Freight volume: Tough times may be receding

Though the slump in freight volume is expected to continue for the rest of the year, many transportation providers believe the toughest stretch may now be in the rearview mirror. And if the downturn removes weaker competitors from the playing field, some companies believe that may open up opportunities for growth and market share gains.

"I do not foresee a significant change in the current freight environment as we move through the third quarter. However, there has been a slight improvement in volume trends,” said Henry Gerkens, president & CEO of Landstar System in the carrier’s second quarter earnings report.

“In addition, some of the very difficult revenue comparisons experienced during the first half of 2009 begin to ease toward the end of the 2009 third quarter and into the 2009 fourth quarter,” he noted. “I believe the worst is over.”

That being said, however, Gerkens stressed that there continues to be some level of uncertainty in the marketplace. He noted Landstar’s revenue continued to be negatively impacted by the severe recession in the domestic and global economies during the second quarter, with earnings shrinking to $17.9 million on revenues of $491.2 million, compared to $29.8 million in earnings on revenues of $697.7 million in the same period last year.

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This is No Way to Win the Hearts and Minds (and Votes) From the Teamsters

YRC Worldwide Chairman and CEO Bill Zollars has been forced to apologize to the company's Teamsters employees after making public comments hinting that the company's non-union work force would not have to take further cuts in pay. That angered YRC's 30,000 Teamsters, who already have taken a 10 percent wage cut and freezes in their pension payments. Currently YRC's Teamsters are in the process of voting on approval an additional 5 percent wage cut and more cuts in pension payments.

Memo to Bill Zollars: Next time you might get the urge to say something derogatory about your Teamster work force, wait until after they are voting to approve yet another wage and benefit cut that you and your management team foisted on them.

In the This-Can't-Be-True-Oh-Yes-It-Is category, Zollars has been forced to backtrack from comments he made regarding YRC's non-union employees.

What Zollars said originally was he didn't think YRC's non-union employees would have to take further compensation cuts. That angered YRC's Teamsters, who are this very moment are being asked to vote on yet another wage and benefit cut package floated in order to keep the financially ailing trucking company afloat.

Already, YRC Teamsters have OK'd a 10 percent wage cut and a freeze in their pensions. They are now being asked to approve another 5 percent wage cut (through 2013) and pension freezes for the next 14 to 18 months. That is expected to save the company approximately $900 million annually, combined.

YRC already has been kicked out (temporarily, at least) from the Central States pension plan, the Teamsters' largest, for lack of timely payments. If that wasn't enough of a red flag to raise in front of the Teamsters' bulls, Zollars' hamhanded remakrs surely set them over the top.

Zollars was forced to issue a public apology in the form of a letter to Teamsters union president James P. "Jim" Hoffa, son of the legendary labor leader.

In the letter, made public by the union, Zollars said: "YRCW is committed to the principle of 'shared sacrifice' and will require that our non-union employees take as much, if not more, cuts in wages and benefits as provided by our union employees...The companies' financial books and records will be made available as required...to verify that non-union employees have provided equal sacrifice."

What impact Zollars' comments will have on the rank-and-file voting to approve this life-or-death package of wage and benefit cuts is unknown. But it can't help.

David Ross, analyst with Stifel Nicolaus, Baltimore, called the incident "one more thing out there that gets all the employees riled up." He called the incident an example of YRC not being "mindful" of all the stakeholders in this process.

Maybe it was an honest mistake. Maybe it was a slip of the tongue. Maybe it was just a goof. Whatever it was, Zollars has got to know better.

Next time anything is up for a vote regarding the Teamsters, maybe the smartest strategy would be to say nothing at all.

20 ABF State Driving Champions to Compete in National Truck Driving Championships

ABF Freight System, Inc., is sending 20 championship drivers from 10 states to the 72nd National Truck Driving Championships, August 18-22, 2009, in Pittsburgh. Professional drivers earn the right to compete in the National Championships by winning state driving championships and by maintaining an accident-free driving record for the past year.

Among the competitors representing ABF are nine repeat winners from 2008, including three former National Champion Drivers and three 2009 state driving Grand Champions. Two competitors, Paul Gattin and Ben Saiz, also currently serve as America's Road Team Captains.

Click here for the list of former National Champion drivers.....

UPS Q2 profit falls 49%

The recession continued to take a toll on package shipping giant United Parcel Service Inc.

Atlanta-based UPS on Thursday said its net income for the second quarter fell 49 percent to $445 million, as revenue dropped 16.7 percent to $10.8 billion. Its net income in the second quarter of 2008 was $873 million and its revenue was $13 billion.

Earnings per share were down 48.2 percent to 44 cents.

U.S. Domestic package revenue declined 12 percent to $6.8 billion, while international package revenue decreased 23.8 percent to $2.2 billion and supply chain and freight revenue fell 23.3 percent to $1.8 billion.

Average daily volume in the U.S. Domestic Package segment declined 4.6 percent in the quarter and international export volume decreased 7.3 percent.

