Trucking Sector Loses Jobs

YRC Worldwide Inc. will lay off about 3,750 drivers and dockworkers as it merges its Yellow Transportation and Roadway carriers, a 15 percent reduction in its 25,000 employees, a company spokeswoman said Thursday.

Overland Park, Kan.,-based YRC said Sept. 8 that it was speeding up the integration of Yellow Transportation and Roadway.

The company's earnings and revenue fell during the third quarter as the economic slowdown continued to take a toll.

YRC is a less-than-truckload operator and a direct competitor of Fort Smith-based Arkansas Best Corp. and California-based Con-Way Inc.

This is the third round of layoffs taken this year by YRC Worldwide.

Earlier this month, YRC Logistics Inc. cut 50 jobs in St. Louis and about 150 in nearby Edwardsville, Ill., as part of a change in service providers by one of its clients.

In February, YRC said it would close 27 such facilities at USF, with the loss of 1,100 jobs.

Like the rest of the U.S. trucking sector, YRC's business has been hit by a combination of weak retail and auto sales, and an overall crumbling housing sector.

More than 1,900 trucking companies have failed this year, the highest level of industry bankruptcies in more than seven years. Analysts estimate 4.5 percent of the U.S. trucking fleet was idled in the first three quarters of 2008.

Analysts have questioned whether in a prolonged downturn YRC will be able to pay down its debt and maintain cash flow. The trucking company says that it will be able to do both.

Shares of YRC closed Thursday at $4, down 20 cents on normal volume with 3.19 million shares trading hands.

DHL parent cuts outlook

Deutsche Post World Net, the world’s biggest logistics company, today slashed its profit forecast for this year by 17 percent and scrapped its outlook for 2009, citing slowing global economic growth, especially in the United States.

The German mail, express and freight forwarding group is now forecasting full-year earnings of around 2.4 billion euros [$3 billion], excluding one-off items and its stake in Deutsche Postbank, against a previous outlook of 2.9 billion euros [$3.65 billion].

The company, parent of DHL Worldwide, blamed sluggish consumer spending and shrinking investment by its business customers for the expected shortfall of 500 million euros [$630 million] in pre-tax earnings.

“The third quarter was a challenging quarter and we expect that the general economic environment to remain so in the near future,” Chief Financial Officer John Allan said in a statement.

The main shortfall will be seen in the express division “which is being particularly impacted by the deteriorating market conditions in the U.S.” the Bonn-headquartered company said.

Deutsche Post suffered a setback in plans to turn round its unprofitable DHL Express business in the U.S. last week after UPS Chief Executive Scott Davis said the size and scope of a deal to transfer DHL's air services to its U.S. rival may be changed. The deal is key to Deutsche Post’s $2-billion restructuring of its U.S. express business which is forecasting a loss of $1.3 billion this year.

Deutsche Post said third-quarter pre-tax earnings, excluding Postbank, is around 8 percent below 468 million euros [$590 million] in 2007. The only highlight is ocean freight, where double-digit growth outweighed weakening airfreight traffic to drive a similar increase in earnings at the forwarding and freight unit. The company said it will publish third quarter figures on Nov. 10.

Deutsche Post said it scrapped its 2009 outlook because it expects the global economy to slow further and recession to hit some developed markets. Previously, it forecast earnings before interest and tax of 3.4 billion euros [$4.28 billion].

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......