Less-than-truckload (LTL) transportation services provider YRC Worldwide Inc. reported this week that it is seeing decent gains in its operating data for certain metrics on a quarter-to-date basis for the fourth quarter.
For YRC Freight, its largest operating unit, tonnage per day in October headed up 1.7% annually, while November 2017 tonnage per day increased approximately 1.1% annually. And on a quarter-to-date basis through November, revenue per hundredweight rose roughly 3.7% annually, while revenue per shipment increased approximately 5.0% quarter-to-date through November 2017 on an annual basis.
And for the YRC Regional segment October 2017 tonnage per day increased approximately 5.5% annually and November 2017 tonnage per day increased approximately 6.0 annually. Quarter-to-date through November 2017, revenue per hundredweight was up around 0.8% compared to a year ago. Revenue per shipment increased approximately 4.1% quarter-to-date through November 2017, compared to the same period last year.
These gains, specifically on the YRC Freight side, are in sync with the unit’s change in operations plan, which was announced this summer and went into effect in November.
On the company’s third quarter earnings call, YRC CEO James Welch said that the YRC Freight change of operations has allowed the unit to take some freight out of its larger and unproductive facilities, where it can go from two-dock stands to one dock, explaining how the inefficiencies of running its two-dock operations are not good. Having the ability to have a higher handling ratio is expected to be a big benefit and provide a more consistent service offering, Welch added.
The CEO added that he is optimistic about YRC’s 2018 prospects, too.
“We have a volume of what we wanted and so we are going to be working even harder on yield as we move forward,” he said on the earnings call. “I think we have a very balanced environment for yielding growth.”
Citing extraordinary extra costs due to the storms, YRC said net income in the Third quarter was $3 million compared to $13.9 million in third quarter 2016. Earnings before interest, debt, taxes and depreciation was $81.4 million in third quarter compared to $85.5 million in the prior year comparable quarter.
YRC continues its reinvestment in the business with $31.9 million in capital expenditures and new operating leases for revenue equipment with a capital value equivalent of $15.9 million, for a total of $47.8 million in the year-ago quarter.
Welch said YRC expects to take delivery of more than 1,300 new tractors in fourth quarter 2017 and first quarter 2018, for a total of more than 3,700 just the beginning of 2015, which is an upgrade of approximately 25% of its fleet. YRC expects to also take delivery of more than 2,400 trailers in the fourth quarter 2017 and first quarter 2018 for a total of more than 7,300 since the start of 2015.
Welch said the hurricanes cost YRC in “the low double digit of millions range at YRC Freight.” YRC Freight’s average length of haul is 1255 miles and the storms resulted in YRC “having freight stacked up all over the entire country and in their network and how they had to gradually get it down to that area and the effort that it took to re-handle lot of freight or having to call over customer once it got there,” Welch said. It also resulted in YRC resorting to using expensive purchased subcontractor transportation, and lost revenue opportunities.
But noting the tight supply market, Welch said YRC is taking advantage of higher yields.
“So with capacity tightening and other carriers pushing the yield button, it’s certainly been a good opportunity for us to do the same thing and more importantly take an opportunity to look at our freight mix on a continual basis,” he said.
Welch said he was “disappointed quite frankly with our productivities across all four of any companies,” added: “We just haven’t made the move there that we wanted to make, we thought we could make. Certainly not having the right mix of equipment at a time has hurt that.”
Stifel analyst David Ross wrote in a November research note that while much of YRC’s third quarter network has been cleared, there is still some lingering costs associated with equipment rentals that will continue through much of the fourth quarter.
But when looking out to 2018, Ross explained that “the LTL environment looks very positive for continued price and tonnage gains. And if YRC can just string together a couple of good quarters, the stock should trade much higher in our view.”
About the Author
Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman
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