YRC Freight pitches network changes to union

Less-than-truckload (LTL) transportation services provider YRC Worldwide said today that its YRC Freight subsidiary has submitted a proposal for a new set of network improvements—or change of operations—to the company’s union leadership.

YRCW officials said these changes, once implemented, will serve as another step in YRC Freight’s efforts to continuously improve customer service, optimize linehaul density and load average, reduce empty miles and reduce shipment handling.

According to a copy of the proposed change of operations released by Teamsters for a Democratic Union (TDU), the proposals include:
-consolidating 29 end of line terminals into existing terminal locations;
-reducing end of line road domiciles;
-reducing distribution center locations by 3, utilizing existing capacity to create density for more network direct loading;
-reversing specified road primaries;
-establishing a new relay operation in Staunton, Va. to reduce system miles; and
-adding additional sleeper runs to the Jackson, Miss. road domicile

The TDU copy also cited YRCW as saying these changes will reduce terminal building costs, including management, staffing, lease costs, taxes, depreciation, communication, electric, water, and sewer costs, among others. And it also stated how this change of operations request continues the restructuring of YRC’s terminal network to further strengthen its financial position to better provide job security to its employees while also growing the business and increasing employment opportunities.

“By realigning our network, YRC Freight will reduce the number of handling and relay locations in order to build network density,” said Jeff Rogers, president of YRC Freight, in a statement.” These network improvements will be seamless to our customers and when implemented will improve our service. The ongoing effort to optimize our network is also a key part of our sustainability efforts as we reduce mileage and emissions. Better density means fewer empty miles and less emissions. This is all about improving customer service and taking another step to regain a lead position in the North American LTL market. This change also moves us closer to sustained profitability.”

YRCW officials did not reply to LM for further comment at press time.

The company statement said that a committee made up of union and company leadership will convene a formal hearing, which is expected to take place next month, to consider the network improvements which it said are expected to begin in May.

But TDU said that is not likely to be the case, stating yesterday that the proposed YRC change of operations is on hold, and no hearing on it is scheduled for March or for April.

TDU said that these proposed changes would result in the loss of 760 dock, cartage, shop, and office jobs, with a loss of 542 road jobs at the terminals being consolidated and conversely there would be 639 cartage and 343 road jobs added at other terminals for a net loss of 230 jobs.

In February, YRCW reported that in 2012 the company reported a positive annual operating income for the first time in six years.

YRCW’s consolidated operating revenue for 2012—at $4.851 billion—was down 0.4 percent compared to 2011, but its consolidated operating income increased $162.3 million to $24.1 million, including a $9.7 million gain on asset disposals, marking its first positive annual consolidated operating income in six years. And it reported that 2012 consolidated operating revenue at $4.869 billion and a consolidated operating loss of $138.2 million, including an $8.2 million gain on asset disposals. EBITDA for 2012 at $241.2 million represented an $82.0 million improvement over 2011.

Following the second and third quarters, which saw operating profits of $27.3 million and $15.5 million, respectively, which represented the first time in four years that YRC, the second-largest LTL carrier behind FedEx Freight, posted two straight quarters of operating profit, the fourth quarter made it three straight quarters of operating income growth at $30.0 million. Fourth quarter consolidated operating revenue at $1.169 billion was down 3.6 percent annually.

2012 operating revenue at YRC Freight—at $3.2 billion—was up 0.1 percent annually, with total tonnage per day and total shipments per day down 2.5 percent and 2.3 percent, respectively. Revenue per hundredweight and revenue per shipment were up 3.1 percent and 2.9 percent, respectively. Fourth quarter revenue for YRC Freight—at $777.2 million—was down 3.4 percent, and total daily tonnage was down 5.5 percent. Total shipments per day were down 5.4 percent, and revenue per hundredweight and revenue per shipment were up 3.2 percent and 3.1 percent, respectively.