Copyright 2008, Traffic World, Inc.
YRC is regrouping for a renewed attack on its competition for LTL freight with a network overhaul company executives say will save millions of dollars and par down transit times.
YRC North American Transportation, the national LTL division of YRC Worldwide, is rolling out what it calls its Velocity Network at Yellow Transportation, Roadway and USF Holland. YRC says it will speed delivery in more than 30,000 lanes in the Eastern United States.
The changes reflect customer demand for increased reliability with next-day and second-day service, YRC said. It will allow the company to cut a full day off three- and two-day lanes for more than 15 percent of the 150,000 shipments that move through the YRC carrier system each day.
"By designing networks with fewer miles, we can offer increased predictability and more precise delivery options to our customers," said Mike Smid, president and CEO of YRC North American Transportation. "The lanes involve fewer handoffs, and fewer touches mean faster and more reliable deliveries."
Launched June 2 for USF Holland and July 6 for Yellow Transportation, the improvements cover most lanes in the eastern half of the country. Changes to Roadway''s operations went into effect July 14.
The freight slowdown and weak economy have been particularly hard on the $9.6 billion YRC, and the company has been working overtime to catch up with its LTL competitors.
One of its biggest, ABF Freight System, began rolling out an operations overhaul last year. Its Regional Performance Model, or RPM, has sought to improve transit times in the carrier''s one- and two-day markets. Large LTLs such as Old Dominion Freight Lines, Saia and Estes Express Lines have been working to shave hours and days off short-haul and regional shipments. In addition, LTLs of all sizes have been working to keep up with efforts to heighten service standards at FedEx Freight and UPS Freight.
To get there, YRC, which rang up a $46 million loss in the first quarter, is using the Velocity Network to move away from traditional hub-and-spoke designs, using the YRC carriers'' enormous volume and density to provide greater origin-to-destination delivery. In some cases that will mean bypassing distribution centers - a trend initiated by customers looking for cleaner, faster supply chains.
"The focus on inventory reduction is higher than I''ve ever seen," Zollars said. "(Shippers) have an obsession with not putting any more in their supply chains than they absolutely have to." In certain cases involving long haul moves with Yellow or Roadway, the velocity improvements will shave 50 to 55 hours of transcontinental transit times, Zollars said.
Zollars estimated a reduction in 20 million network freight miles will save YRC $40 million in operating costs.
YRC''s new five-year labor agreement, hammered out with the Teamsters late last year and which YRC calls a "game changer," will provide some of the operating flexibility the network overhaul will require. The company has started taking advantage of a new classification called a "utility" employee that allows a single worker to perform road, dock, and pickup and delivery work.
Use of new part-time employees, known as "four-hour casual" workers and also are part of the new labor agreement, help YRC to better match labor to volume, the company said.
It also began using truckload substitute service - both its USF Glen Moore truckload operations and other for-hire carriers - for freight that had moved by intermodal rail.
"The rails are out of capacity," Zollars said. "It''s harder and harder to use them for intermodal service. They''re more expensive and less reliable."
Zollars and Smid noted YRC''s operations overhaul also responds to environmental issues that are requiring carriers and their shippers to meet stricter pollution control standards. "More direct lanes save fuel as well as time," Smid said.
Zollars said with the increasing cost of diesel fuel, it''s more environmentally friendly, and cheaper, to spend $1 million annually on hotel rooms for its drivers than allow them to sleep in an idling cab.
Zollars said although he''ll continue to integrate certain aspects of various YRC carrier companies "where it makes sense," there are no plans to consolidate into a single YRC brand.
However, he didn''t rule out more brand consolidation down the road.
"Will we have all the brands that we have now five years from now? I''m not sure," he said.