year for transport providers in general and YRC should see the benefits of that.

In September, YRCW completed its long-awaited financial restructuring. Company shareholders unanimously voted to have YRCW common stock diluted.

This news followed a $500 million restructuring announced in July, which included a new $400 million lending agreement.

Before the restructuring, YRCW had 48 million outstanding shares. After the restructuring, it has 1.9 billion shares, meaning former shareholders will own just 2.5 percent of YRC. The other 97.5 percent is now owned by new shareholders comprised of lenders, bondholders, and labor union members.