YRC Combines Long-Haul, Regional Operations In Michigan

Less-than-truckload (LTL) carrier YRC Worldwide, Inc. YRCW proposed October 1 to consolidate two northern Michigan terminals operated by its YRC Freight long-haul unit into one terminal in the area that is operated by its Holland regional unit.

The proposal calls for YRC Freight locations in Alpena and Cadillac to be merged into a Holland facility in Gaylord, according to a "Change of Operations" document obtained from labor sources. Being a union carrier, YRC is required to submit its proposal to the International Brotherhood of Teamsters union, which represents the company's drivers and dockworkers. The Teamsters can provide input. However, it cannot stop YRC from implementing the change.

The announcement is the first move by YRC to streamline its network since it entered into a $600 million term loan agreement to to refinance its debt. The new financing deal, which is designed to provide additional liquidity and comes with less restrictive financial covenants, is a key part of YRC's multi-year plan to return to sustained profitability, something that has been elusive for years and that has continued to be a problem through the first half of 2019.

YRC Spokesman Mike Kelley declined comment on the proposal. It is not the first time the company has made a move like this, according to a union source.

YRC has embarked on a "network optimization" program that CEO Darren D. Hawkins has said will yield $80 million in margin improvements during 2020 through improved operating efficiencies. As part of the program, YRC has begun to close service centers – most of which it doesn't operate from – as part of a plan to shutter 25 centers by the end of 2019. The moves will generate $25 million in cash proceeds, YRC has said.

The company has also shut the New Lebanon, Pennsylvania headquarters of regional unit New Penn Motor Express and consolidated its corporate functions at YRC's headquarters in Overland Park, Kansas. That will save the company about $25 million a year, it said.

Image Sourced from Google