SURFACE & DOMESTIC TRANSPORTATION
TRUCKING | RAIL | INTERMODAL | AIR & EXPEDITED | DISTRIBUTION
40 THE JOURNAL OF COMMERCE www.joc.com SEPTEMBER 4.2017
By William B. Cassidy
SHIPPERS WANT FASTER door-to-door ser-
vice from less-than-truckload carriers,
and YRC Freight is obliging with the most
extensive change to its terminal network
in years. YRC will add eight distribution
centers, without breaking ground on a
single new building.
The LTL ca rrier pla ns to unlock
underutilized capacity by converting eight
existing terminals to distribution centers,
effectively adding 837 doors of "transfer
capacity" to its network, allowing the Over-
land Park, Kansas-based company to handle
an additional 7,000 shipments a day.
Changes to Y RC Freight 's US net-
work of 260 terminals will be matched
by
changes in its driver workforce. The
company told the Teamsters union, which
represents YRC Freight's 7,000-plus driv-
ers, it plans to create 84 "utility employee"
positions for truck drivers.
Utility drivers will be able to drive and
work on the dock, and they will work in
shorter-haul lanes than traditional linehaul
drivers. That means they'll be home most
nights. These drivers will operate within a
175-mile radius of the carrier's 31 distribu-
tion centers.
The carrier will go further than that.
YRC plans to introduce 118 "meet-and-turn"
relay operations involving 236 drivers from
20 terminals. The company will eliminate
195 layover trips and 267 overnight hotel
stays each night, helping drivers get home
faster and more often.
These steps will translate to a 15 per-
cent overall increase in capacity by the time
the network enhancement is completed in
October, as YRC Freight repurposes existing
facilities, changes how it manages drivers,
and adjusts freight flows, President Darren
Hawkins said.
"We believe we're going to need that
(capacity) to handle the demand that's com-
ing over the next several quarters," Hawkins
said. He expects a steady increase in indus-
trial freight and surg ing e-commerce
demand to continue to boost LTL volumes
and pricing this year.
Those higher volumes, along with other
steps toward efficiency gains and improved
pricing, helped push YRC Freight back into
the black in the second quarter after two
quarters of losses. The carrier reported a
$28 million second-quarter profit, after a
$10.5 million first-quarter loss.
"And then we've got the ELD (elec-
tronic logging device) mandate coming" on
Dec. 18, Hawkins said. "The LTL carri-
ers won't have any issue with that, but any
truckload carriers running into delays get-
ting ELDs in place could create additional
demand for LTL capacity."
YRC Freight's network enhancement
comes as greater demand for LTL service
overall tightens capacity and encourages
several LTL carriers to expand terminal
networks. Eleven straight months of manu-
facturing growth is piling shipments onto
LTL docks.
At YRC Freight, higher volumes strain
the network at certain key times. "The
constraints that exist within the current
structure cause the company to regularly
incur severe freight backups at seven of the
present distribution centers," YRC Freight
wrote the Teamsters union in July.
E-commerce, however, may play an
even more important role by fundamen-
tally changing distribution needs in ways
advantageous
to LTL carriers. "With the
way many large retailers are positioning
their own distribution centers, we're see
-
ing higher demand for LTL," Hawkins said.
Those retailers are building smaller
distribution or fulfillment centers closer to
consumers, emulating Amazon. "In the past,
inbound traffic to the DC would be truck-
load," he said. "Now, with a shorter length
of haul, many retailers are more inclined to
use LTL."
Where LTL carriers such as YRC Freight
really stand to benefit from e-commerce
isn't the final mile but the "middle mile,"
Hawkins said. "The middle mile often gets
overlooked," he said, but LTL terminal net-
works are designed to handle that leg of the
freight movement.
As the length of haul from vendors to a
retail distribution center gets shorter, rapid
replenishment and the cost of inventory mean
orders get smaller and more frequent, favoring
an increase in the number of LTL shipments.
That's helping to tighten LTL capacity.
When it comes to truck capacity, 2017
has been an unusual year, Hawkins said. "In
times past, we've typically seen truckload
YRC FREIGHT'S
NEED FOR SPEED
Carrier will convert eight terminals to DCs and improve
driver management to improve flow and free up capacity
"We're a reflection of the economy.
I like what I'm seeing.
Demand seems firm.
Pricing seems firm. I'm encouraged."
