Saturday, October 27, 2007

YRC sees no ease in trucking slump

Parent of Akron's Roadway says its regional unit hurt by weaker Midwest economy

YRC Worldwide Inc., parent of Roadway in Akron, sees no sign that a yearlong slump in U.S. trucking will ease, said Bill Zollars, chief executive of the largest U.S. trucker.

''Last year, the economy started to weaken at the beginning of October,'' Zollars said in a conference call. YRC, of Overland Park, Kan., expected conditions to improve by now and they haven't, he said. ''That has us concerned.''

The outlook could make it tougher for YRC to stem four straight quarters of falling sales and net income that have contributed to a 28 percent drop in shares this year. YRC posted a 58 percent decline in third-quarter profit in its financial report released Thursday.

The results were dragged down by its regional trucking division, which was hurt by a weakening economy in the Midwest, Zollars said.

Clients are being pinched, too. The trucker will reprice contracts for some ''unprofitable customers'' at its USF Holland and Reddaway divisions in the Midwest, Zollars said.

YRC rose $1.30, or 5 percent, to $27.26 in trading Friday. Earnings were released after Thursday's trading. YRC's regional division, its second-largest, ''will likely get worse before it improves,'' said Edward Wolfe, a Bear Stearns & Co. analyst who is based in New York and rates YRC ''underperform.''

Wolfe said YRC regional's main business where each truck carries goods from more than one customer, known as less-than-truckload, will likely remain weak and make change ''difficult'' at the company's Midwestern divisions.

YRC and other large U.S. trucking companies have seen freight demand decline as a housing slump has reduced shipments of construction materials and home furnishings. Con-way Inc., J.B. Hunt Transport Services Inc. and Landstar System Inc. all posted declines in third-quarter profit.

Zollars said the regional trucking unit ''performed well below expectations.''

Friday, October 26, 2007

Zollars: YRC cost-cutting will include job losses

YRC Worldwide Inc. will cut an undetermined number of jobs in the next six months as part of its effort to reduce costs by $100 million, Chairman Bill Zollars said Friday.

The Overland Park-based transportation company announced its intention to cut costs when it reported Thursday that a weak domestic shipping market had taken a 57.5 percent bite out of its third-quarter earnings.

"With the economy in the kind of shape it's in, we've got to make sure the infrastructure we have fits the business model," Zollars said Friday.

YRC Worldwide has about 66,000 employees, including about 2,600 in the Kansas City area.

Results from subsidiaries YRC National Transportation and YRC Logistics stacked up well against overall industry performance, Zollars said in Thursday's release, but YRC Regional Transportation performed "well below expectations" because of consumer-mix challenges and integration issues.

Yellow Corp. completed its $1.05 billion purchase of Roadway Corp. on Dec. 11, 2003. The resulting company, Yellow Roadway Corp., changed its name to YRC Worldwide on Jan. 3, 2006.

The company said in its earnings release that Jim Staley, president of YRC Regional Transportation, will retire Dec. 31 after 37 years in the industry. Keith Lovetro, who joined YRC Regional on Oct. 1 as senior vice president and COO, will take his place, reporting to Mike Smid.

The company named Smid as North American Transportation president, a newly created role. Smid, who was Roadway president and then president of YRC National Transportation when it was formed in January, will be responsible for the asset-based operating companies of YRC Worldwide.

These changes are part of YRC Worldwide's efforts to turn around YRC Regional Transportation's performance, Zollars said.

Arkansas Best Posts Lower Q3 EPS As Revenue Declines

Transportation holding company Arkansas Best Corporation said its net earnings for the third quarter of 2007 slid hurt by sluggish freight environment and higher workers' compensation claims offset in part by some improvement in third-party casualty claims.

The Fort Smith, Arkansas headquartered said net income for the third quarter ended September 30, 2007 fell to $18.9 million, or $0.75 per common share from $31.5 million, or $1.24 per share a year earlier. 9 analysts, on average, expected quarterly earnings of $0.88 per share, according to a poll by Thomson Financial.

Operating income for the three-month period declined to $28.19 million from $49.79 million in the comparable period last year. The company's third quarter revenue slid to $479.8 million from $507.3 million in the year-ago period. 6 analysts had a revenue consensus estimate of $485.36 million for the quarter.

The company said its largest subsidiary ABF Freight System, Inc. reported third quarter revenue of $462.2 million, reflecting a per-day decrease of 6.4% from third quarter 2006. Operating income at ABF fell to $28.5 million from $49.4 million a year earlier.

