William B. Cassidy | May 06, 2011 11:08AM EDT
Less-than-truckload pricing will continue to rise throughout 2011, as a stronger economy “soaks up” excess capacity, said YRC Worldwide’s William D. Zollars.
The nation’s second-largest LTL trucker improved revenue per hundredweight 1.8 percent in the first quarter, thanks to higher rates and fuel surcharges, he said.
That’s a smaller year-over-year increase in yield than some competitors reported, but those truckers made deeper price cuts in 2010 than YRC, Zollars said.
Contract rates were up “north of 3 percent” year-over-year in the quarter, the chairman, CEO and president said. A year ago, YRC’s prices were still falling.
The general rate increase for non-contract freight YRC announced last fall “is holding on the same historical basis as in the past,” Zollars said.
“Yield is a complicated subject,” Zollars told analysts during a May 6 conference call on YRC earnings. The company lost $102 million in the first quarter.
He noted that corporate accounts grew faster than local accounts in the first quarter, reflecting the return of larger, high-volume customers to YRC Worldwide.
However, those corporate account shipments are less profitable than local account freight, Zollars said. Higher fuel surcharge revenue also complicates comparisons.
“We think the most important way to judge our balance between revenue growth and yield are incremental margins,” Zollars told the financial analysts.
“At YRC we had a 55 percent incremental margin on our revenue growth, which I think indicates we are doing a pretty good job balancing revenue and yield.”
Although yield at both YRC National and YRC Regional rose only 1.8 percent, revenue per shipment was up 3.3 percent and 7.7 percent, respectively.
Zollars and other YRC officials refused to take questions on the $4.3 billion company’s financial restructuring, slated to be finished in July.
The LTL carrier — long the market leader — has lost more than $2.7 billion since 2006, with revenue shrinking from $9.9 billion in that year to $4.3 billion in 2010.
Zollars said the key to achieving sustained profitability at YRC Worldwide is “to continue to focus on improvement in the performance of the company.”
He confirmed that he will be leaving the company once its restructuring is complete.
-- Contact William B. Cassidy at wcassidy@joc.com. Follow him on Twitter @wbcassidy_joc.