Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
YRC Worldwide Inc.'s first-quarter results, released on Friday, have sparked a sharp division of opinion between the company, which claims the numbers indicate positive sequential and year-over-year momentum, and analysts who believe the less-than-truckload (LTL) carrier's financial situation remains dire.
The Overland, Park, Kan.-based company reported a first-quarter net loss of $102 million, compared with a net loss of $274 million in the year-earlier period. YRC posted operating revenue of $1.1 billion and an operating loss of $68 million in 2011's first quarter. By way of comparison, in the 2010 first quarter, YRC reported operating revenue of $987 million and an operating loss of $233 million. The 2011 results were adversely affected by extreme winter weather and included $8 million of "professional fee expenses" related to the company's restructuring efforts, YRC said in a statement.
YRC National Transportation, the amalgam of the old Yellow Transportation and Roadway Express, reported a 7.9-percent increase in average daily tonnage over the 2010 period, and a 3.3-percent increase in revenue per shipment. The company's YRC Regional unit reported a 16.2-percent tonnage increase year over year, and a 7.7-percent gain in revenue per shipment.
A glass half full ...
William D. Zollars, YRC's chairman, president, and CEO, said the company was pleased with the overall quarterly results in light of the severe winter weather and the seasonally weak period. In a conference call Friday with analysts, Zollars said volumes have continued to trend upward into the second quarter, both on a sequential and year-over-year basis, as demand improves. Rates on contract renewals are up about 3 percent year to date, Zollars said.
"In all of our channels, we are seeing pricing improvement on the contractual side and on our GRIs," Zollars said, referring to the general rate increases usually announced once a year and which are imposed on non-contract customers.
Revenue per hundredweight, a closely watched metric of profitability, rose only about 1.8 percent year over year for both YRC's regional and national units. Zollars acknowledged that traffic from large corporate accounts, which are usually resistant to rate increases, is growing at a faster rate than traffic from so-called local accounts, which are traditionally more profitable. He added, however, that many accounts that YRC captured from rivals already had low-yielding traffic because their previous carriers had cut their rates. YRC, by contrast, has remained relatively constant in its pricing strategy, he said.
"Yields are a complicated subject," Zollars observed.
... or a glass half empty?
David G. Ross, an analyst for the investment firm Stifel Nicolaus & Co., wasn't buying the company's explanations. In a research note released today, Ross said that YRC is "stuck over a barrel" by its big corporate accounts that refuse to give it compensatory pricing.
"These accounts also know that if they pull their volume, YRC can't cut costs fast enough and will likely fail, so we don't believe YRC has the leverage to make money on them," Ross wrote.
The analyst said YRC has three choices: raise rates on these accounts, watch the freight disappear and go out of business, or keep rates stable and be stuck with unprofitable freight that will further hamper its efforts to survive on what Ross called an "unsustainable long-term business model."
Another analyst, Jon A. Langenfeld of the investment firm Robert W. Baird & Co., said the quarterly results reflect YRC's "price aggression" in an effort to rebuild freight density.
Langenfeld hinted that the "leniency" shown by YRC's lenders in supporting its restructuring efforts have emboldened the carrier to cut prices without worrying about profitability, at least in the short term.
Langenfeld said YRC's actions remain the greatest obstacles to pricing improvement and greater profitability among LTL carriers. While noting that "industry pricing fundamentals have firmed" in the first quarter, Langenfeld added that "industry profitability [is] still well below adequate levels, and improved pricing remains the primary vehicle to improving margins."
CEO to step down in July
During the analyst call, Zollars reaffirmed his plans to retire in late July, when the company is scheduled to complete its financial restructuring.
"I'm going to be here through the restructuring process" but will step down upon its completion, Zollars said.
Zollars had announced his impending retirement last year, and the Teamsters Union has conditioned any concessions from its 25,000 unionized members on assurances that Zollars would step down. It was originally believed Zollars would retire at the end of 2010, but he has stayed on into 2011 as the company's restructuring efforts continue.
As part of the restructuring, the company announced in late April that it will receive an infusion of $100 million in new capital and will be able to cancel a large portion of debt in return for the issuance of new equity—a move that will virtually wipe out all existing shareholders.
The U.S., U.K., and Australia will strengthen supply chain resiliency by sharing data and taking joint actions under the terms of a pact signed last week, the three nations said.
The agreement creates a “Supply Chain Resilience Cooperation Group” designed to build resilience in priority supply chains and to enhance the members’ mutual ability to identify and address risks, threats, and disruptions, according to the U.K.’s Department for Business and Trade.
