Largest U.S. Trucker in Complete Freefall

Largest U.S. Trucker in Complete Freefall... but not to worry... the GDP "only fell 3.8%" (ahem)

It is amazing what a different story you hear when you compare government reports to company reports. Whatever alternative universe the bulls live in, is one I'd love to languish in - must be a nice place. One area that has been leading this market down of late is transports. They've been horrid. While the dry bulk shippers have been bad for a long time, railroads held up much of 2008. They have been terrible of late; Paul Kedrosky has a chart showing the year over year crash in shipments by category.




It is a similar case with the Fedex (FDX), UPS (UPS) cohort. I'm not that familiar with the trucking industry since it's not really an area I play in on the long side, but I am familiar with YRC Worldwide (YRCW) which is the #1 trucker in the U.S.

Let's see what YRC is saying

• Struggling No. 1 U.S. trucking company YRC Worldwide Inc (YRCW) on Thursday reported a fourth-quarter net loss, citing the impact of the slowing U.S. economy and impairment charges.
• The U.S. trucking sector has suffered from weak volumes since the third quarter of 2006, a slowdown that has been made worse by sliding retail and auto sales, the U.S. housing sector meltdown and the slowing of the overall economy.
• The company reported revenue for the quarter of $1.93 billion, down from $2.35 billion a year earlier.
• The Overland Park, Kansas-based company reported a fourth-quarter net loss of $244.4 million, or $4.14 a share, compared with a net loss of $735.8 million, or $12.99 a share, a year earlier. Excluding impairment charges related to a write-down of goodwill related to the integration last year of two trucking units under a single brand and a write-down of goodwill at its YRC Logistics unit, the company posted a loss of $2.51 a share.
• "Our results reflect the significance of the economic recession that has been longer and deeper than anyone anticipated," (anyone? hmm... someone is not reading certain blogs) Chief Executive Bill Zollars said in a statement. "Although we were not pleased with this level of performance, it was consistent with our internal expectations and those of our banking group."
• YRC is in discussions with its lenders on its debt covenants and Zollars said "discussions with the banks are progressing well, and we are on track to finalize an amendment by mid-February."

Those darn debt covenants keep popping up.

• YRC National Transportation total tonnage per day down 14.6%
• YRC Regional Transportation total tonnage per day down about 14%

Disclosure: No position

Comments

[NETeamster:]

Just another case of poor management, choosing to battle with the employees rather than taking care of the business of business. Management looks at everything on the one dimensional world of paper, and cant figure why things are different in the real three dimensional world. their mantra is " well it looks good on paper". Flush............... Thats what you can do with your paper...........

Feb 04 09:28 AM

[k9s-4-k8:]

There's always the choice to invest in your own truck and become an owner/operator, but we know the risks involved there. Working for Yellow eliminates certain risks but leaves one dependent on them. When the economy turns down, they're going to pass the buck. If you have a problem with it, buy a truck and go independent, or go into a new line of work. Belly aching about your loss of bargaining power is meaningless if you don't take steps to empower your own work life.

Feb 04 12:30 PM

[truckerblues:]

From the trenches, bill count is down, O/R is up for YRCW and the regionals no matter who's fault it is the writing is on the wall.

Feb 04 01:18 PM

[Ex-8th floo...:]

I saw it almost 3 years ago when Bill Z bought USF against the board's wishes. What a mistake! They eventually wrote off over 700 mil? There are people running this company that have no business doing it. They are lucky to know which end of the truck goes first! Zollars is not a trucking person and neither is Smid. Sure Smid may have started on the dock but he has no idea what it takes to run a truckline. Most of the people in any position of power there do. Zollars will ride off into the sunset in his Mercedes and Smid will tear out of there in his 'Vette. Jobs may be scarce but at least I'm ahead of the game before the bottom falls out and I will have a job while the others are sucking wind.

Feb 04 02:24 PM

[Top Gun:]

Thanks to all the folks who actually worked in the industry for their comments. I have learned a lot, most of it not so good. It sounds like Darwinian economics may not work here, as the capital levels are so high, and margins so low, that the entire operation may go away with a small misstep. However, the current slowdown is so severe that I wonder if even the best of projections would save a company running so close to break even. On the other hand, a properly aged fleet should be able to be furloughed. I suspect to much leverage was used - leased vehicles.

Feb 04 04:51 PM

[Pete-30 yea...:]

Retired: I still have my Swamp Holly Orange underwear! It is very sad to read the articles everyday about Yellow and to follow the stock market.

