DC Velocity - December 2009

newsworthy

ing to Stifel Nicolaus analysts. In its peak year of 2006, YRC earned about $300 million in net income and that was on 66 percent more revenue than it has today, according to the analysts.

Despite the high risk posed to existing shareholders by the debt swap, they have little choice but to approve it. If the deal falls through, YRC could file for bankruptcy protection as early as next quarter. Such an event would almost guarantee that its shares would become worthless.

No quick fix

If YRC rights the ship, it will likely do so without any near-term help from the U.S. economy or from freight volumes. In an interview with consultancy TranzAct Technologies Inc., YRC Chairman William D. Zollars said that freight demand will not see a meaningful recovery during the first half of 2010 and that he expects further pressure on LTL rates and on near-term profitability for carriers.

While Zollars said YRC sees a more favorable climate in the second half of 2010, he added that “we’re not betting on the economy bailing us out.”

Zollars said YRC will be cash flow positive in 2010 and that operating cash flow metrics are steadily improving. “We are a much stronger company than we were going into the recession,” he said.

YRC has reduced capacity by between 25 and 30 percent during 2009, and Zollars said he is satisfied with the downsizing of the YRC network. “Our capacity fits our volumes pretty well” at this time, he said in the interview.

—Mark Solomon

; Winning ways. USG Corp. has received the 2009 Shipper of
the Year award from NASSTRAC, a non-profit association for
transportation and logistics professionals. USG, a manufacturer of
gypsum products, received the award for its innovative approach
to leveraging customer and carrier partnerships; taking corporate
responsibility and safety issues seriously; and effectively manag-
ing costs. The award will be presented at NASSTRAC’s Logistics
Conference & Expo in April.
accolades

; The best Defense. YRC Worldwide has received a 2009 NDTA Distinguished Service award from the National Defense Transportation Association. The award recognizes YRC’s achievements in the field of transportation and logistics in support of the NDTA and its mission.

; Efficiency expert. Harbor Truckers for a Sustainable Future has named APL’s Global Gateway South facility the most efficient marine terminal in the ports of Los Angeles and Long Beach. This is the fifth time in 10 years a harbor trucking association has recognized APL for efficient terminal operations.

14 DC VELOCITY DECE,MBER 2009

ABF, Teamsters may—or may
not—be in concession talks

To hear less-than-truckload carrier ABF Freight System tell it, the carrier and the Teamsters union are discussing a proposal aimed at wringing wage concessions and pension payment deferrals out of ABF’s unionized employees.

To hear the Teamsters tell it, nothing of the sort is taking place.

The disagreement took root on Nov. 17 at the annual TransComp Exhibition and Intermodal Expo in Anaheim, Calif., when ABF Chief Operating Officer Wesley Kemp reportedly said the company was in concession talks with the International Brotherhood of Teamsters (IBT). ABF was seeking wage cuts totaling 15 percent through the four remaining years of its collective-bargaining agreement with the union as well as an 18-month deferral of pension payments, he said.

These are demands already agreed to by Teamster members employed at ABF rival YRC Worldwide Inc. But ABF’s offer comes with different terms. While YRC workers are receiving options on the company’s stock that could be exercised at a pre-set price, ABF has proposed that employees participate in a profit-sharing plan in return for agreeing to the concessions.

The next day, the Teamsters issued a statement saying the union is holding no talks or discussions with ABF. National Freight Director Tyson Johnson said in the statement that the union is “not having contract or concession discussions” with ABF, and that he has contacted ABF to “demand that they correct the record.”

The day after that, ABF spokesman Danny Loe issued a statement saying there is “obviously a difference of opinion as to how one would characterize the communication that’s taken place between ABF and the IBT concerning wage concessions. That being the case, it’s likely best not to debate those semantics in a public forum.”

A source close to ABF said the company, worried about the prospect of YRC’s gaining a significant cost advantage from the wage givebacks and pension deferrals, could wait no longer to make similar demands of its Teamster employees. The source confirmed that a proposal was presented to the Teamsters and surmised the union’s public rebuke was based on the use of words like “talks” and “negotiations” that imply a more formal negotiating process is under way.