YRC Presidents Comment

Addressing what they term misperceptions, Phil Gaines, Terrence Gilbert and Keith Lovetro say YRC Worldwide has been building financial stability.

As presidents of Yellow Transportation, Roadway and YRC Regional Transportation, respectively, the three executives might be expected to express optimism for the future of their operations. But they readily point out that nuances of the moves the companies have been making may be easy to overlook or misinterpret.

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On the subject of financial stability, the fact the company has borrowed against its “revolver” credit is part of a move to restructure some of the company's debt by moving it from higher cost credit instruments to lower rates. Offering a consumer example, it would be like making a balance transfer to a lower-priced credit card with a better interest rate.

While chief financial officers sort out the mechanics of money, the operations side of the motor carriers has been a critical issue for customers. The integration of Roadway and Yellow will create the sustainability to address the issues [of the economy] they can't control, say the executives. We're here for the long haul, and we're building a network to address industry needs, they agree.

Much of the integration of shared services and technology has gone on behind the scenes and is completed. Non-customer-facing operations have been integrated using customer input all along,
Integration provides an opportunity to lower the carriers' cost base and improve service. The shared service centers mean the customer will deal with the same driver, same center and same sales representative.

The motor carrier executives point out the company has shared information about the transition with customers to help build confidence. They are actively seeking out customers and demonstrating the value of the changes bring—including some of the less tangible issues such as employee satisfaction at the YRC companies. Examples of the things that influence attitude include improved job structure, more efficiency, better equipment and facilities (including lowering the age of the truck fleet).

On the technical side of the integration, common processes, a common management and common sales force along with continued investment in the network support improvements. Though much has been made of facility closures, the executives note they have been able to “add doors” in some markets, meaning that a shared service center may result in a net increase in the number of dock doors processing freight in a geographic area. The added efficiency of the shared service centers has positive impact on a number of environmental factors, by reducing miles and fuel use.

The YRC companies have been rolling out the integration in a number of smaller markets where they have established shared service centers. The executives note this process takes place with close communication with customers and the response, they say, has been positive. The result, they report, has been higher levels of customer satisfaction and improved service.

Asked about industry reports that shippers had begun shifting freight to other carriers, the executives suggest talk of diversions may be overstated. They claim not to have seen that kind of behavior from customers.

The story of the integration is still being written, but from the company's perspective, it has been proceeding with integration of the “back office” functions and has now turned its attention to completing network rationalization combining physical plant and operations. It's clearly a juggling act, but the guys who are being paid to make it happen are optimistic about their success, even in this troubled economy.

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