YRC is going back to the Teamsters as the trucking company tries to match a financial restructuring with an overhaul of its operations that includes a tighter network and more efficient freight handling.
The redesign is the next step in a restructuring at the nation’s third-largest less-than-truckload carrier started last year by new YRC President Jeff Rogers. It will be the latest installment in a broader overhaul of the YRC Worldwide business that’s taken place since a financial rescue that included critical concessions from the Teamsters, massive equity-for-debt swaps with bondholders and bankers, and a sweeping change in management at YRC Worldwide and its subsidiaries.
YRC managers will meet with union officials after completing a review of the carrier’s network, Rogers said in an interview. “We’ve got meetings set up already,” he said. “I sat down with (Teamsters National Freight Director) Tyson (Johnson) within my first couple of weeks as president and told him it would be coming.”
The redesign would be a proactive step for an LTL giant that has spent much of the past five years reacting to deep losses and sidestepping potential bankruptcy. Yellow Transportation and Roadway, the long-haul LTL operators that were the original core of YRC Worldwide, were merged in 2009 to form YRC. At their peak, Yellow and Roadway had nearly 700 terminals. Today, YRC has about 300 terminals. “I think we may still have too much infrastructure, too much network, for the bills we’re handling,” Rogers said in an interview last fall.
The extent of the redesign isn’t clear yet, but it aims to get freight moving more quickly, more efficiently and with fewer “touches” from origin to destination through YRC’s 300 terminal network and to make YRC more competitive with the two largest LTL (and nonunion) carriers FedEx Freight and Con-way Freight.
Con-way Freight has engineered its terminal network to speed direct loads, and FedEx Freight last year redesigned its network around priority and economy shipments. Like those competitors, YRC wants to move freight farther faster.
That could mean adjusting its breakbulk network to allow more direct loading of shipments in high-density lanes, or changing work rules for employees.
“We need to look at the way we’re moving freight through distribution centers,” Rogers said Jan 6. That may require Teamsters approval for a change of operations.
Rogers said there are steps YRC can take to reduce freight handling before a change of operations, such as ensuring breakbulk terminals follow existing load plans.
For Rogers, named president of YRC last September, the redesign is the next step in a process that includes streamlining the $2.9 billion operating company’s management and consolidating multiple operating territories into two regions.
“We’re making great progress,” he told The Journal of Commerce. “We’re providing much better service than we have in many, many years.” YRC’s total daily shipments rose for the third straight quarter in the third quarter, climbing 5.5 percent year-over-year. LTL volume stayed “relatively strong” through Dec. 23, Rogers said.
“I’m encouraged with how the year ended,” he said. “That tells me 2012 could be a very good year.” YRC doesn’t just want more freight, however; it also wants the right freight. “I’ll gauge our progress as volume builds, and we can start making the decisions on the business we want, as we gain the ability to pick and choose the right type of freight mix. YRC hasn’t been able to that for many years.”
But there is still pain to be wrung from the company’s recovery. On Jan. 5, YRC announced the sale of the former Roadway headquarters. YRC will eliminate 50 to 100 jobs at the facility and transfer another 100 to 150 employees. “One of the biggest tasks ahead for me is to bring the Yellow and Roadway folks together,” Rogers said. “We’re moving forward as YRC, not Yellow, not Roadway. Those companies don’t exist anymore.”
YRC began changing old signs on its terminals last year, and it is slowly replacing the livery on thousands of vehicles still branded with the old corporate logos. Last month, the company quietly switched shippers still using the old Yellow and Roadway base tariffs to YRC’s base pricing book. “Most didn’t even notice it,” Rogers said.
“A lot of folks are embracing the YRC culture,” he said. “But it takes time to get 22,000 folks who used to be Yellow or Roadway to embrace YRC. We’ve got to get everyone on board. For us to be successful, we have to be successful as YRC.”