The country’s largest LTL carrier, YRC Worldwide Inc. (YRCVW) will sell its dedicated contract carriage business to Greatwide Logistics Services as it continues attempts to restructure operations and avoid bankruptcy. With the sale raising an estimated value of $34 million, “we believe that the prospects for YRCW continuing as a going concern are improved, and that it can go forward as a much smaller and leaner entity,” said Lee A. Klaskow, the senior transportation and logistics analyst at Longbow Research.
A large third-party logistics provider, Greatwide said it is acquiring “the contracts, personnel and equipment of the Dedicated Contract Carriage division of YRC Logistics,” a subsidiary of YRCW. Longbow estimates that the division has a fleet of approximately 400 tractors and 800 trailers generating annual revenue in the range of $65 to $75 million with five primary customers in the grocery, retail and industrial sectors.
“We estimate that the company's dedicated business accounted for roughly 15% of YRC Logistics revenue and about 1% of YRCW's total,” said Klaskow. While YRCW indicated that the sale was part of a strategy to move its logistics business to an “asset-light model,” Klaskow’s report on the sale said: “we expect that cash generation, improvement to the balance sheet and liquidity were the driving factors in the deal. YRCW continues to be aggressive in rightsizing its network to current demand levels, reducing its cost structure, and monetizing its assets through excess property sales and sale-leasebacks.”
Greatwide is a held non-asset based 3PL, which was acquired by the private investment firm Centerbridge Partners in February. Offering dedicated contract carriage, transportation management services, irregular route truckload, full-service truckload brokerage, warehouse-based logistics and transportation management services in the U.S. and Canada, it has estimated annual revenues of $1.2 billion. The company describes itself as the second-largest dedicated contract carriage provider in the U.S. with over 1,300 clients.
“The business obtained through the acquisition of YRC Logistics’ Dedicated Contract Carriage aligns perfectly with our industry-leading position in providing dedicated transportation to food and grocery, consumer products and retail customers, while also strengthening our presence in the industrial sector of the market,” said Greatwide CEO Raymond Greer in a press release announcing the YRC purchase agreement. “This acquisition allows us to expand our capabilities to include flatbed dedicated service and apply our transportation management services expertise to new industrial shippers.”
