We use cookies to provide you with a better experience. By continuing to browse the site you are agreeing to our use of cookies in accordance with our Cookie Policy.
  • ::COVID-19 COVERAGE::
  • INDUSTRY PRESS ROOM
  • ABOUT
  • CONTACT
  • MEDIA FILE
  • Create Account
  • Sign In
  • Sign Out
  • My Account
Free Newsletters
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC.
    • Podcast
    • Blogs
      • Analytics & Big Data
      • Best Practices
      • Dispatches
      • Empowering Your Performance Edge
      • Logistics Problem Solving
      • One-Off Sound Off
      • Public Sector Logistics
      • Two Sides of the Logistics Coin
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • MODEX 2020
    • Upload Your Video
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC.
    • Podcast
    • Blogs
      • Analytics & Big Data
      • Best Practices
      • Dispatches
      • Empowering Your Performance Edge
      • Logistics Problem Solving
      • One-Off Sound Off
      • Public Sector Logistics
      • Two Sides of the Logistics Coin
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • MODEX 2020
    • Upload Your Video
Home » but what will they call it?
newsworthy

but what will they call it?

April 1, 2005
DC Velocity Staff
No Comments

If you're already thinking the name "Yellow Roadway" doesn't exactly roll off the tongue, brace yourself for the possibility of a Yellow Roadway USF. Early last month, the now-supersized carrier announced that it planned to acquire USF Corp. in a $1.4 billion deal expected to close this summer.

The acquisition marks the second merger in less than two years for Yellow, which purchased Roadway in 2003. But this is clearly a different kind of acquisition. By joining forces with Roadway, Yellow, a national LTL specialist, benefited from the obvious synergies associated with acquiring another national LTL specialist. Adding USF, by contrast, will strengthen its presence in the next-day and regional business, which is among the fastest-growing segments of the motor freight industry.

The announcement left shippers wondering what it all means—specifically, whether the move will trigger a flurry of consolidations involving regional LTL players. Industry analysts say they have reason to be concerned. Old Dominion Freight Line, Vitran and SCS Transportation are all said to be open to the idea of acquiring other regional players. At the same time, Vitran, CNF Inc. and Arkansas Best Corp. have all been mentioned as possible takeover targets.

Should their fears about consolidation be realized, shippers that rely on LTL service should brace for price hikes. "LTL pricing will remain strong as industry consolidation extends the conditions associated with a seller's market," predicts Michael Regan, chief executive officer of TranzAct Technologies, which provides logistics management solutions.

Andrew Gillespie, director of transportation at Ansell Healthcare Products LLC, says his company is already mulling the long-term effects of the Yellow Roadway-USF deal. As a customer of both Yellow Roadway and USF who spends upwards of $10 million a year on LTL shipping, Gillespie's company is watching the deal closely.

"I'm not worried about the next couple of quarters, but in the long run I have concerns that this could force more consolidation in the business," he says. "That could serve to limit the [number] of providers out there, which would have [upward] cost implications."

Others are more optimistic. Ellen Ruby, traffic manager for Construction Specialties Inc., a small shipper based in Muncy, Pa., says her company saw no negative fallout from the merger of Yellow and Roadway two years ago, and she doesn't expect any this time around. Ruby predicts mergers will continue because "that is how [the carriers] are realizing higher profits." Ruby says her Roadway reps (the company has kept its Yellow and Roadway brands separate) have told her that the company has recorded higher profits following Yellow's merger with Roadway and that they expect to see more of the same from the USF deal.

Worth every penny?
It's easy to see why Yellow Roadway is paying such a high premium (nearly 40 percent) for USF. The deal gives Yellow Roadway an immediate and nationwide scale in next-day and regional markets, an area where it's seeking to expand its presence. It stands to save a lot of money, too. Approximately $40 million of net synergies are expected within the first year. Longer-term synergy opportunities are estimated to be at least $150 million per year.

The merger, which has been unanimously approved by both companies' boards, will create a company with revenues of $9 billion and more than 70,000 employees and 1,000 locations. But before it can become final, the deal must be approved by shareholders and by federal and state regulators.

"With the addition of USF, we continue to accelerate our growth, earnings and positive momentum," said William Zollars, chairman, president and chief executive officer of Yellow Roadway, when announcing the deal. "Our strategic rationale for this transaction is focused on enhanced scale, complementary service offerings and significant cost synergies. Additionally, our logistics and truckload capabilities will be enhanced by the USF service capabilities."

Transportation Trucking Less-than-Truckload
  • Related Articles

    No, a robot will not take your job (but it might change it)

    If you build it, will they come?

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

Recent Articles by DC Velocity Staff

U.S. Xpress makes “significant investment” in self-driving tech vendor

Truckload carrier predicts challenging year ahead for industry

Train kept a rollin’

You must login or register in order to post a comment.

Report Abusive Comment

Most Popular Articles

  • Cold chain giant Lineage Logistics buys its own rail operator

  • Outlook 2021: What’s in store for logistics supply chain?

  • Cushman & Wakefield Brokers Sale of 170 Acres plus Lease for 1MSF Build-to-Suit for Home Improvement Retailer in Commerce City, CO.

  • Thriving in the long haul: interview with Colin Yankee

  • Capacity challenges will continue in 2021

Now Playing on DCV-TV

2mw 01 18 21 thumb

LTL Carriers Using Yield Management Techniques to Identify New Accessorial Charges

DCV-TV 4: Viewer Contributed
As we head into 2021, shippers are not too optimistic about negotiating rates with their carriers. The reason for this, as highlighted in the three CODE RED Webcasts we've hosted with our friends from CSCMP and NASSTRAC, is that in today's transportation marketplace, shippers are operating in uncharted waters. With...

FEATURED WHITE PAPERS

  • Proven Benefits: A Compendium of Slotting Optimization Success Snapshots

  • Bridging Information Gaps in Dock and Yard Operations

  • How Intelligent Sensor Solutions Turn Data Into Action

  • Order picking Solutions: Understanding Your Options

View More

Subscribe to DC Velocity Magazine

GET YOUR FREE SUBSCRIPTION
  • SUBSCRIBE
  • NEWSLETTERS
  • ADVERTISING
  • CUSTOMER CARE
  • CONTACT
  • ABOUT
  • STAFF
  • PRIVACY POLICY

Copyright ©2021. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing