YRC Unit Plans More Cuts to Streamline Network
This story appears in the March. 18 print edition of Transport Topics.
YRC Freight’s proposed operational change, the largest in four years, could shutter 29 terminals and save the company $30 million annually by moving freight through a streamlined network.
The national less-than-truckload carrier outlined its plan in a 101-page document, known as a change of operations, that was sent to the Teamsters union and posted on multiple trucking websites last week.
SJ Consulting, which specializes in LTL analysis, estimated that the move would save $30 million annually by closing the terminals and three distribution centers, realigning the freight network and eliminating 236 jobs.
YRC officials wouldn’t discuss specifics, but the company issued a statement March 12 saying, “The network improvements will be another step in YRC Freight’s efforts to continuously improve customer service, optimize linehaul density and load average, reduce empty miles and reduce shipment handling.”
Parent YRC Worldwide Inc.’s latest sweeping operational change was in 2009, when the Yellow Transportation and Roadway units were combined, nearly six years after YRC’s predecessor bought Roadway Express for about $900 million. That terminal combination led to $751.2 million in operating losses for the national LTL business in that year.
Since then, the national freight unit’s losses narrowed in every year and turned into a slim $21.1 million operating profit in last year’s fourth quarter, also excluding interest and taxes.
“By realigning our network, YRC Freight will reduce the number of handling and relay locations in order to build network density,” said Jeff Rogers, president of YRC Freight. “These network improvements will be seamless to our customers and, when implemented, will improve our service. The ongoing effort to optimize our network is also a key part of our sustainability efforts as we reduce mileage and emissions.”
YRC said a union-management committee was to meet next month to discuss and review the changes slated to take effect in May. However, the union last week sent a memo to all local unions, saying its freight negotiation committee “is reviewing various substantive and procedural issues involved with the proposed change.”
That memo from Tyson Johnson, who is co-chairman of the negotiating group, also was posted on trucking websites. The memo said no meetings to discuss the changes would occur in March or April.
Neither the union nor the company provided additional comment.
“This is all about improving customer service and taking another step to regain a lead position in the North American LTL market,” Rogers said. “This change also moves us closer to sustained profitability.”
During the year, YRC Freight’s operating expense was $3.24 billion, and its full-year operating loss was $37.3 million.
“This change of operations request continues the restructuring of the company’s terminal network to further strengthen the company’s position,” YRC Freight’s notice said.
The move would eliminate distribution centers in Cincinnati, St. Louis and Memphis, Tenn., and terminals in 22 states.
States where multiple closings are planned include California, Illinois, Montana, New Jersey and Ohio.
Assuming completion, YRC would have about 250 terminal facilities after the change of operations, compared with more than 700 in March 2009, when the two LTL networks were pushed together.
The proposal calls for cutting 109 road drivers’ jobs, affecting workers in a total of 85 terminals and shifting 343 positions from one terminal to another.
An additional 121 dock and mechanical jobs would be eliminated at a total of 83 terminals.
The remaining six positions to be reduced are clerical workers.
Workers who decide to move to a new terminal would receive as much as $7,150 for relocation and housing expenses.