Operating ratio was 93.8% compared with 90.0% in the third quarter of 2006. ABF's third quarter 2007 total weight per day declined by 5.8% compared with third quarter of the previous year. ABF's current labor contract with its unionized employees will expire on March 31, 2008. ABF expects to begin labor negotiations next month and anticipates a timely agreement.

The company said, "Beginning in the fourth quarter, the year-over-year impact on operating results of the RPM investment should be reduced as we start to compare back to prior-year periods that included those same costs. ABF remains fully committed to this initiative, and we anticipate that RPM will positively impact future revenue growth and profitability as we gain additional market share."

Thursday, October 25, 2007

YRC Worldwide announces management changes

YRC announced today that Jim Staley, president of YRC Regional Transportation, is retiring at the end of the year. He is to be replaced by Keith Lovetro, who recently joined the company as an experienced executive in the regional trucking industry.

Lovetro’s appointment as YRC Regional president is effective immediately. He will report to Mike Smid, who has been named president of North American Transportation, a new position.

Staley joined the company in 2003 when YRC, then known as Yellow Corp., acquired Roadway Corp., a rival trucking firm. Staley had been Roadway’s president and chief executive. Staley was named president of YRC’s regional trucking firms in May 2005.

Bill Zollars, YRC’s chairman and chief executive, said in a statement that YRC National Transportation and YRC Logistics have performed better than the industry average in a difficult environment.

“YRC Regional Transportation faced additional challenges from consumer-mix and integration issues, and as a result, performed well below expectations,” he said in a statement. “We are taking appropriate actions to address these performance issues.”

Smid will continue to report to Zollars and will be responsible for all of YRC’s trucking units. Since January 2007, Smid has been president of YRC National, which is comprised of the company’s biggest operations, Yellow Transportation and Roadway Express.

YRC Announces New Board Members

YRC Worldwide Inc. announced today that Michael T. Byrnes and Mark A. Schulz have joined YRC Worldwide's Board of Directors.

Byrnes, 61, has more than two decades of direct experience in China. Until his retirement at the end of 2005, he served as President, Tyco International China. Prior to Tyco, Byrnes was Vice President China Operations for Rockwell Automation where his responsibilities included establishing Rockwell's Research and Development center, manufacturing facilities, a logistics center and the International Procurement office in Shanghai. Since January 2006, Byrnes has served as a U.S. based Senior Advisor with Yuan Associates, a professional government affairs consulting firm located in Beijing, People's Republic of China.

Byrnes is a United States Army Retired Brigadier General and has served as the U.S. Defense Attache, U.S. Embassy in Beijing and Ulaanbaatar and as the Military Attache, U.S. Consulate Hong Kong.

Byrnes is fluent in Mandarin Chinese. He holds a Master of Arts degree in strategy and operations from the Navy War College and a Master of Arts degree in Asian studies/international relations from the University of New Hampshire. He received his undergraduate degree in history from Providence College.

Schulz, 55, recently retired after spending 32 years at Ford Motor Company most recently as Executive Vice President and President International Operations where he oversaw the company's activities for the Ford brand internationally (Asia Pacific, Europe and Africa) and the company's other brands globally: Volvo, Jaguar, Land Rover, Aston Martin and Mazda. Under his leadership, Ford significantly broadened its presence and market penetration in China, India and other emerging markets. His widely acknowledged negotiating and diplomatic skills were frequently credited with removing obstacles and facilitating Ford's ability to expand its operations around the world.

Schulz holds a Master of Science degree in industrial management from MIT, where he was a Sloan Fellow. He also holds a Master of Science degree in engineering from the University of Michigan, a Master of Science degree in economics from the University of Detroit and a Bachelor of Science degree in mechanical engineering from Valparaiso University.

"We are pleased to welcome Michael and Mark as the newest members of our board of directors. They both bring valuable leadership experiences and international acumen to the Board, to our company and to our shareholders," said Bill Zollars, Chairman, President and CEO of YRC Worldwide. "This is an exciting time in YRC Worldwide's transformation and as we continue our strategy of growth, particularly in China, we are confident that our position as an industry leader will be strengthened by the guidance and perspective from Michael and Mark."