“The global economic environment pressured our performance, but UPS remains financially very strong,” said Scott Davis, UPS chairman and CEO, in an earnings statement. “We continue to invest in growth opportunities, even as UPSers improve productivity and help our customers manage through these challenging times. We are a company that can weather this recession, positioning ourselves well to benefit when economic recovery occurs.”

YRC Worldwide Sends 58 Drivers to the National Truck Driving Championships

YRC Worldwide announced today that 58 of its professional drivers will compete at the 2009 National Truck Driving Championships (NTDC) to be held August 18-22 at the David L. Lawrence Convention Center in Pittsburgh.

To qualify for the national championships, each driver placed first in his respective class at state competition. The drivers will compete against nearly 400 others for national titles in eight different classes of vehicles and for the overall title of National Grand Champion.

Both the state and national contests include challenging driving skills and maneuvering tests, a pre-trip inspection and a written examination covering vehicle operation and federal safety regulations. To participate in state competitions, drivers must be accident-free for one year.

"We are proud of all of our professional drivers who participated in the state truck driving competitions. Their passion and motivation to compete is a display of their outstanding driving skills, professionalism and commitment to safety," said Mike Smid, President-YRC Inc., and Chief Operations Officer-YRC Worldwide. "We wish all of our drivers the best of luck at the National Truck Driving Championships."

The 2009 YRC Worldwide National Truck Driving Championships Team:

YRC chief pulls back statements in letter to Teamsters

YRC Worldwide Inc. CEO Bill Zollars appears to be pulling back from recent comments that have sparked the ire of union workers.

The International Brotherhood of Teamsters on its Web site has posted a Tuesday letter from Zollars. In the letter, he apologizes for comments to the Kansas City Business Journal that nonunion workers probably would not take further compensation cuts, even if union workers agree to an extra 5 percent wage cut and the forfeiture of 18 months of pension payments, because current cuts had been extended and nonunion workers took more of a cut to health and benefits.

Teamsters members are voting on whether to accept the new concessions package, valued at $825 million.

“YRCW is committed to the principle of ‘equal sacrifice’ and will require that our nonunion employees take as much, if not more, cuts in wages and benefits” as outlined in the tentative concessions agreement, Zollars wrote.

The Teamsters had explained to members that the concessions package included provisions that nonunion employees would “have further adjustments made to their total compensation package to bring their total wage and benefit package in line with what reductions are proposed” in the concessions.

The Teamsters Web site said Zollars’ note was a response to a Monday letter from union General President James Hoffa demanding “an immediate clarification” about public statements that contradicted the tentative agreement. A Teamsters spokesman said the union wouldn’t comment beyond what it posted online.

Zollars also said in the letter that YRC was retracting a Monday announcement about extending its delivery services to homes and businesses through a partnership with Specialized Transportation Inc. (STI), forming YRC Residential Solutions.

“YRCW will not subcontract bargaining unit work to Specialized Transportation Inc. or any other company” in violation of union agreements, Zollars wrote. “We recognize that, with more than 8,000 Teamsters on lay-off, residential delivery work must be offered to the bargaining unit.”

The Overland Park-based trucking company (Nasdaq: YRCW) has laid off thousands, closed facilities, sold property, amended bank agreements and taken other steps to avoid bankruptcy amid a drawn-out freight recession.

BILL ZOLLARS' RESPONSE TO GENERAL PRESIDENT HOFFA

General President Hoffa contacted Bill Zollars at YRCW yesterday concerning recent statements and announcements that are contrary to the NMFA and the recent MOUS and demanded an immediate clarification.

The response from Zollars to Hoffa’s letter is here.

Arkansas Best loses $15.4 million in second quarter

Fort Smith-based Arkansas Best Corp. posted a second quarter net income loss of $15.4 million, marking the third consecutive quarter the company posted a loss — and with those losses adding up to about $44.5 million in the past nine months.

It’s the economy.

The nationwide depression in the freight industry began in October 2006 and, obviously, continues. Arkansas Best Corp., whose primary subsidiary is ABF Freight System, a nationwide less-than-truckload carrier, posted second quarter revenue of $362.6 million, a per day decrease of 26.7% from the $498.5 million in the 2008 period.

The number of ABF shipments in the first six months of 2009 is down 16.2% compared to the same period in 2008, and the company’s tonnage shipped is down 17.3% in the first half of 2009 compared to the first half of 2008.

“The effects of lower freight levels and a competitive pricing environment that has intensified since the first quarter were the main challenges faced by our company in the second quarter,” Robert Davidson, Arkansas Best president and CEO, said in the earnings statement released Wednesday morning (July 22). “In addition, our results were affected by unusual increases in nonunion healthcare and pension, workers’ compensation and third-party casualty insurance claims costs versus last year.”

For the first six months of 2009, Arkansas Best has lost $33.6 million, compared to a net income of $24.6 million in the first six months of 2008.

