• ITVI.USA
    15,868.670
    8.820
    0.1%
  • OTLT.USA
    2.774
    0.001
    0%
  • OTRI.USA
    21.470
    0.010
    0%
  • OTVI.USA
    15,873.680
    8.980
    0.1%
  • TSTOPVRPM.CHIATL
    2.960
    -0.660
    -18.2%
  • TSTOPVRPM.PHLCHI
    2.100
    -0.250
    -10.6%
  • TSTOPVRPM.DALLAX
    1.610
    0.250
    18.4%
  • TSTOPVRPM.LAXDAL
    3.340
    -0.130
    -3.7%
  • TSTOPVRPM.LAXSEA
    3.860
    -0.220
    -5.4%
  • TSTOPVRPM.ATLPHL
    3.520
    0.380
    12.1%
  • WAIT.USA
    126.000
    -2.000
    -1.6%
  • ITVI.USA
    15,868.670
    8.820
    0.1%
  • OTLT.USA
    2.774
    0.001
    0%
  • OTRI.USA
    21.470
    0.010
    0%
  • OTVI.USA
    15,873.680
    8.980
    0.1%
  • TSTOPVRPM.CHIATL
    2.960
    -0.660
    -18.2%
  • TSTOPVRPM.PHLCHI
    2.100
    -0.250
    -10.6%
  • TSTOPVRPM.DALLAX
    1.610
    0.250
    18.4%
  • TSTOPVRPM.LAXDAL
    3.340
    -0.130
    -3.7%
  • TSTOPVRPM.LAXSEA
    3.860
    -0.220
    -5.4%
  • TSTOPVRPM.ATLPHL
    3.520
    0.380
    12.1%
  • WAIT.USA
    126.000
    -2.000
    -1.6%
CanadaCompany earningsLess than TruckloadNewsTruckingTruckload

TFI to take aim at UPS Freight’s unprofitable business

CEO vows quick action to negotiate with customers or ultimately cut them loose after acquisition closes.

TFI International (NYSE: TFII) plans to aggressively improve margins at UPS Freight after its $800 million acquisition closes by reining in unprofitable business. The plan: renegotiate with customers or cut them loose, CEO Alain Bedard told financial analysts on Monday after the Canadian trucking and logistics company reported fourth-quarter financial results.  

“There is some freight there that the company does not make any money on,” Bedard said of UPS (NYSE: UPS). “It’s normal because it was part of a global commingling, bundling — whatever word you want to use — for the good of the company, UPS. And if you look at the results of UPS, they are fantastic, but UPS Freight, not so much. So now UPS Freight being stand-alone, they have to stand on their own two feet. There’s some freight, maybe, that [doesn’t] fit the network. So we will have to address that as soon as possible as soon as we get in there — talk to the customer and take action.”

Bedard’s blunt talk about UPS Freight customers shouldn’t come as a surprise. The CEO has built TFI into the largest trucking and logistics company in Canada, and one of the biggest in North America, by acquiring firms and turning them into profit engines. In the U.S., the truckload carrier CFI is a prime example. 

Bedard set a target of bringing UPS Freight — to be renamed TForce Freight — to an operating ratio of 96% within 12 months. It currently sits around 99%, which Bedard bluntly stated “isn’t normal.”

“We’re laser-focused on bringing a level of profitability that is normal,” Bedard said.

TFI has strong Q4 as it sets expectations for UPS Freight performance

TFI’s own performance in the fourth-quarter almost seemed an afterthought with UPS Freight acquisition set to close in the second quarter. But the company’s performance was impressive: Revenue increased by 13% compared to a year ago, and adjusted net income soared by 49%. 

TFI handily beat analysts’ expectations for the quarter by 16 cents per share. The company, which began reporting in U.S. dollars, had adjusted net income of $94.4 million, 98 cents per share, on $1.1 billion of revenue. 

The Canadian firm began reporting its results in U.S. dollars ahead of the closing of the UPS Freight acquisition. Once the deal completes, the majority of TFI’s revenue will come from the U.S.

Bedard’s long-term vision for TForce Freight includes getting its operating ratio below 90. He singled out Saia and Old Dominion as measuring sticks for LTL performance.

The overwhelmingly unionized workforce of UPS Freight — represented by the Teamsters — doesn’t stand as a barrier to achieving that level of profitability, Bedard said.

“We work with the union,” Bedard said. “We respect the contract, but we respect the business.”

