Tough road ahead for Yellow, Roadway merger?

Bob Walters, president of Freight Management Inc., received a visit from YRC Worldwide Inc. representatives last week at his Anaheim, Calif., office. What he heard about YRC’s plan to merge its biggest trucking companies concerned him.

Walters, whose logistics firm handles the freight-shipping needs of a variety of companies, is not alone. Overland Park-based YRC is embarking on an ambitious plan to combine the operations of Yellow Transportation and Roadway, the biggest undertaking of its kind in the trucking industry.

“If they don’t plan that very carefully, they could really injure their place in the marketplace,” Walters cautioned.

The worries among industry observers stem from the history of such mergers in the trucking business. Virtually all of them — such as when Arkansas Best Corp. bought Worldway Corp. in the mid-1990s — have been messy with service disruptions that caused customers to flee and the trucking company to hemorrhage money for a period of time. Combine that with the recessionary economic conditions along with YRC’s escalating financial problems in the past year, and some analysts think YRC is cooking up a recipe for disaster.

But Bill Zollars, YRC chairman and chief executive, pointed out that industry experts were predicting a disaster when then-Yellow Corp. bought Roadway Corp. in 2003, which combined the two biggest less-than-truckload carriers.

“Others expected us to lose a significant amount of business, which didn’t happen,” he told analysts Friday. “Yellow and Roadway have been around for 80 years and have an unmatched scale and presence in the market. Our customers continually expect us to improve their supply chains, and this integration will do just that.” Complete Story......