YRC says it's making progress ... but is it enough?

YRC Worldwide CEO Mike Smid knows his customers and competitors are wondering whether the nation's largest LTL carrier will survive. There's no question in his mind that it will, he told DC VELOCITY at NASSTRAC's 2009 Logistics Conference and Expo in late April.

YRC has made substantial changes in its operations while aggressively managing cash, liquidity, and fixed and variable costs, Smid said. "We have not gone to a bank and asked for any additional money—not a dime," he said. (Two weeks after the interview, however, YRC Worldwide Chairman, President, and CEO Bill Zollars told The Wall Street Journal that the company would ask the federal government for $1 billion in Troubled Asset Relief Program (TARP) funds to help it meet pension obligations.)

Smid believes the recently completed integration of Yellow Transportation and Roadway Express—the integrated unit now goes by the name YRC National—will improve the carrier's outlook. The integration included a network restructuring to eliminate terminals in some areas and expand in others—YRC now operates about 100 more service centers than either Yellow or Roadway did individually, with direct service to an additional 21,000 locations. The carrier also says it has cut average transit times by half a day and boosted on-time delivery rates by several points. Meanwhile, it continues to reduce operating and personnel costs. Full Story.......

YRC’s Performance Improving as Firm Cuts Costs, Zollars Say

This story appears in the May 25 print edition of Transport Topics.

YRC Worldwide Inc. has received relief from lenders who waived an earnings target for the second quarter, and company head William Zollars said the less-than-truckload carrier’s performance is improving because of several cost-cutting moves, including potential pension-payment relief from the Teamsters union.

The company acknowledged reports that the unionized less-than-truckload carrier also is considering an application for $1 billion in aid from the federal Troubled Assets Relief Program to defray pension costs that currently are a cash drain.

“We are in the process of finishing negotiations with pension funds,” said Zollars, chief executive officer. He declined to give a date when he expected those talks would conclude. YRC hopes to save cash by replacing cash pension payments, now ranging from $34 million to $45 million a month, with pledging of real estate collateral.

Zollars, who spoke May 19 at the Wolfe Research Global Transportation Conference here, said the company was making progress in recovering business diverted when its Roadway and Yellow Transportation LTL units were integrated two months ago. The company has regained three to four percentage points of the 11% business reduction attributed to concerns about the integration process, he said.

“We would expect, as we move through the second quarter, more and more business will return,” Zollars said. He said the company’s operating loss was “60-ish” million dollars in April. Full Story.........

UPS Looking at Bailout Impact

Extending TARP to trucking industry raises questions

Transportation giant UPS said it’s studying the issue of federal bailouts for financially ailing trucking companies but wouldn’t comment directly on competitor YRC Worldwide’s request for $1 billion in federal aid.

“The bottom line is, we don’t comment on the financial difficulties of our competitors,” said UPS spokesman Norman Black. On whether the treasury department program which has so far has sent money to the banking, automobile and insurance industries should be extended to the trucking industry, “we’re still looking at that,” Black said.

UPS paid $6.1 billion to unshackle itself from its own pension liability in 2007. Industry observers said at the time that allowing UPS to exit the pension plan, which covered 240,000 union parcel workers, was part of a quid pro quo with the Teamsters that gave the union an unhindered path toward organizing UPS Freight, the company’s less-than-truckload subsidiary, through a terminal-by-terminal card check agreement.

One Wall Street analyst wondered, “If YRC is allowed to get $1 billion from TARP, is UPS allowed to get a $5.1 billion refund?”