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Truckers Cut Costs to Survive Freight Recession


Terminal Closures at YRCW Subsidiaries
Regional subsidiaries of less-than-truckload transportation and global logistics services provider YRC Worldwide Inc. (YRCW) will cease operations at 27 service centers that will result in charges of $30 million, according to a Reuters news report published on February 7. This news comes on the heels of YRCW’s investor meeting, which was held in New York last month, when it said it was planning to go forward with a “regional recovery plan.”
The service centers for the two YRCW subsidiairies—USF Holland (six service centers) and USF Reddaway (21 service centers)—are said to be closing their doors on February 22, according to a YRCW filing with the U.S. Securities and Exchange Commission, noted the Reuters report. It added that decision is a component of a $100 million improvement plan for the company. Both USF Holland and USF Reddaway became part of YRCW, when YRCW purchased USF Corp. in 2005.
YRC acquired USF Corp. in an effort to provide regional shipping services along with its national, long-haul networks operated by Yellow Transportation and Roadway, said an article in The Kansas City Star. The Star also noted that since then YRC has consolidated some of USF’s carriers, including USF Dugan and USF Bestway, into Holland and Reddaway. The Kansas City Star report added that the USF Holland terminal closures will eliminate 300 employees in Georgia, Mississippi, North Carolina, Arkansas, and Alabama. It also said that the USF Reddaway terminal closures will eliminate 800 employees in Louisiana, Oklahoma, New Mexico, and Texas.
Terminal Closures at Vitran
Trucking company Vitran Corp. (TSX:VTN) plans to close thirteen “redundant” freight terminals throughout the U.S. upper Midwest this year as it works to improve its bottom line in a “soft economic environment.” Through a new information technology operating system, which should be in place sometime in the second quarter of fiscal 2008, “we will begin to focus on the elimination of 13 terminals,” president and CEO Rick Gaetz said Friday.
The North American trucking industry, including Vitran, has been hit hard by the rising cost of fuel and the economic slowdown in the U.S. brought on by a worldwide credit crunch and troubles in the battered U.S. housing sector. That slowdown in U.S. housing and in the restructuring North American automotive sector has led to fewer shipments of everything from auto parts and lumber to copper pipe and roofing supplies.
Truckers are Extending their Trade-in Cycle or Deferring Capital Spending
For some truckers, slower volume means slower spending. For example, FirstExpress, a private truckload carrier based in Nashville, Tennessee is stretching their vehicle trade in cycles from 36 to 48 months. Some truckers built up capacity over the past few years in advance of the new pollution standards. With lower truck utilization, these truckers feel they can extend the life of their current fleet. Other companies are deferring capital spending until they see signs of an uptick in the economy. Clearly these challenging times demand effective management of capital expenditures and a tight control on expenses. It is likely that these types of initiatives are being repeated across North America.


Dan Goodwill

Dan Goodwill

Dan Goodwill, President, Dan Goodwill & Associates Inc. has over 30 years of experience in the logistics and transportation industries in both Canada and the United States. Dan has held executive level positions in the industry including President of Yellow Transportation’s Canada division, President of Clarke Logistics (Canada’s largest Intermodal Marketing Company), General Manager of the Railfast division of TNT and Vice President, Sales & Marketing, TNT Overland Express. Goodwill is currently a consultant to manufacturers and distributors, helping them improve their transportation processes and save millions of dollars in freight spend. Mr. Goodwill also provides consulting services to investors, vendors to the trucking industry, transportation and logistics organizations.
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