Click for more FreightWaves articles by Nate Tabak
TFI to acquire UPS Freight for $800M
Canada trucking giant Bison acquired by James Richardson & Sons
Titanium roars in Q3 on US brokerage performance, adds dividend

Nate Tabak, Border and North America Correspondent

Nate Tabak is a Toronto-based journalist and producer who covers cybersecurity and cross-border trucking and logistics for FreightWaves. He spent seven years reporting stories in the Balkans and Eastern Europe as a reporter, producer and editor based in Kosovo. He previously worked at newspapers in the San Francisco Bay Area, including the San Jose Mercury News. He graduated from UC Berkeley, where he studied the history of American policing. Contact Nate at ntabak@freightwaves.com.

13 Comments

  1. How will this merge affect those of us that have been PVD’s???
    I love my seasonal work with UPS and would hope those jobs stay in place. I formerly worked with USPS as a substitute on HC routes. Don’t plan on going back.
    So I hope that our seasonal jobs remain. It’s something I look forward to and really enjoy.

    1. You know ups freight and ups is not the same company. Ups is the delivery service. Ups freight is tractor trailer that has freight on it.

    1. Im a driver for freight and sometimes its just poor dispatching or poor loading of freight inside the truck due to the inbound routing or inbound loading. Drivers sometimes find themselves driving past their 1st and 2nd stops because their 3rd one is on the tail end. I will be honest ups freight isn’t my 1st rodeo. Their technology is ancient at best. Money was never dumped into the freight side by parcel. CEO knows it .. Carol Tome…I hope TFI runs this company the way a real trucking company runs. It’s not always about numbers, it’s about getting the job done the 1st time with deliveries and pickups …

  2. We’re a small local cabinet maker and feel most of UPS Freight issues are preventable with actual “logistics”, which alone are costly. Out of the last 10 material shipments, UPS lost, delayed or damaged 4 of them. For the past couple of years, when given a choice by our manufacturers or distributors we would always select someone other than UPS Freight. TFI has work to do.

    1. I’m a former employee of UPS freight ( 4 years ) and I was with Overnite who UPS bought in 2004 for 15 years. I can say without hesitation that Overnites processes worked MUCH better. On time deliveries in the high 90’s, low damage and loss claims. UPS came in and changed many of those processes for no other reason than labor cost. They never could wrap their heads around the fact that having route planners on the floor made it far easier and efficient on the driver and, by not having to handle the freight multiple times from origin to destination prevented claims. All they were worried about was dock production and how many shipments per hour each man hour produced. They never figured out how costly it was paying damage claims or the time involved for the driver having to back track due to poor route planning. If TFI will listen to the people and take their experience and know how into consideration, they can easily hit the mid 90’s operating ratio they want in the first 6 months. All that said, if they’re looking to SAIA as their “ model LTL company “ with an OR at 90, well I feel sorry for the employees , the customers AND the company. That is unless you like big employee turnover .

  3. Interesting read especially where Mr. Bedard was to cut loose customers due to pricing. First customers are granted rate quotes or tariffs they just don’t make up their own! So maybe a deep dive to the pathetic activity of how S–T rates come to be? Now lets give UPS (Brown) with the exceptional teamster drivers who handle 100% fingerprint goods for transport to delivery doors of any business or residential address. To the men and women at BROWN my hat is off to your dedication! Now if you wish to be like Old and Saia they have awesome lock step movement that all personnel must follow such as customer first with rates that work for both operations and the customer. So if your a shipper and your pick ups are missed maybe you should review your rates with your other carriers. If your a price shopper shipper your at the bottom of the chain for P & D. Also if you ship fragile goods and 40% gets banged up then your goods need to be refocused on packaging. Remember the Orangutans from the suitcase commercial had to get jobs elsewhere. So give all your P & D drivers a smile them being late is not always on them only less than 1% of the time for they do not control a keyboard and mouse inside the terminal office.

    1. Good luck TFI. To operate below 90 is a pipe dream, or good bye teamsters, and you think the union will roll over is another is another pipe dream.
      Good bye to a lot of UPS union employees, get ready. I’ve been through it, it will be a rough ride for many

  4. a couple of changes like having more tractors so drivers could pick up all the freight and not have a computer program enslave the dispatcher numbers will help.. this company isn’t Saia. It will be what it is named.. a leader doesn’t follow it leads. So becoming a Saia clone is a follower..

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