The head of YRC Worldwide Inc. said on Friday that pricing is "competitive but sane" as the largest U.S. trucking company by revenue attempts to reverse six months of heavy losses.
Bill Zollars, YRC's chairman and chief executive, also said it was on track to close its first acquisition of a Chinese trucking company this quarter, providing transport in China for key U.S. customers such as Wal-Mart Stores Inc. (WMT).
The trucking industry is viewed as a leading indicator of economic activity, and YRC and its rivals have faced sluggish volumes, overcapacity and soaring fuel costs.
Zollars said there were no signs of a domestic uptick, while the import and export volumes that had supported rail and truck operators also weakened.
"The one bright spot as we completed last year was the flow (of goods) from China to the U.S., and vice versa," he told Dow Jones Newswires in an interview.
"That has really (come) down as well. The global economy has been hurt by the slowdown in the U.S. economy."
Shares Soar Following Earnings Report
YRC shares soared more than 30% on Friday even though the company reported a first-quarter loss after the market close Thursday. The Overland, Kan.-based company predicted all of its operations would return to profit in the second quarter.
Shares recently were up $3.98, or 30.7%, at $16.94 on composite volume of 5.2 million shares, compared with average daily volume of 2.4 million.
YRC operates in the "less-than-truckload", or LTL, segment of the business, which groups shipments from multiple customers on single trucks. The LTL business has seen the fiercest price competition as operators have cut rates to generate cash as they struggled with the surge in diesel prices over the past four months.
The company admitted it had botched the integration of recent acquisitions last year, forcing it to unwind operational changes, close some trucking bases and eliminate 1,100 jobs.
Zollars said the revamp had been completed, while a new labor agreement would also boost the company's flexibility.
YRC has also amended credit agreements to alleviate pressures on its balance sheet and liquidity.
Opportunities In China
After focusing on a domestic turnaround, Zollars said the acquisition of Shanghai Jiayu Logistics, one of China's largest truck operators, was on track to close in the current quarter.
Jiayu is small by U.S. standards, with 3,000 trucks and annual sales of $35 million, but Zollars said it offered a two-pronged vehicle for expansion and improving customer service.
"There is just as much opportunity for moving stuff around China as there is for moving it from China to the U.S.," he said.
While Jaiyu's current customer base is mainly local Chinese companies, YRC plans to market trucking services to its large U.S. customers that have expanded in China, such as Wal-Mart and Home Depot Inc.
Zollars also predicted that Chinese manufacturers will start to boost production ahead of a wave of factory closures expected around the Beijing Olympics in August. The closures are aimed at reducing pollution levels in the Chinese capital.
"What you will see is a fairly significant inventory build-up prior to the Olympics. They will make sure there is no interruption in supplies.