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.
In one of the most significant days in its history, less-than-truckload (LTL) carrier YRC Worldwide Inc. today named a new CEO and eight-member board of directors, formally announced the retirement of the executive who has run the company since 1999, completed a financial restructuring critical to its ongoing success, and released second-quarter results that it said shows some daylight after three dark years.
YRC confirmed late today that long-time transportation executive James L. Welch was named the company's CEO, effective immediately. Until Thursday, when his resignation was announced effective July 22, Welch was president and CEO of Dallas-based transport company Dynamex Inc. He spent nearly 30 years with YRC and its predecessor companies, the last seven as president and CEO of national LTL carrier Yellow Transportation. Yellow Transportation became YRC National following its integration with Roadway Express, which YRC bought in 2003.
DC Velocityreported in its Thursday online edition that Welch had been chosen as YRC's next CEO.
Welch replaces William D. Zollars, who retired today as the company's CEO as well as its chairman and president. There was no announcement of a new president or chief financial officer. William Trubeck, who had been serving as interim CFO, is expected to step down when a new CFO is named.
In a statement, James Hoffman, who today was named to chair an entirely new eight-member board of directors, said Welch's stature and leadership puts YRC in a "strong position to regain its competitive edge in the transportation marketplace."
"This is an exciting and challenging time for YRC Worldwide, and I am pleased to have been chosen to move the company forward," Welch said in the same statement.
Welch, 55, is an accomplished transportation executive, and is highly regarded within YRC and the Teamsters union, which represents more than 25,000 YRC employees and actively participated in the CEO selection process. The union played a key role in rescuing YRC from the brink of bankruptcy at the end of 2009 and in making significant wage and benefit concessions that have helped keep the company solvent.
Hoffman, 58, is a long-time telecommunications executive who for the past 10 years has worked at Alliant Energy, a Madison, Wis.-based concern, in what YRC described as "various leadership roles." The new board member likely most familiar to the transportation/logistics community is Jim Winestock Jr., 60, who spent 40 years at UPS Inc. and capped his long career there by heading the company's U.S. operations and sitting on the 11-person "management committee" that effectively runs the Atlanta-based giant.
Restructuring wraps up
The Overland Park, Kan.-based carrier said that, as the final phase of the restructuring that began at the end of April, it will issue convertible notes that will generate $100 million of new capital. It also replaced its three-year asset-based securitization program with a new three-year, asset-based loan structure that will provide even more liquidity and financial flexibility. It also swapped part of its loans for the issuance of new securities, including equity, a move that will alleviate the company's debt burden but reduce the value of its equity to the point that current stockholders will hold nearly worthless shares.
The Teamsters hailed the agreement. "The completion of the restructuring is a significant accomplishment in our efforts to preserve good jobs," said Teamster President James P. Hoffa in a statement.
"Because of the restructuring, YRC will now have the cash to focus on operations, and a new CEO and board to implement its operating plan. With these difficult three years behind us, we can look forward to a brighter future," Hoffa said.
The Teamsters will control about one-quarter of YRC's equity following the restructuring.
Q2 results released
At the same time, YRC reported a $2 million consolidated operating loss in the second quarter on consolidated operating revenue of $1.257 billion. The results included a $17 million adjustment for professional fees related to the restructuring, YRC said. Last year's quarter included an $83 million after-tax benefit for what the company termed in a statement a "fair value adjustment to an equity-based award." On a net basis, it reported a loss of $39 million in the quarter, compared with a $10 million net loss in the 2010 quarter.
In the 2010 quarter, YRC reported consolidated operating revenue of $1.25 billion and consolidated operating income of $48 million. The 2010 quarterly results included the combined impact of the $83 million after-tax gain as well as $9 million in professional fees.
YRC National posted adjusted operating income in the second quarter, the first time it has been in the black in three years. YRC National's average daily shipments and tonnage rose 7.1 percent and 6.2 percent, respectively, over year-ago levels. Revenue per shipment climbed 5 percent, and revenue per hundredweight increased 6 percent, the company said.
At YRC's regional unit, daily tonnage rose 8.1 percent, revenue per shipment rose 9.9 percent, daily shipment volume increased 4.7 percent, and revenue per-hundredweight climbed 6.5 percent, the company said. The revenue per-hundredweight results include the effects of fuel surcharges, the company said. Still, YRC said it would have seen gains in hundredweight revenue even without the surcharges.
Sanity returns to LTL pricing
In his final analyst call, Zollars painted an optimistic picture of YRC's current position and its outlook. Activity in July, historically a weak month for freight, is consistent with normal trends, he said. Zollars said YRC is gaining market share, though he couldn't quantify the statement.
Zollars said former customers are returning to the company and will continue to do so, encouraged by the carrier's improving financial situation and the completion of the restructuring.
Zollars said that "sanity" has returned to LTL pricing after many quarters of destructive price wars, as evidenced by the number of carriers—including YRC—that have announced general rate increases of 6.9 percent on non-contractual traffic. Zollars said YRC is experiencing about a 4-percent increase in contract rates when those agreements come up for renewal.
At current pricing conditions, YRC could add 20 percent more capacity across its system without impacting profitability, Zollars said. The company's $120 million capital expenditure (CapEx) budget for 2011 will go to replacing its fleet, which for over-the-road equipment is roughly five years old, and for equipment used in urban areas is about twice that age. YRC has about 16,400 rigs and 54,000 trailers.
Zollars did not disclose YRC's 2012 CapEx plans other than to say the company will "reinvest in the business going forward."
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.