Leaders of the Teamsters union late yesterday approved a network-restructuring plan proposed by YRC Freight, the long-haul unit of YRC Worldwide Inc., allowing the company to implement the plan over the next several weeks.
The plan, first made public in mid-March, allows YRC Freight to close breakbulk terminals in Cincinnati, St. Louis, and Memphis, Tenn. It would also consolidate "end-of-line" terminals used as freight pickup and final delivery points in San Jose, Calif.; Youngstown and Mansfield, Ohio; and Daytona Beach, Fla., among other cities.
The restructuring would lead to the loss of 760 dock, shop, office, and cartage jobs and an additional 452 over-the-road driver positions at the affected terminal locations. At the same time, 343 over-the-road driver jobs would be created, along with 639 cartage positions. All told, the restructuring is expected to result in a net loss of 230 jobs.
Under the National Master Freight Agreement, the compact that governs labor relations between the Teamsters and unionized trucking companies, a company has the right to implement what is called a "change of operations." Management must meet with the union to discuss the proposal, and labor has substantial input in how the change is executed. However, the Teamsters don't have much control over the company's overall strategy.
YRC Freight said the proposal is designed to improve linehaul density, reduce unproductive "empty miles," and cut fixed administrative expenses such as building and leasing expenses. It also believes the proposal will make the company's service more cost-effective, in part by reducing freight "touches" that can slow transit times, increase labor costs, and increase the risk of shipment damage.
A breakbulk facility serves as an intermediate sorting point for interregional freight. Freight from various end-of-line terminals is sent to a regional breakbulk terminal to be combined into trailers, which the carrier then routes to other end-of-line terminals. For example, freight destined for Texas from a terminal in Binghamton, N.Y., might move to a breakbulk terminal in Pittsburgh, where it would be combined with Texas-bound freight from other Eastern cities.
The network proposal is YRC President Jeff Rogers' latest move to wring efficiencies and profitability out of the long-troubled division, which accounts for the bulk of the company's overall revenue. Problems at that unit nearly drove the entire company into bankruptcy at the end of 2009.
YRC Freight is doing what it can in other areas to be more cost-effective. James L. Welch, YRC Worldwide's CEO, said about one quarter of YRC Freight's traffic now moves via lower-cost rail intermodal service with freight funneled into Chicago and transferred to a railhead there. Much of that freight moves on BNSF Railway, one of the two large western railroads, Welch told DC Velocity at the NASSTRAC annual meeting yesterday in Orlando.
At the same time, the unit's average over-the-road length of haul has expanded to 1,335 miles from 1,300 miles over the past 12 months, Welch said. While 35 extra miles might not seem that long, Welch said it makes a huge difference when it is multiplied over the millions of vehicle miles that YRC drivers put on the company's rigs each year.