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LTL carrier Yellow to close terminals as part of transformation

According to two change of operations requests, less-than-truckload carrier Yellow Corp. has begun the process of consolidating terminals in its Western network. The company seeks to consolidate 20 YRC Freight and Reddaway facilities and close nine.

An accompanying letter to the Teamsters and its negotiating group is asking for a hearing “on or about June 13” with implementation not taking place until July 17 at the earliest. Yellow provided the notification in accordance with National Master Freight Agreement guidelines. The documents were posted on the website of Teamsters for a Democratic Union (TDU), a Teamsters dissident group.

The action is part of a multi-phased restructuring named One Yellow. As part of the shake-up, Yellow has consolidated its four LTL operating companies and its logistics unit under one roof, on the same technology system.

“The purpose of this change request is to create a super-regional network built for speed, by increasing density and load factor in [pickup and delivery] and linehaul movements, improve service, reduce empty mileage, eliminate certain fixed costs (building and lease, management staffing, taxes, communication expenses, etc.) and improve efficiencies,” a Monday letter stated.

Yellow (NASDAQ: YELL) has also used a favorable LTL environment to replace lower-margined freight with higher-yielding shipments. It is also attempting to lower purchased transportation expenses by reducing its use of local cartage and outside linehaul service.

“By reengineering the P&D and linehaul operation, this multi-region change of operations will allow YRC Freight and Reddaway (also known as Yellow) to provide a competitive service, secure additional revenue and provide new union jobs,” the document said.

In addition to the turnaround initiatives, the carrier used a controversial $700 million pandemic relief loan to pay off obligations and update its aged fleet. The actions are expected to reduce maintenance costs and improve fuel efficiency. During the fourth quarter, Yellow reported a 95.7% operating ratio (4.3% operating margin), which was 310 basis points better year-over-year.

The notification to Teamsters officials also calls for the addition of 11 velocity distribution centers, realigning ZIP codes in the West, a new linehaul network and 260 utility driver positions.

The documents showed the utility employee changes “will have an effect on both road driver positions and local cartage positions.” Impacted terminals will be able to bid on positions. Employees will be offered transfer opportunities but will be required to reapply where seniority will be taken into account.

“Because of the scale of this change, it will be very disruptive to many employees, with changes of domicile, change in work status, and in seniority,” a notice on the TDU website stated.

An internal Yellow Corp. document showed this was the first phase of a “super-regional transformation.” The second phase (Northeast and Midwest, or carrier New Penn) is slated in the third quarter with the third phase (Southeast and Central, or carrier Holland) scheduled for the fourth quarter.

“This will provide customers with one company for both regional and long-haul shipments leading to improved asset utilization, enhanced network efficiencies and cost savings,” the document stated.

Guidance previously provided by management indicated the Yellow network would consist of 308 or 309 terminals by the end of 2022. The carrier was operating 317 terminals in the fourth quarter.

“As a policy, we cannot comment on pending changes of operation, however we have previously stated that all One Yellow changes in 2022 should create capacity for our customers and not reduce it,“ a spokesperson with the company told FreightWaves.

Yellow reports first-quarter results on Tuesday after the market closes.

Click for more FreightWaves articles by Todd Maiden.

Watch: Core capital goods update and jobless claims

The FREIGHTWAVES TOP 500 For-Hire Carriers list includes Yellow Corp. (No. 5).