I am very proud to have invested 30 years with the best long-haul ltl trucking company in the world. The company has always paid a higher union wage and out performed most to become the best.

They have let the rapid growth into too many areas and services destroy them. They have lost most of their solid freight managers that are replaced with too many young people that can't run freight operations.

When I left as a terminal manager, my replacements- three in the first year, destroyed the terminal performance.

Take a look at the equipment(tractors and trailers) which is getting old and run down. This is taking a toll also as yearly replacements of a aged fleet is not taking place.

Down size and get back to running the best long-haul freight operations in the U. S.. Forget the worldwide do it all.


On Feb 02 09:51 PM Vested interest wrote:

> So after 30 years of service I directly involved with Yellow's rise
> to the top of the LTL industry. I now watch from a distance after
> downsizing forced me to retire without so much as a thank you for
> the many years of service. I've watch this company go from " so so"
> to "great" and now down to JUNK because of the decisions the execs
> are making for all our welfare. I only hope they find a way to pull
> this company back out of the fire before we "all" lose our battle
> to keep YRCW afloat. I will say one thing that's been on my mind,
> since they started to figure out what it will take to stay alive
> in our current economic crisis, and go back to trucking basics. Forget
> about keeping up with the Jone's and give back to the consumer what
> they grew up expecting from the number "1" long haul carrier in the
> nation. Service, Price, and Loyalty! Basically what that means is:
> If you tell a customer you can service their product and deliver
> it on time at a fair price then "do it". If YRCW can't, which they
> have been attempting for over 15 years, then get out of that venture.
> They might not be in position, and may never be, to compete for the
> regional business. Yellow grew by being the best at what they did.
> Long haul LTL was their nich and they did it better then anyone out
> there. Their pricing structure worked before they got the idea there
> was a better way to price a skid of freight. Now they measure, weigh,
> and cube every piece of freight, at a great cost to the company!
> They pay some of the best wages in the industry only to have there
> vested interests, employees, get bogged down with paper work instead
> of picking up and delivering freight. Also, real time is great but
> what percentage of their customers are really concerned about that
> or have the time to sit at their computers and watch every move of
> their freight? Now last but not least, loyalty to their customers
> used to be everyones mission at Yellow. The account reps, President,
> Vice President, drivers, dockmen, supervisors, managers, and clerical
> personell at Yellow had a genuine concern for our customers. It was
> done on a local basis, most of the time on a first name basis. That
> was important to the customer and gave them a sense of security knowing
> that someone personally was taking care of their problems and they
> knew where and when they could call "JOE" the freight handler. Yellow
> has lost that personal touch with it's customers and therefore have
> taken away any loyalty they had to continue the relationship in good
> times and now bad. I've said enough. I only hope some of this reaches
> the powers to be that are currently making decisions for YRCW and
> get back to basics, before everyone loses, including those that are
> now retired and too old to venture back into the yuppie world. You
> can catch me at WalMart next time you go shopping. Greetings!

Feb 05 07:45 AM

[Matthew LaG...:]

While the economy has not been a benefit to Yellow in the past two years, it is their very poor management practices that has finally brought them and their "brother" Roadway, now YRCW, down. I have been with both companies and the management just doesn't seem to get the idea of treating their employees like human beings, and the laborers don't seem to get that for them to make more money, the company has to make more money. Therefore the bad management mixed with what I call the "Union Attitude" has finally brought them down. I was told multiple times to "slow down, save some work for the next guy". This is completely against my work ethic. I have also seen management treat the employees as a number and not hold them accountable for their work, or lack of. To be sucessfull, it is my belief that you have to do right things right. You have to have a good plan, and you have to hold your employees accountable to that plan and the rules set forth. It is my belief that this is why FedEx and UPS will be the ones coming out ahead when the economy picks up, which it will. They both have good, solid management and they both seem to hold their employees accountable. Watch for both of these companies to survive through these tough times.

Feb 05 01:43 PM

[TraderMark:]

Ditto what Top Gun says.

Coming from Michigan it all sounds very familiar... I don't think many in the stock market who compromise the better off in America understand what is going on in the bottom half.

Ah well, can't talk to these CNBC bulls - they are convinced more free and easy money will fix everything.


On Feb 04 04:51 PM Top Gun wrote:

> Thanks to all the folks who actually worked in the industry for their
> comments.

