This story appears in the March 30 print edition of Transport Topics.
YRC Worldwide Inc. said it will close 11 USF Holland regional less-than-truckload terminals and turn the freight over to other company units, a move expected to boost operating income by at least $25 million a year.
Freight currently moved through nine terminals in the Northeast will be handled instead by YRC’s New Penn regional unit that also operates there. The Richmond, Va., and Wichita, Kan., USF Holland facilities’ freight will be moved by YRC’s national LTL unit.
“The primary reason [for the move] was to continue providing better service to the customer,” Keith Lovetro, president of YRC Regional Transportation, told Transport Topics on March 23. “There was always a level of confusion with overlapping terminals, and customers were asking which ones to use. This makes us easier to do business with.”
Shutdown costs of $8 million to $10 million will be incurred when the terminals close by March 31, and about 350 USF Holland workers will lose their jobs, YRC said.
Operations at 62 other USF Holland terminals are continuing, as are the regional services offered by USF Reddaway in the western portion of the country. YRC in 2007 reconfigured its regional LTL business as part of a cost-saving effort, combining USF Bestway with Reddaway and adding geographical coverage for Holland.
New Penn is taking over the freight moved now through USF Holland terminals in Baltimore, Albany, N.Y., and Syracuse, N.Y., and six terminals in Pennsylvania. They are: Philadelphia, Allentown, Harrisburg, Wilkes-Barre, Bedford and DuBois.
The move represents the latest cost-saving initiative by YRC, which lost nearly $1 billion last year, mostly because of asset writedowns. Operating losses at the national unit were $749.4 million, including impairment costs of $776.7 million. Its trucking business last was profitable in 2007, when the national unit made $159 million, before taxes and interest.
The latest closing announcement follows less than three weeks after the national trucking business was integrated by combining the terminals, equipment and employees from Roadway and Yellow Transportation into a single unit. That action was expected to improve operating results by at least $200 million a year. The consolidation led to the shutdown of 170 facilities and a remaining network of 450 terminals.
The shutdown expenses include severance, lease termination and other facilities costs that will be included in the first-quarter earnings results.
Annual savings from the shutdowns could be as much as $30 million, according a March 20 regulatory filing.
Workers who lose their jobs will be given preference in hiring in the future by other units, the company said. Lovetro said there are no other areas where YRC Regional services overlap.
He said the company will assess whether the facilities that are being closed could be used by YRC’s national unit. If not, the buildings will be sold.
When the national integration occurred March 2, several months ahead of schedule, seniority lists were combined so that the most experienced workers could pick which jobs they wanted based on their qualifications and skills.