One of the top priorities for the new group is developing an early warning pilot focused on the telecommunications supply chain, which is essential for the three countries’ global, digitized economies, they said. By identifying and monitoring disruption risks to the telecommunications supply chain, this pilot will enhance all three countries’ knowledge of relevant vulnerabilities, criticality, and residual risks. It will also develop procedures for sharing this information and responding cooperatively to disruptions.
According to the U.S. Department of Homeland Security (DHS), the group chose that sector because telecommunications infrastructure is vital to the distribution of public safety information, emergency services, and the day to day lives of many citizens. For example, undersea fiberoptic cables carry over 95% of transoceanic data traffic without which smartphones, financial networks, and communications systems would cease to function reliably.
“The resilience of our critical supply chains is a homeland security and economic security imperative,” Secretary of Homeland Security Alejandro N. Mayorkas said in a release. “Collaboration with international partners allows us to anticipate and mitigate disruptions before they occur. Our new U.S.-U.K.-Australia Supply Chain Resilience Cooperation Group will help ensure that our communities continue to have the essential goods and services they need, when they need them.”
A new survey finds a disconnect in organizations’ approach to maintenance, repair, and operations (MRO), as specialists call for greater focus than executives are providing, according to a report from Verusen, a provider of inventory optimization software.
Nearly three-quarters (71%) of the 250 procurement and operations leaders surveyed think MRO procurement/operations should be treated as a strategic initiative for continuous improvement and a potential innovation source. However, just over half (58%) of respondents note that MRO procurement/operations are treated as strategic organizational initiatives.
That result comes from “Future Strategies for MRO Inventory Optimization,” a survey produced by Atlanta-based Verusen along with WBR Insights and ProcureCon MRO.
Balancing MRO working capital and risk has become increasingly important as large asset-intensive industries such as oil and gas, mining, energy and utilities, resources, and heavy manufacturing seek solutions to optimize their MRO inventories, spend, and risk with deeper intelligence. Roughly half of organizations need to take a risk-based approach, as the survey found that 46% of organizations do not include asset criticality (spare parts deemed the most critical to continuous operations) in their materials planning process.
“Rather than merely seeing the MRO function as a necessary project or cost, businesses now see it as a mission-critical deliverable, and companies are more apt to explore new methods and technologies, including AI, to enhance this capability and drive innovation,” Scott Matthews, CEO of Verusen, said in a release. “This is because improving MRO, while addressing asset criticality, delivers tangible results by removing risk and expense from procurement initiatives.”
Survey respondents expressed specific challenges with product data inconsistencies and inaccuracies from different systems and sources. A lack of standardized data formats and incomplete information hampers efficient inventory management. The problem is further compounded by the complexity of integrating legacy systems with modern data management, leading to fragmented/siloed data. Centralizing inventory management and optimizing procurement without standardized product data is especially challenging.
In fact, only 39% of survey respondents report full data uniformity across all materials, and many respondents do not regularly review asset criticality, which adds to the challenges.
Artificial intelligence (AI) tools can help users build “smart and responsive supply chains” by increasing workforce productivity, expanding visibility, accelerating processes, and prioritizing the next best action to drive results, according to business software vendor Oracle.
To help reach that goal, the Texas company last week released software upgrades including user experience (UX) enhancements to its Oracle Fusion Cloud Supply Chain & Manufacturing (SCM) suite.
“Organizations are under pressure to create efficient and resilient supply chains that can quickly adapt to economic conditions, control costs, and protect margins,” Chris Leone, executive vice president, Applications Development, Oracle, said in a release. “The latest enhancements to Oracle Cloud SCM help customers create a smarter, more responsive supply chain by enabling them to optimize planning and execution and improve the speed and accuracy of processes.”
According to Oracle, specific upgrades feature changes to its:
Production Supervisor Workbench, which helps organizations improve manufacturing performance by providing real-time insight into work orders and generative AI-powered shift reporting.
Maintenance Supervisor Workbench, which helps organizations increase productivity and reduce asset downtime by resolving maintenance issues faster.
Order Management Enhancements, which help organizations increase operational performance by enabling users to quickly create and find orders, take actions, and engage customers.
Product Lifecycle Management (PLM) Enhancements, which help organizations accelerate product development and go-to-market by enabling users to quickly find items and configure critical objects and navigation paths to meet business-critical priorities.
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.