The trend of year-over-year tonnage improvement from the less-than-truckload (LTL) carriers in August ends with YRC Worldwide’s (NASDAQ: YRCW) midquarter report. In a press release issued after the market closed on Wednesday, the company reported that tonnage declines actually accelerated during the quarter, down 6.4% in August, following a 4.3% decline in July.
The report was worse than the updates from competitors Old Dominion Freight Line (NASDAQ: ODFL) and SAIA (NASDAQ: SAIA), which reported August tonnage increases of 2.4% and 0.5%, respectively. Before the market opened on Wednesday, ArcBest Corp. (NASDAQ: ARCB) reported a total tonnage-per-day increase of 3.5% for August, with LTL tonnage up by a high-single-digit percentage.
For the first two months of the third quarter, YRC’s shipments per day were down 7.6%, which was partially offset by a 2.4% increase in weight per shipment compared to the same period of 2019. Revenue per hundredweight, or yield, is down 4.9% quarter-to-date.
The implied revenue decline quarter-to-date is in excess of 10% year-over-year, worsening as the quarter progressed. The carrier’s peers reported flat to slightly better revenue for the month of August.
The results for the quarter may not matter all that much to investors as the carrier advances its turnaround, following a $700 million lending package from the federal government.
Terminal consolidation moves forward
Recent posts on truckingboards.com show change-of-operations notifications have been issued at a couple of YRC’s facilities.
In an Aug. 25 letter to Teamsters National Freight Director Ernie Soehl, the carrier said it was formally filing for a change of operations under the national master freight agreement to make the distribution center in Memphis, Tennessee, a containerization location. The letter stated that rail freight at the facility will need to be placed into containers as procedure changes at Class I railroad BNSF Railway (Berkshire Hathaway, NYSE: BRK.B) will no longer allow the shipment of trailers on railcars.
YRC said it had already purchased 640 containers so far and plans to add 340 more in the “very near future” to accommodate the change. The operation is expected to handle 500 shipments daily.
The message boards also showed notifications that YRC Freight terminals in Des Moines, Iowa, and Lexington, Kentucky, will be merged into existing Holland service centers in those respective markets. No indication as to the number of employees impacted by the changes was provided.
In an email to FreightWaves, YRC said, “we do not comment on pending change of operations.”
Overhaul taking shape
The announcements advance the carrier’s corporate overhaul, which is designed to market all five of its brands under one umbrella, operating on one network. The facility rationalization will also eliminate redundancy, improve density, cut costs and free up capital.
In the past, it wasn’t uncommon for the carrier to have two of its companies operating independently out of the same facility. However, the ratification of its new labor agreement a year ago has provided the company with more flexibility around operations and work rules.
YRC started the year with 351 facilities, shuttering 16 by the close of the second quarter. Those consolidations complemented similar efforts made last year, which resulted in the elimination of approximately 25 terminals. On their Aug.3 second-quarter call, management said they plan to trim a few more by year-end, bringing the total network to roughly 325 service centers.
Another key cog in the turnaround is the second tranche of the $700 million package it received from a lending program set up under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The $400 million allocation provides YRC the capital needed to update its older tractors and trailers, which have been a cost headwind.
Management said they expect to see cost savings of roughly $10,000 per replaced tractor annually as the cost profile for expense lines like maintenance, fuel and insurance improve. Additionally, the savings in owning versus leasing, and improved vehicle up time are expected to be tailwinds to operating results.
While the company has moved forward with deploying funds from the first tranche of the loan package, which were allotted for the repayment of deferred health, welfare and pension payments, the second tranche hadn’t been accessed as of the company’s second-quarter report.
The loan to the carrier, which was identified as “critical to maintaining national security,” still has some lawmakers questioning the rationale behind the deal. The congressional commission overseeing the distribution of federal funds allotted by the CARES Act still has several questions out to the Treasury and Defense departments.
John Colyer
I work for YRC Freight, we are a Canadian Owner Operator Division so there is No cost to YRC for trucks or maintenance etc. We are a double operation and have been trucking for over 50 years. We pull freight from Minneapolis to Canada and can deliver it a week before any train anywhere in Canada. This company could increase its freight flow greatly if its would only increase its outbound by road instead of Rail as we often sit for a day waiting for a load from Chicago or the Minneapolis Dock to load trailers. Management really need to have a heads up with what’s going on, or better what’s Not going on so we can increase the outbound. Its hard to find workers willing to do dock work with having Amazon down the street. Unfortunately Management is totally out of sync with what or better with what is not happening and the Guy’s in the Big house don’t seem to have a clue. I think they all wear blinkers and just watch the pay check. I think over the years upper management became complacent and forgot to manage. They should have left Roadway in charge after all why but a Winner and then let it all go. No one has the foresight now because things haven’t changed and no one bother to find out. We should be customer oriented on time delivery, management is only interested in Volume which doesn’t cut the mustard in building customers. It need someone who is Trucking orientated in charge. Maybe a week on “Undercover Boss” would be a great Idea but it’s hard to find great leaders these day’s.
David Heafner
True, their biggest problem is they worry more about paying out wages and benefits than trying to grow, after all the years I’ve been in LTL FREIGHT growing the company, better service, getting it done will cover benefits and wages witch in retrun give you profitable, members, numbers and looking good for next promotion
DANNY
I am constantly hearing from current employees , that no one cares! Junior supervisor don’t have a clue, they are not properly trained. The terminal manager is always all over the junior supervisors, to make their numbers, make their numbers, make their numbers! Half of the people on the dock do not use the skills that they know to load trailers properly, to prevent the destruction of our customers products. We do not pick it up on time, we do not deliver it on time, and we tear it up so very badly in the process! And when we do try to repackage or recoup the destruction, we hide the damage! Middle management won’t take responsibility, they haven’t got the time to train lower management, because upper management is always on their case. And the top management appears to not have a clue what goes on from day-to-day, on the dock operation, in the city operation, or inline Hall operation. They’re too busy with their politics, trying to get that next promotion! There is not discipline when discipline is necessary, retraining does not happen on a regular basis. And even with this large influx of taxpayer money , I see no way that YRC Freight can possibly survive! I am retired after 31 years of service with the old ROADWAY EXPRESS.. I was proud to give world-class service to my customers, each and every day. If Freight was damaged I brought it to the attention of my customer! I developed world-class relationships with my customers! I’m not bragging but just humbly sharing the truth! I worked hard and got my numbers, but I serve my people! YRC Freight has forgotten what world-class service is all about! It’s a real shame, but unless Senior Management steps forward, with a can-do spirit, this company is doomed to failure! When union labor took a pay cut, and gave back vacation time, for so many years, we were promised equal sacrifice, on both sides of the house Union and management. This was never ever so! The biggest sacrifice, what is the sacrifice of honor and integrity, and world-class service to our customer! Accountability and responsibility, must be learned, must be taught, must be caught, immediately or we are doomed to have our door shut, permanently! Respectfully submitted, Danny
DANNY
I humbly apologize, as I reread this, although I proof read, some of my words were changed slightly, but I think that my post is totally legible and understandable
DANNY
Do not lie to our customers! Do not tell them what they want to hear, tell them the truth and be honest with them! It does not matter who you are, or what your position is, just be honest with the customer! Do not promise what we cannot fulfill, just be honest with a customer!
David Heafner
HERE HERE! Couldn’t have said it better feel the same way Charlotte (653) Yrc 35+year’s it’s true what you said