Bob Costello, an economist with the American Trucking Associations, said in a June 29 report that the worst of the freight depression is over, but the trucking sector may not see improving conditions.

“I am hopeful that the worst is behind us, but I just don’t see anything on the economic horizon that suggests freight transportation is ready to explode,” ATA Chief Economist Bob Costello said in a statement. “The consumer is still facing too many headwinds, including employment losses, tight credit, rising fuel prices, and falling home values, to name a few, that will make it very difficult for household spending to jump in the near term.”

Despite the previous quarterly losses, Arkansas Best has little long-term debt and a $325 million line of credit. More importantly, the company has $191.4 million in cash or cash equivalents, down slightly from the about $200 million at the beginning of the year.

The company, with its relatively strong cash position, continues to investigate acquisition possibilities. The recession is creating fire-sale prices at transportation-related companies, Davidson told The City Wire in an April interview.
“This is the best buying opportunity I’ll ever have,” Davidson said.

However, the company continues to cut costs — personnel and equipment — to manage the downturn.

“ABF continues to manage its network resources, especially labor and equipment, to the level of freight moving throughout its network. As needed, additional reductions in system resources and costs have been made in the last few months,” Davidson said in the earnings statement.

YRC to provide home delivery

YRC Worldwide's national trucking company will offer home-delivery service for large items like furniture, TVs and exercise equipment.

YRC Inc. has launched YRC Residential Solutions, geared toward retailers needing shipping services for big items to homes or work locations.

YRC, the trucker created through the combination of Yellow Transportation and Roadway, is partnering on the service with STI, a residential delivery specialist.

YRC will pick up the shipments across its network and deliver the goods to an STI location. STI will then deliver the items in the final leg.

Mike Smid, YRC Inc. president, said the new service "helps our customers ultimately be more successful through time savings and an improved delivery experience for the end consumer."

YRC chairman: Nonunion workers probably won’t take further cuts

YRC Worldwide Inc.’s nonunion employees probably won’t take further cuts if International Brotherhood of Teamsters workers approve another round of concessions, company Chairman and CEO Bill Zollars said.

The nonunion workers, who constitute about 14,000 of YRC’s 49,000 total employees — or about 29 percent of the work force — early this year took a 10 percent wage cut that now has been extended, along with the suspension of 401(k) matches and benefits cuts.

The Overland Park-based trucking company (Nasdaq: YRCW) has laid off thousands, closed facilities, sold property, amended bank agreements and taken other steps to avoid bankruptcy amid a drawn-out freight recession.

Nonunion workers have taken more of a cut to health and benefits, Zollars said in a Thursday interview.

On Friday, the Teamsters mailed YRC union workers ballots about accepting concessions that include an extra 5 percent wage cut until 2013 and deferral of 18 months of pension contributions. The union workers would get options for an additional 20 percent stake in outstanding YRC stock, along with considerations such as an appointee on the YRC board.

The concessions, which would bring the total union wage cut this year to 15 percent and the total options available to union workers to 35 percent, would save YRC an estimated $825 million through the end of 2010.

In documents distributed to union members last week, the Teamsters said nonunion employees would “have further adjustments made to their total compensation package to bring their total wage and benefit package in line with what reductions are proposed” in the concessions.

“Increases to wages, if any, can only be made in proportion to increases Teamsters will receive each April under the revised agreement,” the Teamsters said.

The company also tried to balance opportunities for union and nonunion employees. Although union employees would get stock options, non-union employees potentially could get raises, Zollars said.

“Union employees will benefit through stock appreciation,” he said. “(Nonunion workers) will benefit from incentive-based compensation as we recover.”

YRC Worldwide, Teamsters find their fates hitched

The Teamsters didn’t mince words.

The more than $800 million in concessions that members are voting on should “send a message to the industry players who are slashing prices in an attempt to force (YRC Worldwide Inc.) out of business that (YRC) will have the resources to be here for the long haul,” Tyson Johnson, freight division director for the International Brotherhood of Teamsters, said in a statement this month.

The recession has wedged YRC and its union into an unlikely high-stakes partnership. In the pot: the fate of a massive trucking company, roughly 49,000 jobs (35,000 of them union jobs) and one of the last big Teamsters toeholds in the freight industry. YRC accounts for nearly half of the Teamsters freight division’s 80,000 members.

“If YRC were to go out of business, the Teamsters would be hard-pressed to replace those jobs,” said John Wagner Jr., president of North Kansas City-based logistics company Wagner Industries Inc.

The fragile alliance must navigate a rocky road. Union workers’ votes on whether to take an extra 5 percent wage cut and let YRC halt pension payments for 18 months, among other measures, are expected to be counted by early August. And those workers already accepted other pay cuts and pension payment deferrals earlier this year. YRC, meanwhile, lost $257.4 million in the first quarter. It also has been attempting to manage costs by integrating subsidiaries, laying off thousands and closing facilities. Other efforts have involved renegotiating debts and selling property, including its Overland Park headquarters. Full Story.....