YRC Worldwide asks unions to take a pay cut
LTL trucker tries to reduce costs as freight demand slumps
By Dave Hannon -- Purchasing, 12/30/2008 8:00:00 PM
In an effort to reduce its cost base amid a continuing freight demand slump, LTL trucking giant YRC Worldwide, parent of Yellow and Roadway, has asked its Teamster union employees to vote to accept a 10% pay cut in return for a 15% stake in the firm’s ownership. The deadline for union members to vote on that pay cut has been extended to Jan. 6.
Overland, Kans.-based YRC also recently laid off up to 3,750 workers. YRC is also working with its banking partners to modify its current credit facilities to provide the company more financial flexibility. In a statement YRC said its volumes were down more than 10% in the fourth quarter and CEO Bill Zollars said “Consistent with other industry reports, the economic recession continues to put pressure on our volumes and pricing.”
Zollars expanded on that in a recent interview saying the trucking market looks to lag for most of the first half of 2009. “It will be a hard, long road back to recovery,” Zollars said. “The earliest we could expect it to start would be the second half of next year.”
YRC’s fate may have a major impact on the LTL market as a whole and, thus, freight buyers and market analysts are watching its moves closely. In a recent note to investors, Stifel, Nicolaus and Co. analyst David Ross says YRC “is trying just about everything it can to sneak through this downturn, but it may not be enough. And if YRC folds, like Consolidated Freightways back in 2002, we believe the pricing environment should immediately firm and strengthen for the surviving players.” Consolidated Freightways shut its doors in late 2002, reducing competition and increasing rates in the LTL market.
See also: Carriers revamp networks amid continuing trucking demand slump
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