YRC mulls exit from short-haul network

YRC Worldwide Inc.'s proposed move to take its long-haul carriers out of the market for freight moving 500 miles or less may streamline its operations and reduce its payout for damage claims. However, it is unlikely to have much of an impact on how its customers move their goods over shorter distances.

As part of his ongoing effort to fix YRC National, formed by the integration of long-haul carriers Yellow Corp. and Roadway Express, YRC President Jeff Rogers has proposed an extensive service restructuring that would remove short-haul freight from the company's traffic mix and turn that freight over to the company's three regional units: Holland, Reddaway, and New Penn. Rogers had been head of the successful Holland unit before being named president of YRC last year.

The move, which must be cleared with the Teamsters Union but which is expected to be approved, will take YRC out of competition with its regional units for freight moving in same-day or next-day delivery services. The proposal would close YRC's "Velocity Network" created in 2008 to expand the national carrier's service offerings. YRC has requested a Feb. 28 hearing date with the goal of implementing the change in March.

In a letter dated Jan. 20 to Teamsters President James P. Hoffa and David Smith, president of Trucking Management Inc., which negotiates the labor agreements governing YRC and the Teamsters, Lamar Beinhower, YRC's director labor-quality & assurance, said the restructuring of the long-haul network will enable fewer touches of the freight, expedite delivery to consignees, reduce costs, and allow YRC to return to its core competency of handling shipments moving between 500 and 3,500 miles.

Ken Paff, national organizer of the Teamster dissident group Teamsters for a Democratic Union (TDU), said he doesn't expect Teamster leaders to oppose the proposal.

In a mid-January interview with DC Velocity, Rogers said a top priority in reversing the stagnation at YRC is minimizing the chance of freight damage by reducing the number of times each shipment is touched. He added that YRC has "not done a great job in terms of safety performance," and that the company's freight claims ratio—net cargo claim payments as a percentage of revenue—is "in the middle of the pack, and in the past, we've been better than that."

Charles W. Clowdis Jr., a long-time trucking executive and now managing director, transportation advisory services at consultancy IHS Global Insight, said Rogers' move to overhaul YRC's break-bulk locations is long overdue. "At one time, they handled a shipment from Boston to Los Angeles as many as five times," he said. "Too much labor, too many chances for damage and claims. Looks like they are getting smarter now."

Clowdis said YRC National's shippers will notice little change with the carrier exiting the next-day, short-haul market, saying the regional carriers that traditionally handle that type of traffic will be more than willing to absorb the business.

"YRC just never understood how to combine short-haul and long-haul LTL," Clowdis said, adding that shippers "likely just never saw Yellow or Roadway as regional players."