Feb 05 05:28 PM

[Keith42:]

I am a former Roadway Express employee. When I started working for Roadway in the early 1990's they owned many smaller shorthaul companies as well as RPS. Roadway realized that there was too much competition from itself that it sold all but the core business. This was a great move for Roadway. Years later when Roadway was generating money and implementing the Lean concept, Yellow Corp. came along. Yellow's stock down looking for a way to keep their stock holders happy merged (purchased) with Roadway Express. Not happy with the results continued purchasing companies to form the largest trucking company in the U.S. and maybe the world. Dejavu!!!!!!! Let's think about this for a moment. Yellow, Roadway, USF group and whoever else is owned by YRCW sends trucks out each day to deliver and pickup freight, many going to the same dock the same day. One company, one truck. The cost savings would be enormus. Maybe they should link their computers together and start communicating. Just a thought.

Feb 05 10:05 PM

[pder:]

If yrc goes belly up it will hurt their workers because how many non-union companies will hire these guys. On the other hand it will be a boon for the rest of the truck lines

Feb 06 11:55 PM

[415gabe:]

As a result of the RDWY merger I lost my job at YLW, I know that as time goes on YLW will go out of business as its already circling the drain. I feel sorry for the employees there, but they're the real victims as Zollars and his cronnies will ride off into the sunset with FAT $$$$... If I ran a NON-UNION company I WOULD NOT hire people who have had ties with the IBT, but since Obama is big on the EFCA bill, NON-UNION companies might NOT have a choice or a chance!!

Feb 09 01:28 PM

[driving me ...:]

what can u say this economy is terrible the govt is pumping money into it trying to stimulate comsumers, direct result is trucking gets better, immediately. dangerous because it creates a money bubble like housing like oil these bubbles break. i think yrc is the least to worry about they are merging making the most of this economy companies like fedex and ups freight can not merge, streamline, eliminate duplicate runs to stay affloat.So as hope goes this is the most viable plan in the industry. We will see if it works obviously we are on this train til it stops. the sad reality is btwn yellow and roadway they are double in some cases triple the size of the others. if yrc goes down its a whole lot bigger than 60000 losing their jobs. now you have over night 50000 trucks sitting talk about devastating to the economy. others will try to pick up slack, reality is no one is able to handle it. next comes hyper inflation, too many dollars chasing too few goods. people talk about run on banks. ha, wait til they head to stores to get what little is left then youre paying 10 bucks for a gallon of milk. dont think it can happen? this instant information world is taking the little sanity we have and adding a nice dose of fear because people know whats happening sometimes before the companies do. lets keep our heads and keep working working together this is america and we are still great, ignore the talkng heads, make a difference for someone, and just like 911 pulling together we can do anything. dont worry and dont give up. fear and panic is never the answer doom and gloom doesnt work survivers face the problem and deal with it dont run.

Feb 12 10:23 AM

[driving me ...:]

yellow is adopting everything roadway has because roadway has always been profitable yellow mgmt is going away and hopefully yellow has not dug too big a hole to get out of. roadways system does provide hope, remember roadway started rps which is now fed ex also viking which is also fed ex hmmm i think i see a pattern maybe just maybe if yellow stays out of it roadway will do what is right as they always have so far.


On Feb 05 01:43 PM Matthew LaGrange wrote:

> While the economy has not been a benefit to Yellow in the past two
> years, it is their very poor management practices that has finally
> brought them and their "brother" Roadway, now YRCW, down. I have
> been with both companies and the management just doesn't seem to
> get the idea of treating their employees like human beings, and the
> laborers don't seem to get that for them to make more money, the
> company has to make more money. Therefore the bad management mixed
> with what I call the "Union Attitude" has finally brought them down.
> I was told multiple times to "slow down, save some work for the next
> guy". This is completely against my work ethic. I have also seen
> management treat the employees as a number and not hold them accountable
> for their work, or lack of. To be sucessfull, it is my belief that
> you have to do right things right. You have to have a good plan,
> and you have to hold your employees accountable to that plan and
> the rules set forth. It is my belief that this is why FedEx and UPS
> will be the ones coming out ahead when the economy picks up, which
> it will. They both have good, solid management and they both seem
> to hold their employees accountable. Watch for both of these companies
> to survive through these tough times.

Feb 13 09:06 AM

[Kick me:]

I work for Yellow. Management is all about numbers. I let the superviisors remarks slid off my rain coat. The customer is the one that signs my paycheck. Management needs to focus on the customer. Their main focus is to move bills across the dock. Trailers are loaded without concern about the driver. Over the road trailers get loaded with a forklift and no one breaks the pallets down anymore. (this keeps the bill count up - on both ends)

A few lazy guys don't run a company out of business. it takes a CEO to do that.

