YRC Worldwide revenue down but yields improving

YRC Worldwide, the trucking company given up for good a few years ago, appears to be making a comeback. According to its CEO, James Welch, the company has moved through several phases and now is entering its profitability phase even though there is still much more to do.

Overall, the company reported consolidated operating revenue of almost $1.2bn for first quarter 2015, down 2.0%, but consolidated income swung up to a $3.7m from a loss in 2014. According to the company, the overall decline in revenue was due to a decline in fuel surcharge revenue and a strategic decision at YRC Freight to focus on yield and profitability versus market share and tonnage growth.

Each of the two divisions, YRC Freight and Regional Transportation reported declines in operating revenue, of 2.5% and 1.2% respectively. But it was evident that an emphasis on profitability was at play during the quarter. While YRC Freight’s operating income increase was negligible, Regional Transportation’s operating income was up by almost 42.0% to $4.6m.

During the quarter, the LTL division, YRC Freight, exited from minimum-charge shipments, these smaller shipments had negatively impacted the division and as a result revenue per shipment increased 3.8% (including fuel surcharge) or 9.6% (excluding fuel surcharge).

Further investments into YRC Freight appear to be having a positive impact as well. For example, the division implemented its linehaul planning technology which assists with more efficient freight movement.

In addition it was noted on its earnings call that YRC currently has 43 dimensioners throughout its distribution centres. Originally, these dimensioners were primarily set up to rerate freight. However, the company is now running dim studies with some customers to help rate their shipments more appropriately. Furthermore, the company is evaluating new technology for its next phase that will allow larger shipments to go through these machines.

Lastly, an interesting question was raised on the earnings call regarding the percentage of revenue from 3PLs. Short of a full answer it was indicated that across the portfolio of YRC companies about 25% to 35% is from 3PL.

The CEO noted that the company is comfortable with the plan that is in place and that improving yield and the freight mix will continue to be a focus for the company in the coming quarters.