Yellow starts year-long network overhaul to cut redundancies

Dive Brief:

Yellow is undertaking a network optimization initiative in 2022 to improve speed, efficiency and consistency, officials said on an earnings call Wednesday.
The effort includes integrating the linehaul network and streamlining city pickup and delivery operations, which are the "top two costs in any LTL company," COO Darrel Harris said on the call.
CEO Darren Hawkins stressed on the call that this is not a multi-year effort, and "all the phases occur in 2022." Yellow is taking a regional approach, starting in the Northeast right now, tackling areas with the greatest density first.

Dive Insight:

One of Yellow's ongoing goals is eliminating duplicity within its network. It's the impetus behind changing its name back to Yellow and starting its "One Yellow" initiative, which focuses on streamlining its operating companies.

The first stage of the operational overhaul was all about technology and getting its subsidiaries onto the same platform — something Daseke is also doing. It took years for Yellow to accomplish that feat. Now, it is moving onto to the next phase of its operational overhaul.

"Anyone that follows LTL knows when you can pull miles out of your daily linehaul plans, then there's significant savings attached to that," Hawkins said during Stephens' annual conference in December.

It wouldn't be uncommon for a shipment hauled by subsidiary Holland and a shipment hauled by YRC Freight to travel the same lane, he explained. That's the type of redundancy Yellow looks to consolidate.

"Currently, the drivers from both of our companies pass each other going to cover these pickup and delivery areas. They're in two trucks, two drivers, two trailers, and unfortunately they're going to the same customer," Hawkins said.

The company is not giving up any "geography," he added. Yellow plans to keep its two terminals in Nashville, Tennessee, for example. But those terminals would cover different areas of the city. Closing small facilities isn't off the table, as the company looks to close eight or nine as the One Yellow initiative wraps up this year.

Customers have expressed to Yellow the desire to work with one driver and one truck when picking up for regional and long-haul services, Harris said Wednesday. So, the network optimization will also improve customer service.

"There's tremendous synergies to be gained with linehaul optimization as we start to think about providing regional and long-haul services in one network," he said.