YRC Takes Another Hit

In keeping with the warnings we expressed last month, YRC has reported some more bad news:

YRC Worldwide, the country’s largest less-than-truckload carrier, lost $309 million in the quarter ending June 30 as shippers apparently abandoned the troubled company in large numbers, sending revenue down 45 percent.

The company, which has struck deals in recent weeks with its lenders and the Teamsters union to reduce its costs and debt troubles, saw shipping at its national LTL business fall more than 37 percent and tonnage per day at its regional unit decline 26.4 percent compared to the last year’s second quarter.

Even if you ignored these figures, two factors would indicate that YRC is in its last throes:

1. Bankruptcy is often a self-fulfilling prophecy. Simply because YRC might go under, responsible managers are making contingency plans with other carriers. Those carriers are already eating into YRC's market share, resulting in less revenue.



2. People used to joke that the Detriot automakers were health care companies that made cars on the side. The same could be said of YRC's pension fund. No matter what kinds of deals the company makes with labor, the unavoidable commitments YRC owes to pensioners is unsustainable.

YRC may eventually get their finances in order, but that doesn't mean shippers shouldn't be making contingency plans. Capacity will be tight, and those with existing contracts will lock in the good rates.