Subscribe to our free, weekly email newsletter!


Weather, Teamsters concessions chatter batter YRC earnings in first quarter

By John D. Schulz, Contributing Editor
May 01, 2014

Winter weather took its toll on the financial performance of YRC Worldwide, parent of the nation’s long-haul carrier YRC Freight (the nation’s second-largest LTL carrier) and YRC Regional (which represents the nation’s seventh-largest LTL unit).
 
YRC swung from consolidated operating income of $9.9 million in the year-ago quarter to a consolidated operating loss of $32.4 million in the 2014 first quarter. That came on operating revenue of $1.211 billion, compared with year-ago revenue of $1.162 billion.
 
YRC officials cited the rough winter weather as well as “distractions” from ratification of a memo of understanding (MOU) with the Teamsters union. That MOU provides for wage and benefit concessions through 2019, which allowed the company to renegotiate more than $1 billion in long-term debt on more favorable financial terms.
 
“This was one of the worst winter seasons in my more than 30 years in trucking,” YRC Worldwide CEO James Welch said in a statement. “We estimate that it negatively impacted our operating income by approximately $20 million. The main culprits were lower volumes, decreased productivities and higher use of purchased transportation.”
 
YRC also reported a $13.2 million increase in expense related to workers’ compensation, bodily injury and cargo claims. The increase in both bodily injury and cargo claims expense was driven by an increase in the number of claims due to adverse weather conditions, YRC said.
 
“The good news is that during the first quarter of 2014, we laid the foundation for our future operational improvements based on changes provided by the recently ratified MOU, more specifically the establishment of a uniform national attendance policy, payment of vacation based on the number of hours worked and, to a lesser extent, our new over-the-road purchased transportation policy,” Welch said.
 
“I am pleased with the progress we’ve made during the first quarter in implementing these new policies,” Welch said. “However, because the MOU was ratified halfway through the quarter, there were little, if any, positive impacts on year-over-year results. I believe it will take the better part of 12 months before we experience the full effect of the operationally-related policy changes.”
 
YRC’s financial story effectively is that of two companies: long-haul and regional. YRC Freight, its long-haul unit, continues to struggle, with an operating ratio of 104.3 in the first quarter, a 4.6 percent decline from the 99.7 OR posted in the 2013 first quarter. Welch has moved quickly to remedy the situation.
 
Jeff Rogers, who had been YRC Freight president, resigned last September and was replaced by Darren Hawkins who has restructured the organization at YRC Freight to align sales with operations and three terminals are set to open to meet demand for service in certain areas of the country.
 
“For the remainder of 2014, these changes, in addition to our regimented service cycle, are anticipated to provide additional efficiencies that will intensify our operational improvements,” Welch said.
 
YRC’s three regional subsidiaries (New Penn, Holland and Reddaway) are performing much better than the long-haul unit. The regional companies posted a collective 98.3 OR, a 1.2 percent deterioration from the year-ago quarter. But total tonnage was up 2.6 percent, compared to a 1.7 percent rise in tonnage for the long-haul unit.
 
Despite the significant impact of the winter weather, YRC Regional grew revenues by 11.1 percent during the first quarter of 2014. That was partially because of an additional 4.5 days in the quarter for Holland and Reddaway. Welch said he is “very pleased” with the regional unit’s performance.
 
“I believe the strength in the top line speaks volumes for their management teams and the tightening of capacity in certain areas of the country,” Welch said.

About the Author

image
John D. Schulz
Contributing Editor

John D. Schulz has been a transportation journalist for more than 20 years, specializing in the trucking industry. He is known to own the fattest Rolodex in the business, and is on a first-name basis with scores of top-level trucking executives who are able to give shippers their latest insights on the industry on a regular basis. This wise Washington owl has performed and produced at some of the highest levels of journalism in his 40-year career, mostly as a Washington newsman.


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

While the economy has seen more than its fair share of ups and downs in recent years, 2014 is different in that it could be the best year from an economic output perspective in the last several years. That outlook was offered up by Rosalyn Wilson, senior business analyst at Parsons, and author of the Council of Supply Chain Management Professionals (CSCMP) Annual State of Logistics Report at last week’s CSCMP Annual Conference in San Antonio.

Matching last week, the average price per gallon of diesel gasoline dropped 2.3 cents, bringing the average price per gallon to $3.755 per gallon, according to the Department of Energy’s Energy Information Administration (EIA).

A number of key topics impacting the freight transportation and logistics marketplace were front and center at a panel at the Council of Supply Chain Management Annual Conference in San Antonio last week.

The relationships between third-party logistics (3PL) service providers and shippers are seeing ongoing developments due in large part to the continuing emergence and sophistication of omni-channel retailing. That was one of the key findings of The 19th Annual Third-Party Logistics Study, which was released by consultancy Capgemini Group, Penn State University, and Korn/Ferry International, a global talent advisory firm.

Optimism in the form of increasing profits was a key takeaway in the Annual Survey of Third-Party Logistics (3PL) CEOs, released earlier this week at the Council of Supply Chain Management Professionals (CSCMP) Annual Conference in San Antonio.

Article Topics

News · LTL · YRC · YRC Freight · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA