YRCW sells Glen Moore truckload assets to Celadon Inc.
December 16, 2011
Less-than-truckload (LTL) transportation services provider YRC Worldwide Inc. said yesterday it has “sold a significant portion of its assets” of its truckload subsidiary, Glen Moore, to Celadon Trucking Services Inc., a subsidiary of truckload carrier Celadon Inc.
Financial terms of the deal were not disclosed. YRCW officials declined to disclose how many Glen Moore assets were involved in the transaction.
YRCW CEO James Welch said in an interview with LM that this deal made sense on various levels.
“One of the things I wanted do when I came back in here was to really get the company focused precisely on what we mainly do for a living—and that is LTL,” said Welch. “I feel like the company had been really distracted with assets outside of our core LTL expertise. One of the things I have worked hard on in my 140 days back is pushing the operating power to the LTL companies—New Penn, Holland, Reddaway, and YRC—and try to eliminate the distractions other things that surround the business and get focused on improving our performance in the LTL segment of our business, which is 96 or 97 percent of our revenue. You will see me continue to remain focused on North American LTL assets. Anything other than that is not what we are focused on.”
Paul Will, vice chairman, president and CEO of Celadon Group said in a statement that bringing Glen Moore’s dedicated services into the fold augments its existing expertise, adds to the company’s scale and accelerates its growth.
Focus on service: Since taking the helm as YRCW CEO in July (Welch began his career in 1978 as a sales rep for Yellow Transportation, now known as YRC National, and in 2000, Welch was named Yellow’s president and CEO, a position he held until 2007), Welch has stressed a company-wide focus on strong service, regaining customer confidence in YRCW, and rationalizing the company’s network to be more efficient, as opposed to trying to grow and lead by price.
“Things are going well with that,” he said. “We provide world-class service at each of our four regional companies so that is not really an issue. The lingering effects to the Yellow-Roadway integration were creating some service inconsistencies that I was not [happy] with, and I did not feel like we could grow our market share and ask for more price if our service wasn’t more consistent at YRC. That is what our focus has been, and we have made a lot of progress, which has resulted in excellent customer feedback. We have noticed improvements in service and have a kind of fast-forward service to keep an emphasis on providing and improving better service at YRC to help the company move forward.”
When asked what the “lingering effects” of the Yellow-Roadway integration were, Welch explained that it was obvious that not enough time was taken to properly plan for that integration, with a network flow that was not conducive to giving the right kind of service.
He added that the company has made changes and will continue to make changes to its network in order to get YRC into a more “predictable rhythm” and get in the cycle of delivering good service.
Along with service, he said, is a continuing focus on improving the mix of the company’s freight is going to continue to remain to be a big emphasis at all of the YRCW operating companies.
“That is not something that is going to get fixed overnight, because you don’t want to cull or get rid of too much freight unless you are replacing it with better freight,” said Welch. “That is a process which requires an evaluation of your different lanes, short-haul, back-haul, and analysis in trying to work toward that optimal balance of what you are looking for from a freight quality standpoint. We still have a ways to go in that area, no doubt.”
In terms of what YRCW saw during a calm—or limited—Peak Season, Welch noted that things are not like they used to be in that there was not much of a peak, with activity spreading into the fourth quarter. From a volume standpoint, he said the fourth quarter for YRCW is decent, with October being lighter than expected and November a little better than expected.
Big picture changes: 2011 has been an eventful year for YRCW in that it recently implemented a reverse split of its common stock, took steps to augment operations for its YRC subsidiary, and completed a $500 million restructuring in July, which included a $400 million lending agreement.
In addressing these things, Welch said that when he returned to the company things were a little bit worse than he thought they would be. But on the positive side, he said the company has made more progress over the last 140 days than anticipated which balanced it out.
“One of my key strategies coming in was to decentralize and tear down this holding company that was too involved in the operating companies and push the operating power back out to New Penn, Holland, Reddaway, and YRC,” he explained. “I eliminated people at the holding company level. All I want the holding company to be is the CEO, the CFO and their related organization and the general counsel and their related organization. The operating companies are different companies with different service offerings serving different parts of the company. And most importantly they each have different cultures. Instead of trying to make them an YRCW-type of a company, [we are having each company be itself] to provide a different culture and a different image. We are making progress. Am I proclaiming victory? No. We have a long ways to go, but we are making progress.”
This is happening at a time when market conditions appear to be improving in the LTL market. And during the economic downturn and especially when YRCW was at the peak of its financial troubles, Welch observed that a few carriers ultimately hurt themselves trying to put YRCW out of business.
Since that time, though, Welch said competing LTL carriers understand YRCW is not going out of business, which has led to a more rational mindset in the LTL industry regarding the cost-pricing structure.
“Pricing in many ways is more stabilized than I have seen in a number of years, and that is a good thing,” said Welch.
Subscribe to Logistics Management magazine
entire logistics operation. Start your FREE subscription today!