Feb 17 07:39 PM

[alteich:]

Deregulation of the trucking business was not part of Reaganomics. Deregulation occured in 1980, prior to Reagan taking office in 1981.


On Feb 03 09:45 AM elderberryking wrote:

> Actually, I've been surprised for some time that Yellow did not go
> belly up many years ago, when de-regulation gutted the trucking industry
> and well established trucking companies were dropping like flies.
>
>
> When deregulation happened, I was making around $70,000 a year as
> an owner operator with a dedicated new furniture haul from L.A. to
> the east coast, electronics for the backhaul, and figured deregulation
> would cost me about $20,000 a year. Incidentally, $70,000 does not
> seem excessive to me, what with $100,000 tied up in equipment and
> pretty much living in the truck.
>
> My $20,000 estimated profit-drop was way off and in short order I
> was down to $35,000 a year; profits slashed in half. Meanwhile, I
> went from pulling a 42 footer to a 45, then a 53 footer. The terminal
> manager said this was OK, it was the "trickle down theory" at work
> and to be patient.
>
> Being patient didn't help; today this haul is just another crummy
> job.
>
> Deregulation took all the fat out of the business, to the point no
> one can survive. Same as the airline business ... no cash reserves
> ... handle tons of cash but can't make any of it stick around. <br/>
>
> What I can't figure is why RayGun economics was ever bought into
> by the people in this country ... anyways, we're still paying the
> tab for the deregulation disaster and Yellow's current problems go
> all the way back to that sorry event. All IMHO ...
>

Feb 18 04:35 AM

[SENIORITY 5:]

You fail to mention Roadway Express in your script. From what we at the former REX can see, we were cruising along nicely; were debt free; had steady freight; had decent runs-most of them meet and turns-thus eliminating lodging expenses and the workers comp exposure that occurs when employees are kept away from home not working; almost all our runs were scheduled start times. Then came the news that Yellow was buying our company and worse, since Yellow didn't have the cash, was using debt instruments to finance the deal. Roadway was under valued and Yellow convinced lenders that it would be a safe investment. They say that the combined companies are better together than they were seperately. I obviously disagree.

First thing that came to mind was the then recently departed Preston outfit. Others came to mind, Jevic, Saia, and others which had previous dealings with Yellow. Now we find ourselves fighting for survival as part of a company called YRC when most of us wish Yellow had simply left us alone. Thanks a lot Bill Zollar$ for cooking up a deal our Roadway board found attractive, at the time. What was the deal...$42 a share? I'll take $42 a share for my 119 shares, right now.

The only way to turn this freight outfit around (assuming it can be done in the current economic environment, and more importantly, that you want to turn it around and not simply take the money-whatever there is- and run) is to get more freight people involved in upper management, making the critical decisions, and fewer money men. Like was previously said, service made these companies what they once were and tinkering by people with only a vision of the bottom line sent us on this tailspin, long before the economy went south. Spending a summer jockeying trailers in the yard at Phoenix does not make you a freight man, Mr. Smid. And getting rid of so many experienced dispatchers and coordinators, favoring something called a "National Service Team", made up of people apparently fresh off the burger-flipping circuit, cost you a lot more than money....you lost the confidence of your people because of their absolutely stupid routing and scheduling decisions.

It's time to use the Roadway model of everyone's involvement to make quality and service the number one priority. When you offer a product that the customer wants to buy, you can sell. When your product is superior to your competition's, you can sell at a premium. You don't cut your service committment to make a more attractive bottom line. You cut your service when you're ready to roll over and die.



On Feb 02 10:53 AM Drag Racer wrote:

> They have made some very bad moves in the last year. Now they wany
> their employees to pay for their mistakes. As a road driver Yellow
> never mentions what they actually take from us. From April til December
> of last year ( I was out on W/C the first three months) I gave back
> time from every trip out and back for waiting .50 each way totaling
> $1,500.00 for 7months and layover time (because we don't get paid
> until we are over thirteen hours of our ten hour layover) equalling
> for me another $2,400.00 for 7 months. $3,900.00 from one driver.
> Now they take off the top another 10% which will become an additional
> 7,000 to 8,000 dollars a year for four years more with no guarantee
> that the company will stay afloat. This money will find it's way
> into to the pockets and Yellow will fold. The management of this
> company has ruined Jevic, Preston, and now Yellow as it was known.
> Since the fuel prices have come down so has the fuel service charges.
> We have taken up the slack with this 10% +. In the past I have seen
> companies survive on the fuel service charges alone. ( for a short
> period of time) Now we are the service charge. I have contacted
> our Congressmen to ask that they make certain they watch Yellows
> actions and make dam sure this money we are giving back does not
> go South for Vacations.

