Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
Along with hell freezing over, the national debt being retired, and a write-in candidate winning today,
add this to the list of improbable scenarios: David G. Ross may be changing his tune on YRC Worldwide Inc.
Ross, a Baltimore-based analyst who covers the trucking industry for investment firm Stifel, Nicolaus & Co., has
been one of Wall Street's biggest bears on the Overland Park, Kan.-based less-than-truckload (LTL) carrier. And given
YRC's myriad of difficulties over the past five or so years, Ross' extreme bearishness has been justified.
However, YRC on Friday reported its best quarterly results in several years. For the first
time since 2008—excluding the second quarter of 2010 when it benefited from an $83 million
noncash reduction in equity-based compensation expense—YRC reported positive operating income for
both its YRC Regional subsidiary and its long-troubled YRC Freight long-haul unit, which is the
amalgamation of the old Yellow Freight and Roadway Express.
YRC Regional, which is made up of regional carriers New Penn, Holland, and Reddaway, posted a
3-percent year-over-year gain in operating revenues. Yields rose as the unit posted a 2.9-percent
increase in revenue per hundredweight and a 3.6-percent increase in revenue per shipment. Tonnage
rose slightly while daily shipment volume fell slightly.
At YRC Freight, revenue per hundredweight rose 3.4 percent and revenue per shipment increased
3.2 percent from the 2011 quarter. Ross said in a research note that this is a sign the unit may
be finally "getting tough" with large national accounts by shedding some of the traffic that the
carrier has been losing money on for years.
YRC executives acknowledge that the unit has been top-heavy with big customers who tender large
blocs of freight that the carrier hauls at either a loss or at very thin margins. Analysts have long
worried that these customers have YRC Freight over a barrel because the carrier would effectively be
history if their freight went elsewhere.
Ross said that "YRC Freight is finally making some progress" under YRC CEO James Welch, who
took over in 2011, and Jeff Rogers, who ran the very successful Holland regional unit before
being named to turn around YRC Freight. However, lest anyone think Ross is turning bullish,
he cautioned that YRC Freight has "much farther to go if the segment is to be economically
sustainable."
By contrast, Ross wrote that YRC Regional has attained "rock-star" status by turning in an
operating ratio of 93 in the third quarter. Operating ratio is the ratio of expenses to revenues
and is considered a key metric of a transportation company's operating efficiency. At a ratio of
93, YRC Regional spends 93 cents for every revenue dollar it takes in. That is the second-best
LTL operating ratio behind Old Dominion Freight Line, considered the top company in the field.
MAJOR CHALLENGES STILL EXIST
Overall, however, YRC faces major challenges that could more than offset the
success at YRC Regional or the nascent turnaround at YRC Freight. Ross wrote that YRC must
spend large sums to modernize its aging fleet and must eventually deal with a looming $5 billion pension liability. In the note,
the analyst said, "We do not know where the money will come from to pay for new equipment and pay
its retirees."
Under terms of an agreement with the Teamsters Union, YRC is currently required to pay only one-fourth
of its normal pension obligations into the plan. YRC's existing contract with the union doesn't expire
until 2015.
As of the end of the third quarter, YRC had liquidity—defined as cash, cash equivalents, and
availability of funds under a $400 million asset-based loan facility—of $237.6 million. That is
down $11 million from second-quarter totals, the company said.
Jamie Pierson, YRC's CFO, said in a statement that the small decline in liquidity is a testament to
the company's "effective working capital management."
According to Ross, the ideal scenario is for YRC to sell the regional unit or spin it off—free
from any pension liabilities—to shareholders. Then it should shut down YRC Freight, sell off its
assets, and use the proceeds to provide some sort of pension to workers who "are highly unlikely, in our
view, to realize what they were promised."
The number of container ships waiting outside U.S. East and Gulf Coast ports has swelled from just three vessels on Sunday to 54 on Thursday as a dockworker strike has swiftly halted bustling container traffic at some of the nation’s business facilities, according to analysis by Everstream Analytics.
As of Thursday morning, the two ports with the biggest traffic jams are Savannah (15 ships) and New York (14), followed by single-digit numbers at Mobile, Charleston, Houston, Philadelphia, Norfolk, Baltimore, and Miami, Everstream said.
The impact of that clogged flow of goods will depend on how long the strike lasts, analysts with Moody’s said. The firm’s Moody’s Analytics division estimates the strike will cause a daily hit to the U.S. economy of at least $500 million in the coming days. But that impact will jump to $2 billion per day if the strike persists for several weeks.
The immediate cost of the strike can be seen in rising surcharges and rerouting delays, which can be absorbed by most enterprise-scale companies but hit small and medium-sized businesses particularly hard, a report from Container xChange says.
“The timing of this strike is especially challenging as we are in our traditional peak season. While many pulled forward shipments earlier this year to mitigate risks, stockpiled inventories will only cushion businesses for so long. If the strike continues for an extended period, we could see significant strain on container availability and shipping schedules,” Christian Roeloffs, cofounder and CEO of Container xChange, said in a release.
“For small and medium-sized container traders, this could result in skyrocketing logistics costs and delays, making it harder to secure containers. The longer the disruption lasts, the more difficult it will be for these businesses to keep pace with market demands,” Roeloffs said.
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.