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NewsTrucking

Roadrunner downsizes dry van business, announces closures of five terminals, mass layoffs at five other locations

This story has been updated to include a statement by Shannon Everett, president of Rich Logistics, as well as a press release issued by Roadrunner, Rich’s parent company, late Monday, Sept. 30.

Approximately 450 truck drivers and employee positions will be eliminated after Roadrunner Transportation Systems Inc. (NYSE: RRTS)  notified workers on September 30 that the company is closing five terminals and significantly reducing its workforce at five locations.

The downsizing of Roadrunner’s dry van truckload business, Rich Logistics, headquartered in Little Rock, Arkansas, means it will reduce its number of drivers from 768 to 460 drivers, Shannon Everett, president of Rich Logistics, told FreightWaves late Monday.

“My thoughts and prayers go out to our employees and their families that have been impacted by this restructuring, a decision that we feel was necessary given the growing forces that are currently being exhibited throughout the NAFTA trade lanes,” Everett said.

Roadrunner, headquartered in Downers Grove, Illinois, is an asset-light company that posted around $2.2 billion in revenue in 2018. However, the company reported another big loss of nearly $142 million in the second quarter of 2019 that was far worse than the consensus estimate, which called for break-even results.

The downsizing includes reducing its “unprofitable” dry van company tractor and trailer fleets by more than 50 percent, according to a press release sent out by Roadrunner late Monday.

“In conjunction with the downsizing activities, the company expects to incur one-time pretax operations restructuring costs of between $12 million and $16 million, excluding the gain or loss on the sale of equipment and the write-down of assets,” the company said in its release.

In his letter to employees, Everett said the decision to reduce its dry van business was reached “after carefully assessing our operations and anticipated corporate needs.”

The termination date for notified employees is expected to be November 29, the letter stated. Employees subject to the workforce reduction will receive either severance or a 60-day notice, the company said.

Rich Logistics, which was acquired by RoadRunner for approximately $48 million in February 2014, will be permanently closing its terminals in: Kansas City and St. Louis, Missouri; Burton, Michigan; and Brownsville and Laredo, Texas.

The company will be significantly reducing its workforce at its Dallas, El Paso and Van Ormy, Texas, locations, and its sites in Little Rock, Arkansas, and Nashville, Tennessee.

The company said it is complying with the federal Worker Adjustment and Retraining Notification (WARN) Act, which requires employers with more than 100 employees to provide their workers with a 60-day notice of a mass layoff.

“The downsizing activities are expected to reduce lease obligations and debt and be substantially complete by year-end 2019,” the Roadrunner release states.

The elimination of approximately 450 workers represents approximately 10 percent of the company’s total workforce, according to the release.

“We believe downsizing the dry van business will improve operating margins and cash flow, reduce lease obligations and debt, improve internal controls and allow greater focus on the significant value-creation opportunities within our other businesses,” Curt Stoelting, chief executive officer of Roadrunner, said in the release.

RoadRunner has been working to emerge from a financial scandal after three of its former executives were indicted by federal officials in an alleged accounting and securities fraud case that was discovered in May 2017.

Rich Logistics and its parent company, Roadrunner, were also hit with a $37 million lawsuit filed by Arkansas-based PKE Western Truck Leasing, Inc., alleging breach of contract on August 7. Everett said plans to downsize Rich Logistics’ dry van operation is “unrelated” to the PKE lawsuit.


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Clarissa Hawes

Clarissa has covered all aspects of the trucking industry for 13 years. She is an award-winning journalist known for her investigative and business reporting. Before joining FreightWaves, she wrote for Land Line Magazine and Trucks.com. Clarissa lives in the Kansas City area with her family. If you have a news tip or story idea, send her an email to chawes@freightwaves.com.

26 Comments

  1. To Everett I really don’t believe a word you say when talking about your goes out to the families and workers affected by this mass lay-off and shut down.. I really hope you guys go under completely and you lose everything!!! Oh by the way I was one of the drivers you shit on!!!

    1. My name is Christina, I am the recruiter for TK Transport, Inc. I would like to start by letting you know that I’m sorry to hear of the unfortunate circumstance that you are in. TK Transport, Inc is currently hiring drivers. We are based out of Clute, Texas. If you would like any information please contact me at 979-417-7557 or by email recruiting@tktransport.co

  2. The funny thing is, so much is said about the thought that was given in these decisions, but yet the decisions left Ford lanes undelivered, contracted lanes to the automotive plants unfulfilled, created more late deliveries and assembly line shutdowns costing the company even more money. The decisions were not thought through, they were done without any care for their customers, their employees, or their bottom line. Cutting back staff and drivers is one thing. Keeping enough people on board to continue fulfilling the contracts you made with your customers is another thing entirely. Roadrunner has not been in the business of delivering automotive parts and has no idea of how things actually get done. Yes there are up’s and down’s, but Rich did not stay in business for that many years, through all the strikes and recessions in the automotive industry and still be a 40 million dollar company to be acquired by another logistics company on the open market, then run into the ground by mismanagement and ignorance of the automotive industry. For all of us who gave everything we had to Rich Logistics because we took pride in taking care of our customers, keeping deliveries on time, and doing the right thing… and were given nothing but a severance package and a termination notice, well done Roadrunner!

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