Sunday, September 13, 2009

Confusion Reigns as US Truckers Squabble

Fight for Home Market Consolidation Freight Hots Up
Shipping News Feature

US – Several major trucking companies have commented on the oversupply of companies and vehicles in the less than full load haulage market in the country.

There was open hostility by executives of several companies at a recent New York freight conference toward the inequality shown by lenders in a shrinking cargo market.

The number one consolidators, known as LTL’s (less than truck loads) in the field, Kansas based YRC Worldwide, which numbers several major carriers in its group activities, came in for particular criticism and were not represented at the meeting. YRC have had mixed fortunes of late and just last week persuaded the 1500 staff at their New-Penn Motor Express subsidiary to accept a revised pay deal after a previous rejection. New Penn was formerly a very successful carrier but it has lost money since being absorbed by YRC.

90% of YRC workers had already voted for pay reductions of up to 10% and reductions in pension benefits. It was made plain by management and union officials alike that a no vote would result in redundancies and closures which caused a reversal in the previous result. YRC claims it will save $45 million this month alone by its cost cutting rising to $50 million per month by next year.

Various competitors in the industry spoke out strongly against the methods used to ensure YRC’s survival. Unsurprisingly companies like Con-way and Werner Enterprises consider the market would be healthier should their main rivals fold and reduce competition and overcapacity.

Many believe the sheer size of the enterprise has enabled them to draw on funds from lenders and YRC’s creditors recently revised the company’s credit facility, reportedly $950 million, for the tenth time simultaneously suspending the liquidity (cash in hand) requirement of $100 million until mid October.