Feb 20 08:58 AM

[SENIORITY 5:]

Gabe:

Before you slam all of us Teamsters, consider that there are many of us who signed up back in the 70s, before deregulation, and when the only non-union freight company of any consequence was Overnite. I have enjoyed my Teamster-afforded lifestyle. My wife was able to stay home and raise our kids rather than have to send them to daycare while she worked so we could make ends meet. We have a nice home in a decent neighborhood. We drive decent cars and can send our kids to college. We don't have medical bills that go unpaid. I have a retirement to look forward to.

With that comes the responsibility that we have to be more efficient, if not more productive, to justify our higher standing in the freight community. As the old adage goes, you get what you pay for. And if you want the best, there are costs involved. From what I see going down the road these days, a lot of the guys driving at currently non-union outfits are former Teamsters who were displaced through no fault of their own when their companies went belly-up.

I know guys who got laid off and went to work for other companies. Almost to a man they say that their temporary or interim employers want them to stay after they get their recall notice. Why? Their work ethic. They show up for work, do so on time, sober, ready to go. They deliver to their destinations on time, safely. All of which were expected when we hired on with that union carrier after having been employed somewhere else.

Don't forget, the contract negotiated between the company and the union is binding on the rank-and-file, also.


On Feb 09 01:28 PM 415gabe wrote:

> As a result of the RDWY merger I lost my job at YLW, I know that
> as time goes on YLW will go out of business as its already circling
> the drain. I feel sorry for the employees there, but they're the
> real victims as Zollars and his cronnies will ride off into the sunset
> with FAT $$$$... If I ran a NON-UNION company I WOULD NOT hire people
> who have had ties with the IBT, but since Obama is big on the EFCA
> bill, NON-UNION companies might NOT have a choice or a chance!!

Feb 20 09:39 AM

[User 362941:]

Why don't all you naysayers back up and give this merger a chance.
Everyone is bucket- mouthing it and no one is backing it.When and if
it fails; That is the time to get up on your soap boxes and say I told you
so.For now, let the hand play out.

Feb 23 07:14 PM

[Stag Nation:]

I AM.. an OTR driver from the Roadway side. There are more to blame here than the Exec's alone. I've watched in disgust, our drivers deliberately delay frieght by stopping for many hours to play at casinos. OR, take long naps along the side of the road becuase they spend too much off time carrying on instead of resting. OR the TruckStop Stud... There are no ramifications anymore for bad behavior. What? A letter is put into your file... I can think of several that were fired for bad behavior... and drug related offenses only to be rehired later after the arbitration commitee drops the offenses and in most cases gives the perpetrator back pay to boot!.... The grievances have gone through the roof at YRCW... And in all cases, so it seems, there is payout by the company. Explain to me, how can the company stay in business like this???? Well, it is becoming more obvious now that it can't.
Is it too late? hmmm, I pray not. But we, as Union members. need to be the professionals that we once were.... Reward good behavior by allowing us to continue to work, and get rid of those who are not worthy to be a Teamster, let alone working as a driver for YRCW.

Feb 28 01:21 PM

[Scot McDowell:]

You should go to work for a non union carrier ! You are nothing more than a suck ass SCAB !! !!


On Feb 28 01:21 PM Stag Nation wrote:

> I AM.. an OTR driver from the Roadway side. There are more to blame
> here than the Exec's alone. I've watched in disgust, our drivers
> deliberately delay frieght by stopping for many hours to play at
> casinos. OR, take long naps along the side of the road becuase they
> spend too much off time carrying on instead of resting. OR the TruckStop
> Stud... There are no ramifications anymore for bad behavior. What?
> A letter is put into your file... I can think of several that were
> fired for bad behavior... and drug related offenses only to be rehired
> later after the arbitration commitee drops the offenses and in most
> cases gives the perpetrator back pay to boot!.... The grievances
> have gone through the roof at YRCW... And in all cases, so it seems,
> there is payout by the company. Explain to me, how can the company
> stay in business like this???? Well, it is becoming more obvious
> now that it can't.
> Is it too late? hmmm, I pray not. But we, as Union members. need
> to be the professionals that we once were.... Reward good behavior
> by allowing us to continue to work, and get rid of those who are
> not worthy to be a Teamster, let alone working as a driver for YRCW.

Mar 07 09:24 AM