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    60.030
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    3.2%
  • OTVI.USA
    13,799.390
    60.030
    0.4%
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    -0.010
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  • TSTOPVRPM.ATLPHL
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    14.8%
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  • WAIT.USA
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Company earningsFinanceLess than TruckloadLogisticsNews

Roadrunner expanding less-than-truckload network

After delisting from the NYSE, the company continues to double down on its asset-light model

Roadrunner Transportation Systems Inc. (OTC: RRTS) announces “significant” expansion in its less-than-truckload (LTL) division. The company announced plans in a July 16 press release to add three new LTL service centers in Chicago, Philadelphia and Riverside, California.

The Downers Grove, Illinois-based company said the new facilities are expected to come online this summer, adding 169 dock doors to its network.  

“These network changes are part of a broader effort within Roadrunner Freight to significantly invest in service,” stated Roadrunner Freight President Frank Hurst in the release.

Part of the corporate overhaul

The announcement follows the re-tooling initiatives the company has made throughout its LTL network; which include reducing transit times, expanding its shuttle service between service centers and regional hubs, adding weekend operations and implementing new dock automation.

The news is encouraging given the company’s restructuring efforts, which have included selling off non-core units and even delisting from the New York Stock Exchange.

In efforts to reduce costs, preserve capital and stave off losses, Roadrunner accelerated its multi-year corporate shakeup last year, re-focusing on an asset-light model in its core LTL and value-added logistics offerings.

“On the Roadrunner Freight side, our restructuring work is complete. We are now laser-focused on service, safety and the driver experience. We currently have the lowest exceptions, best on-time delivery and highest driver count since I joined the company,” Hurst said in an email to FreightWaves. “What we have learned, admittedly through some trial and error, is that when we spend our time focused on customers and drivers, the financials take care of themselves. This is the foundation of our SHIP IT LIKE YOU OWN IT philosophy.”

Roadrunner’s prior acquisition and organic initiatives were centered on the company becoming an all-encompassing transportation and logistics provider. The company’s product offering expanded to include a full gamut of services – truckload (TL), LTL, air and ground, cross-border, expedited, temperature-controlled, intermodal, freight management, retail consolidation, international freight forwarding and customs brokerage. This allowed the company to more than triple revenue in a decade to 2018’s high-water mark of $2.2 billion.

However, the inability to fully integrate acquisitions and market the company as the transportation and logistics behemoth imagined left it debt-laden and cash-strapped. Roadrunner incurred losses of $341 million in 2019 and $166 million in 2018, which included large asset and acquisition write-downs from past deals. Even on an adjusted operating basis, the company has incurred losses. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $71 million lower in 2019 at a loss of $54 million.

Roadrunner has made several moves in the last two years to keep the company afloat. Emerging from a major accounting scandal with new management in place, the company completed a capital restructuring. The $450 million rights offering essentially allowed Roadrunner to lower its debt load by $389 million, replacing dividend-paying preferred shares with common stock shares. Additionally, the recent divestitures have raised more than $300 million, which has been used to lower the company’s debt and lease obligations.

The new facilities

At 93,000 square feet and 139 dock doors, the new Chicago facility doubles the existing facility’s size and will provide office space for Roadrunner Freight’s corporate functions.

The Riverside facility will be a new location for Roadrunner. The company said that the addition of the terminal will provide it with a third facility in Southern California, bringing its total footprint in the area to 257,909 square feet and 280 dock doors. The expansion in the area was “a direct result” of the company’s growth in ecommerce.

The new terminal in Philadelphia is expected to bolster its Northeast footprint. “The Philadelphia facility is our gateway into the Northeast. It will serve as our regional hub and is the first step toward providing more robust service in the Northeast corridor and reducing transit times in that all-important region,” Hurst told FreightWaves.

The release said the company is also conducting a review of other locations for further expansion.

“We are actively exploring opportunities and vetting markets to determine where we need to open new facilities to serve our customers and support our drivers. It’s an exciting time to be part of the Roadrunner Freight organization,” concluded Hurst.

Click for more FreightWaves articles by Todd Maiden.

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Todd Maiden

Based in Richmond, VA, Todd is the finance editor at FreightWaves. Prior to joining FreightWaves, he covered the TLs, LTLs, railroads and brokers for RBC Capital Markets and BB&T Capital Markets. Todd began his career in banking and finance before moving over to transportation equity research where he provided stock recommendations for publicly traded transportation companies.

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