Yellow Corp. announced late Wednesday that it wants to merge the operations of its New Penn and Holland regional carriers with its YRC Freight national network as part of a multiyear ambition to develop a super-regional carrier that provides one- to two-day deliveries across the country.
The Overland Park, Kansas-based carrier (NASDAQ: YELL) announced plans to merge 22 terminal operations in the East, Midwest, and sections of the South managed by New Penn, Holland, and YRC Freight. Yellow will also build 35 short-haul velocity distribution facilities and cut 19 terminals from its terminal network.
New Penn serves the Northeast, while Holland serves the Midwest. The operations in the South are a conglomeration of legacy networks.
According to the plan, Yellow would add 998 “utility” driver positions to support the new velocity center operations. According to Yellow, the drivers will travel around 175 kilometers to and from the new distribution hubs. According to Yellow, this will allow drivers to return home after each tour of duty. According to Yellow, utility drivers will be allowed to work for all three operating businesses.
Existing New Penn and Holland drivers would be converted to utility drivers. Current drivers effectively fulfill the same functions as the proposed utility drivers. One significant distinction is that utility drivers would be paid by the hour, whereas present drivers are paid by the mile.
The announcement is the second stage of Yellow’s three-phase strategy to develop a super-regional carrier under the Yellow brand. The carrier intends to enter the market with a streamlined approach that removes redundant operations while providing quicker LTL pickup and delivery.
Yellow’s terminal network would be affected by 62% of Wednesday’s adjustments. The first phase, roughly five weeks ago, merged YRC Freight’s Western operations with Reddaway, a Western regional carrier. This modification affected 26% of Yellow’s terminals. The third and final phase has not yet been disclosed.
Yellow, a unionized carrier, is obligated by the Teamsters union’s National Master Freight Agreement to file its “change of operations” with the union.
A corporation has the right to make such adjustments under the terms of the contract. Management must meet with the union to discuss the idea, and labor has a significant say in implementing the changes. On the other hand, the Teamsters have little clout to prevent its implementation.
A hearing between the firm and the Teamsters has not been scheduled to discuss the New Penn, Holland, and YRC Freight consolidation. There is no timetable for implementation. Yellow executives believe the proposal will be adopted by the end of 2022.
