YRC CEO Sees Light at End Tunnel for LTL Long-Haul
YRC Worldwide, which collectively represents the second-largest group of carriers in the $43 billion less-than-truckload (LTL) sector, will benefit from closings and reduced capacity in the $340 billion full truckload (TL) market, according to analysts and top YRC officials.
鈥淭he year 2019 probably ended with close to 800 closings in the truckload industry,鈥 YRC Worldwide President and CEO Darren Hawkins said in an interview with Logistics Management. 鈥淭hat lessens capacity. Plus, the driver shortage, increased alcohol and drug screenings, the insurance market, all those things will impact capacity. The truckload market is (nearly) 10 times the size of the LTL market. But a ripple in truckload can create a tidal wave in LTL,鈥 Hawkins added.
One top analyst agrees with Hawkins. Satish Jindel, principal of SJ Consulting, which closely tracks the LTL sector, said he believed LTL contract rates for shippers would rise at a higher rate than TL rates in 2020.
鈥淥ne reason LTL will perform better is retailers are converting TL shipments to LTL because of e-commerce demand,鈥 Jindel said. 鈥淟TL carriers are handling more retail shipments than ever before. That will continue. The caveat is the LTL industry must learn how to handle those shipments.鈥
As far as shippers are concerned, Hawkins said rates will continue to track internal operational costs 鈥 led by soaring insurance rates and equipment prices 鈥 that continue to rise in the 鈥渕id-single digits.鈥
Going forward, Hawkins said, YRC will have fewer physical locations, but the same geographic service areas.
鈥淲e expect this will increase density, reduce mileage, facilities and equipment and better serve our customers,鈥 Hawkins said.
YRC consolidated 25 terminals last year and will continue to evaluate, he said.
YRC Worldwide, parent of the fourth- and seventh-largest groups of LTL carriers, lost $104 million last year, compared with $20.2 million net profit in 2018. YRC鈥檚 total revenue for last year fell 3.4 percent.
Hawkins said YRC鈥檚 full year financial results from 2019 are hurt by comparisons with 2018, which was a boom year all around for trucking. Last year鈥檚 results, he said, were hurt by a slump in U.S. manufacturing.
Source: Logistics Management