Less-than-truckload (LTL) carrier YRC Worldwide Inc. on Aug. 3 offered a brightening picture of its prospects, with a reduction in market share erosion and firmer pricing for its products.

However, the outlook for 2011 remains murky, with the company bracing itself for significant cost increases that could retard the progress it has made so far in 2010.

The results were consistent with the company's quarterly pre-announcement in mid-July. The nation's largest LTL carrier by sales posted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $40 million. Daily tonnage carried by YRC's regional carriers in the second quarter rose 4.5 percent year over year, its first quarterly volume growth in four years.

Tonnage carried by the company's YRC National unit, the amalgamation of the old Yellow Transportation and Roadway Express, fell 19 percent year over year. The second-quarter numbers represent a sequential improvement over the 35-percent decline in the first quarter.

YRC and its competitors are benefiting from a recovery in LTL volumes, which has begun absorbing excess capacity and resulted in improved yield trends. Through the first half of the year, YRC National's yields were up 3.9 percent, accelerating from a 0.4-percent increase through the first quarter. YRC Regional's yields were down 2.8 percent through the first six months, slightly worse than the 2.4-percent yield decline through the first quarter.

YRC's management has said it will focus heavily on yield management, meaning it will turn away business it deems to be unprofitable. However, that strategy may clash with the company's need to rebuild traffic lane density and market share, analysts contend.

YRC spent $33 million in cash during the second quarter to maintain operations, almost half the cash burn reported in the first quarter and an encouraging sign. Still, YRC faces major cost pressures later this year and into 2011. It is expected to resume in January contributions to the Teamsters pension plan that were frozen in mid-2009 as part of an agreement under which the union also accepted wage reductions in return for an ownership stake in YRC and to ensure the carrier's continued survival. A full resumption of pension contributions to 35,000 Teamster employees is expected to cost the company $500 million in 2011 alone.

In addition, between $50 million and $100 million of deferred interest and fees in the company's credit agreements are set to come due on Oct. 26, unless the line of credit is refinanced or two-thirds of YRC's lenders approve an extension of the deferrals.

Furthermore, the 15-percent wage concessions agreed to by YRC's 35,000 Teamster members would be eliminated if the interest and fee deferrals are not extended into 2011. Otherwise, the concessions are to remain in force until March 31, 2013, when the current collective bargaining agreement expires.