DC Velocity - October 2014

newsworthy

short takes

YRC Freight has launched a Dimensional Web Quoting application on its website. The new tool allows customers to obtain a quote based on shipment density, schedule a pickup, and pay instantly with a credit card. … UPS has expanded its inbound and outbound air and ocean freight services to Myanmar. It also released its 12th annual “Sustainability Report,” which notes that in addition to reducing overall carbon emissions in 2013, the company has already met its 2016 goal of reducing its air and ground fleet’s carbon intensity by 10 percent. … Old Dominion Freight Line Inc. has expanded its next-day service to the Greater Toronto Area. … Dematic, a global supplier of logistics systems for factories, warehouses, and distribution centers, is expanding its research and development capabilities to an additional location in Waterloo, Ontario, Canada. … Linde Material Handling–North America Corp. is now offering a 24-month/4,000-hour planned maintenance plan, in addition to the Linde extended care warranty, with the purchase of any 346 Series or 1313 Series lift truck through Dec. 31, 2014. … IWLA, the trade association for the warehouse logistics industry, recently “refreshed” its brand and now has a new logo and tagline: “The Resource for Warehouse Logistics.” … Forklift company Hyster Co. has joined the Institute of Scrap Recycling Industries. … Systems integrator Bastian Solutions has opened a regional office in Chicago. … C.H. Robinson has opened a seventh location in Germany, a road transportation office in Hamburg. … Daifuku America Corp., a provider of material handling solutions, has remodeled and expanded its office building in Columbus, Ohio. … Mitsubishi Caterpillar Forklift America Inc., a manufacturer of forklifts under the Cat lift trucks, Mitsubishi forklift trucks, and Jungheinrich brands, has begun full production at its recently expanded electric products manufacturing facility in Houston. … Ohio-based ASW Global has reorganized itself, forming two entities dedicated to providing supply chain solutions and specialty services to the energy market.

YRC Worldwide Inc., in an unusual mid-quarter update, said tonnage and revenue per hundredweight increased in July and August at its long-haul and regional less-than-truckload (LTL) units, setting the stage for what the company said should be a solid third quarter.

YRC, based in Overland Park, Kan., said its long-haul unit, YRC Freight, posted daily tonnage gains of 2. 4 percent in July and 0.8 percent in August, compared with the same periods in 2013. The unit’s revenue per hundredweight, a key metric of yield performance, rose year over year by 2. 8 percent in July and 3. 3 percent in August. YRC’s regional LTL operations reported a 1.5-percent year-over-year increase in revenue per hundredweight in July and a 0.6-percent gain in August as well as daily tonnage increases, year over year, of 4. 2 percent in July and 3. 7 percent in August.

As a result of the July and August performances, YRC estimated that its third-quarter operating income should be $16 million to $21 million higher than reported operating income in last year’s third quarter. Earnings before interest, taxes, depreciation, and amortization (EBITDA) should be $13 million to $18 million higher than in last year’s third quarter, the company said.

The company cautioned in a statement that the numbers are preliminary and that the estimates may not be realized. Its quarter ended Sept. 30, after DC VELOCITY went to press.

In a note to investors, David G. Ross, transport analyst at investment firm Stifel, Nicolaus & Co., said the third-quarter results should be better than he originally expected. Ross said that quarterly volumes should be “decent” and that pricing strength should be maintained as long as the industrial economy continues to grow. Industrial freight is a large component of LTL traffic. Ross added that YRC was able to shed more of the higher costs associated with coping with a sec-ond-quarter surge in traffic than he had expected. Volumes for many carriers sprang back in the second quarter after bad weather in the first quarter paralyzed portions of the nation’s shipping network.

Thomas S. Albrecht, transport analyst at investment firm BB&T Capital Markets, said the third-quarter numbers show improvement. However, he said YRC Freight must improve its on-time delivery performance to 96 or 97 percent from 90 percent. He added that YRC Freight and YRC Regional need to get “far more aggressive” on pricing, calling on both units to raise rates by 5 to 10 percent across their broad account bases and not just on individual lanes. He also said the two units need to shed accounts that are marginally profitable or unprofitable.

One of YRC Freight’s challenges has been the overreliance on large corporate accounts that use their leverage to extract pricing concessions from the carrier. YRC Freight, which has struggled mightily for the past six years, would have risked collapse several years ago if it had walked away from large accounts. However, with LTL demand gaining momentum and carriers remaining rational in their pricing, it is believed that YRC’s large customers hold less sway over the carrier than they used to.