YRC is in trouble. Key facts:
- $5 billion in revenue
- 31,000 employees – 75% of which are unionized
- YRC is the biggest pure LTL carrier…(XPO, UPS, and FedEx are much bigger)
While Q1 they made money, YRC lost $104 MM last year.To stay afloat, they have:
- Cut costs
- Worked with their banks for flexibility
- Deferred payments for medical benefits for the union workforce
The problem is having a union workforce vs. non-union competition is not a winning strategy. Having said that, it is in the best interest of all shippers that they stay afloat. If YRS fails, rates will substantially increase!
Similarly, oil prices will increase if many smaller US oil producers go out of business. Bloomberg reports: Nearly 1/3 of US shale producers are technically insolvent w/crude at $35/barrel. Oil is currently ~$40.