James Welch is aiming for an operating profit at YRC Worldwide in 2013, following a $24.1 million operating profit in 2012, as he approaches his third year as CEO of the less-than-truckload operator.
In 2012, the LTL holding company reported a net loss of $140.4 million, a 60 percent improvement from the year before.
"We need to continue to move forward with the turnaround," Welch said in an interview at the 2013 NASSTRAC Shippers Conference in Orlando last week. "It's all about performance. We're finally, I think, over the hump from a performance standpoint."
The LTL operator got a boost last week when the Teamsters union approved YRC Freight's latest change of operations, which will close 29 terminals and three distribution centers, restructuring its LTL network and shifting workers.
"For whatever reason, when they put Yellow and Roadway together in 2009, density was kind of a passing thought in the rearview mirror for the management team at that point in time," Welch said. "You just had an overbloated network with too much capacity for the amount of business that was being generated." When the change of operations is complete, YRC Freight will have 266 terminals. SJ Consulting Group estimates the restructuring could save $25 million to $30 million.
That's significant for a trucking company that reported its first quarterly operating profits based on actual freight operations since 2008 in the last half of 2012 — $2.8 million in the third quarter and $21.1 million in the fourth quarter.
The upcoming reorganization "really gets our density to where we need it," Welch said. SJ Consulting estimates YRC Freight's shipments per terminal per day will improve almost 11 percent.
YRC Freight and regional carrier Holland also reached a tentative agreement with the International Association of Machinists, which represents about 200 mechanics at the two LTL companies. YRC Worldwide employs about 25,000 Teamsters, including mechanics as well as dock workers and truck drivers.
"There is still a basic need to pick the freight up on time, deliver on time, don't bust it and then make sure your network is adapting to customer needs," Welch said. "We're not to the point where we can beam freight up, Scotty; it's not Star Trek. You've still got to physically pick up the freight and move it ... That's what we think we're good at."
YRC Worldwide will release its first quarter earnings report May 3.