Byrnes will fill the vacant director position left when John Fiedler retired from the board last August. Pursuant to the company's Bylaws, the Board has also increased the number of directors from nine to ten. Schulz will fill the new director position that this increase creates. Each of these director positions has a term that expires at the company's next annual meeting of stockholders, when all directors are up for election.

Wednesday, October 24, 2007

DHL faces higher labor costs in wake of UPS wage deal

DHL faces higher labor costs in its US operations after peer UPS Inc. concluded above-inflation wage agreements with unions, Financial Times Deutschland reported.

DHL's wage agreement with US transport union Teamsters expires in March 2008. A DHL spokesperson confirmed to the newspaper that negotiations on a new collective deal have started.

DHL has posted unspecified losses in its US operations since it entered the US express market in 2004. It is targeting a profit by the end of 2009.

UPS and the Teamsters agreed wage increases of 4.4 percent on average over the next five years, a deal that will increase UPS' labor costs by up to 2.6 billion annually, the FTD said.

Tuesday, October 23, 2007

Mary Had A Little Lamb, This Inspection is a Scam

Mary Peters, who pushes tirelessly to let dangerous Mexican trucks use U.S. highways, for the first time publicly stood near a Mexican truck on Wednesday.

Peters is the little-known Arizonan who now runs the U.S. Department of Transportation. She usually avoids the news media like a bad rash whenever the subject of Mexican trucks comes up. Perhaps she's planning on running for governor of Arizona and knows how much the public hates her pilot project to open our highways to Mexican trucks.

She must also know the program is illegal. The law says Mexican trucks have to meet specific U.S. safety standards. They don't. No drug tests for drivers, no restrictions on hours behind the wheel, no ability to inspect every truck at the border, no accurate records of valid drivers licenses.

How do I know? Peters' own inspector general says so.

That's why she went all the way to El Paso in February to announce plans to let some Mexican trucks use U.S. highways - even though she was a large, pleasant office in the middle of a city crawling with journalists.

In August, when she decided to allow the first trucks to cross the border over Labor Day weekend, not a peep came out of her well-staffed public affairs department.

It was the Teamsters who learned of the secret plan and put the word out. After two days of "no comment" from DOT, Peters finally had someone else admit to a handful of reporters that yes, they were going ahead with it. (For the record, that someone else was an even lesser known bureaucrat, Federal Motor Carrier Safety Administration chief John Hill.)

So why did Peters finally come out of hiding on Wednesday and allow news photographers to take her picture next to a Mexican truck in front of DOT headquarters?

She claimed the dog-and-truck show would "prove" that Mexican trucks are as safe as U.S. trucks.

Does the Bush administration think we're stupid? It's insulting to the intelligence of the American people to suggest that a staged truck inspection before the news media proves anything.

Peters' real purpose was to convince Congress to back off its own plan to kill the program.

The House voted to block it 411-3 in May, and the Senate cast a similar vote - 75-23 - in September.

More than 50 sign-carrying Teamsters showed up on short notice at Peters' newser to express their views of her Mexican truck program. One of her flacks asked the police officer who we were.

"The Teamsters," he replied.

"We didn't expect them to show up," she said, and walked away.

The police officer asked one of the protesters why we were there, standing on the pavement waving signs. He told him we didn't want to open the border to Mexican trucks.

The officer shrugged. "I would have expected you to show up," he said.

UPS net income up 3.7% in third quarter

United Parcel Service Inc.'s profit rose in the third quarter, as the company noted improvement in its supply chain and freight segment and good gains in its international business.

The Atlanta-based package shipping giant delivered net income of $1.07 billion on $12.2 billion in revenue, compared with net income of $1.4 billion on $11.7 billion in revenue in the third quarter of 2006. Third-quarter earnings increased 6.3 percent to $1.02 a share.

"This was a very good quarter for the company from many perspectives," said Mike Eskew, UPS chairman and CEO. "First, UPS turned in a solid performance in the face of a slower U.S. economy. We reached tentative agreement with the Teamsters on a new contract almost a year early. And we unveiled industry-leading service and technology innovations."

During the quarter, UPS and the Teamsters reached a handshake agreement on a new five-year contract covering about 240,000 U.S. employees. The tentative deal, which is going through the ratification process, will extend UPS' contract with the Teamsters through July 31, 2013.

Through nine months, UPS had net income of $3.02 billion on $36.3 billion in revenue, compared with net income of $3.07 billion on $34.9 billion in revenue in the same period of 2006. Earnings through nine months grew 0.7 percent to $2.84 a share.