The Summer 2024 Business Update
Contributed by: Dan Vander Pol, Co-President
We are coming up on the one-year anniversary of Yellow Freight’s closure, we saw a 6-8% bump in business when they closed their doors and have held onto that bump for the last year. In August we will start comparing against numbers from when Yellow closed, so freight level and revenue comparisons will get tougher.
Operating Ratio
The current year-to-date Operating Ratio is sitting at 93.91% compared to 92.77% last year at this time. So, we have some work to do. There are 4 large areas that have reduced our profitability:
- Healthcare costs (up 24% from last year)
- Workers’ comp (up 27% from last year)
- Price of new equipment (up 31% from last year)
- Price of maintaining equipment (Up 19% from last year)
You may recall that we had a cyber-attack on August 30 of last year, this hurt business and greatly increased costs towards technology improvements in September and October of last year. We have plans in place to be able to make up ground on last year’s OR. We will be seeing shipments from Southeastern Freight Lines going into Utah and Arizona starting in September, which will help both of those states with density as we continue to grow those regions. Also, we are implementing some changes to our Partner gateways, which will help our operation run more smoothly.
Equipment
With the closure of Yellow, used trucks and trailers were placed on the market. We have been successful in purchasing some of the newer Yellow Equipment, so far, we have purchased 45 trucks and around 130 trailers from the auctions. This will dramatically reduce our purchase costs for next year.
As you may have noticed, the trucks we bought from them are white. We evaluated the cost of painting them to match the rest of our fleet and deemed it was not cost effective to paint them, but we are adding our decals to the trucks.
To meet with current regulations, we have taken delivery of 2 electric trucks, one box truck and one day cab. These will run out of our South Bay terminal and will help give us an idea of if these trucks will work on a P and D routes. There are some huge obstacles in implementing electric trucks which are:
- Cost – They cost roughly 4 times what a typical diesel trucks costs.
- Infrastructure – It’s tremendously difficult to get the charging stations set up at the terminal to power them.
- Time – They take roughly 4 hours to charge and can run up to 200 miles in good conditions.
- Reliability – They are currently extremely unreliable to use due to the uncertainty in mileage.
We continue to make progress on our Patterson terminal construction project, and it looks like it is on track to
open early next year. We also received the full permit to pave the lot next to our Portland facility. We are hopeful that this lengthy project will finally be completed within the next 3 months. This will add roughly 100 trailer spots for our Portland team.
I hope you all are having a fantastic Summer and appreciate all the hard work you do to make our organization the best in the industry!
Sincerely,
Dan Vander Pol
