The new CEO of less-than-truckload (LTL) carrier YRC Worldwide Inc. said Friday he is focusing much of his early efforts on fixing the operating culture at the company's national LTL division, saying the network and the attitude supporting it "are not where we want it to be."
In an Aug. 5 interview, James L. Welch said that "we still have work to do" at the division, known as YRC National. "We want to get rock-solid with our network and have a disciplined process for running the network." Welch, who started at YRC 13 days ago, did not provide specifics.
Welch, 57, spent seven years as CEO of the former Yellow Transportation, which was later integrated with Roadway Express to form YRC National. Though Yellow acquired Roadway in 2003, the integration took six years to complete and was fraught with delays and cost overruns due to operational redundancies. The integration also led to customer defections as Yellow and Roadway customers—most of whom were satisfied with service levels of the respective carriers—experienced service problems with the integrated business.
In 2009, the renamed YRC Worldwide shrank the YRC National network by about 25 percent in an effort to streamline the operation, improve service, and cut costs.
Welch said trucking integrations are never easy and not always successful. One problem at YRC National, he said, is there have been so many changes in the operational network since 2003 that customers and employees don't have any consistent pattern to follow. "We don't have the culture defined at YRC National," he said, without going into detail.
By contrast, Welch said he is pleased with the performance of YRC's three regional carriers: Holland, Reddaway, and New Penn. He singled out Holland, which has posted strong operating and financial results of late, for praise.
"I want Holland to continue to do business the way Holland does business, not the way YRCW does business," said Welch, invoking the company's four-letter stock symbol.
Welch said the company's overall network capacity is "meeting our needs right now," indicating there is no immediate rush to expand the network. He echoed comments made last month by outgoing CEO William D. Zollars that YRC is winning back former customers who had defected to rivals, and is gaining new market share as well.
Welch said he is following a 100-day blueprint for reshaping the company but added that it is not a hard timetable. "As a start-to-finish scenario, it's not a concrete 100-day plan," he said. Welch declined to comment on what moves he might take to shed underperforming units like the company's truckload operations.
Welch said he has spent his first two weeks talking to employees and customers by phone, via e-mail, and by walking the corridors of the company's 10-story headquarters building in Overland Park, Kan. "There has been a little lack of leadership that's been accessible to people," he said.
Welch also said he's been immersed in analyzing the details of YRC's multi-month restructuring plan that was finalized July 22, the day his hiring was formally announced. The executive had been, until his resignation the prior day, CEO of Dynamex Inc., a Dallas-based company specializing in time-definite, or expedited, transportation service.
YRC and three of its rivals last month announced rate increases of 6.9 percent on non-contract traffic, effective Aug. 1. Welch said that the LTL industry, after two or more years of destructive rate wars, is getting closer to achieving an appropriate balance of tonnage and yield needed for long-term profitability.
Welch said that there is already ample LTL capacity on the road and that no more is needed at this time. Capacity "is not tight, but it's not been as loose as it's been," he said.
Welch said he expects little, if any, tailwind from the overall economy for the balance of 2011. "I am approaching the rest of the year as there will be no improvement in the U.S. economy," he said.