YRC Worldwide Reaches Out to Brokers

YRC Worldwide Reaches Out to Brokers

The nation's largest trucking operator, YRC Worldwide, is forging closer relationships with third-party logistics providers as it tries to rebuild its business.

The company began a sweeping re-evaluation of its relationships with 3PLs last year as it rolled out a restructuring program affecting every corner of its operations.

Eventually, it plans to launch new products and services with 3PL partners and closely integrate its less-than-truckload operations into their supply chain networks.

It's a step other motor carriers need to take to stay on the road in a fast-changing market, said Bruce Kennedy, YRC Worldwide's vice president of enterprise strategy.

"In August 2009 we began an initiative to change our culture internally and externally from one of frankly competition (with 3PLs) to collaboration," Kennedy said.

It won't be easy for an industry built on direct relationships with shippers, he said June 24 at the SMC3 Summer Conference in West Palm Beach, Fla.

Traditionally, "LTL carriers have used a direct sales model and approached customers directly," said Kennedy. "An intermediary was considered a threat."

That was true at YRC Worldwide, Kennedy told trucking and logistics executives at the SMC3 meeting, where 3PL account relationships "were not healthy."

But better relations with 3PLs weren't just an option for YRC Worldwide, which has lost more than $2.7 billion since 2006, shrinking to a $5.3 billion company in 2009.

The carrier started restructuring its 3PL strategy by identifying all the logistics providers in its customer database -- more than 2,000 companies, Kennedy said.

It then classified those 3PLs to reflect their marketplace roles, from supply chain managers to forwarders and brokers to price negotiators and "rate resellers."

From that initial 2,000, YRC identified a subset of 200 logistics companies "that were significant in terms of their spend and potential spend with us," Kennedy said.

"We took action to align ourselves with those partners we truly want to identify with."

Although he shied away from specific examples, Kennedy said YRC has had "dramatic success" since it began to rethink its 3PL strategy last year.

"We're truly better aligned today with 3PLs than we were until quite recently," he said. "We're creating a culture shift within the organization that recognizes there are multiple channels we must address within the marketplace."

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-- Contact William B. Cassidy at wcassidy@joc.com.