With hundreds of new tractors and trailers already purchased and more on the way, the company formerly known as YRC Worldwide is poised to be highly competitive in LTL freight sector, according to its CEO.
Speaking with Transport Topics on Feb. 5, a day after Yellow Corp. released improving full-year financials, Darren Hawkins said the Overland Park, Kan., company is well-positioned as the economy improves.
“We’re moving in the right direction, and this is a continuous improvement story,” Hawkins said. “You put some new pieces in the equation, including 2,000 tractors coming into the network this year, and 3,000 trailers, we get a tremendous benefit from fuel miles-per-gallon efficiency also on the maintenance expense side, it’s a very nice addition. This makes 2021 pretty optimistic.”
By the end of 2020, the company purchased 300 new tractors and 1,200 trailers. In the first quarter of 2021, it plans to buy 1,110 tractors, 1,900 trailers, and 250 containers.
In the fourth quarter, Yellow lost $18.7 million, or negative 37 cents a share, compared with a loss of $15.3 million, negative 46 cents, in 2019. For the full year, Yellow was in negative territory, but its overall losses were 48.2% less than in 2019. The company reported a loss of $53.5 million, negative $1.28, compared with a loss of $104 million, negative $3.13, in 2019.
Fourth-quarter revenue was up 4.3% to $1.164 billion from $1.159 billion from the previous-year period. But for the entire year, revenue fell 7.3% to $4.51 billion compared with $4.87 billion in 2019.
Fourth-quarter operating ratio improved to 98.8 compared from 99.2 in the same period a year ago. For the entire year, it was 98.7 compared with 99.7 in 2019.
Operating ratio, or expenses as a percentage of revenue, is used to measure efficiency. The lower the ratio, the higher the company’s ability to generate profit.
Hawkins believes long-term profitability is coming soon.
“Profitable growth is the mission; that’s what we’re all about,” he said. “This is a good time to be in LTL, and I think we have the things in place to see continuous improvement as we move forward. We are well-positioned for 2021 and beyond.”
Hawkins said that more than six months after receiving two loans totaling $700 million from the federal CARES Act, Yellow has the financial flexibility needed to return to long-term profitability. The CARES Act is part of a stimulus program to shore up what the government considered essential businesses. Yellow provides freight services for the military. As part of the agreement with the U.S. Treasury, the government gained a nearly 30% equity stake in the company and broad oversight.
“We’re grateful the CARES Act was passed, and the reason it was passed, and the segment we participated in was to provide liquidity to companies that couldn’t access it elsewhere,” Hawkins said. “It was a loan, and not only do we have the terms of that loan, but we gave up 29.6% equity of our company, and the U.S. taxpayer holds that. We’re proud to have participated in this program.” Both loans are set to mature or be repaid on Sept. 30, 2024.
“Our 30,000 employees are grateful,” Hawkins emphasized. “If anybody looks at where capacity is at right now, the customers, employees, shareholders, everyone is better off with Yellow in the supply chain than without us. The value that we bring to the marketplace certainly warranted the actions that were taken. We take seriously the terms of the loan and will work hard to make sure we comply with everything that went along with it.”
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Hawkins said one of the company’s biggest concerns is training and hiring more drivers. American Trucking Associations Chief Economist Bob Costello said at least 60,000 new ones are needed to make up the shortage. To develop more drivers, Yellow trains most of its own.
“The full focus of our company is our driving academies. And we don’t stop there; it’s not just one ‘silver bullet,’ “ Hawkins said. “We run these driving academies at our facilities. Right now, we’re up to 12 locations across the United States, and organically, we are growing our own CDL drivers. 2021 is going to be a growth year for us.”
Yellow started using its new name Feb. 4.. It will begin trading on the Nasdaq exchange Feb. 8 using the symbol YELL. The company said less-than-truckload brands Holland, New Penn, Reddaway, and YRC Freight and HNRY Logistics will continue to operate under their existing names.
The Yellow name dates to the early 20th century when the Harrell family founded the Yellow Cab Co. in Oklahoma City.
Yellow ranks No. 6 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.