actions to reduce costs but still was forced to
restructure its balance sheet with a debt-for-
equity swap at the end of last year. “We con-
tinue to work through those issues and are
moving forward,” says President Mike Smid,
who also is chief operating officer of YRC
Worldwide. “At the same time, we have built
a lot better company with a better set of serv-
ices. We took the path of redesigning our-
selves, rebuilding and repositioning to
ensure that we will have the ability to
respond to future changes in the market.”
For an asset-heavy LTL company like
YRC, this meant paring down and adding
flexibility to its fixed-cost structure. Smid
notes that YRC went into the recession with
700 facilities, including Roadway’s former
network, and emerged with about 340. The
company also adopted more flexible
staffing models and equipment utilization
programs. “And we redesigned our trans-
portation networks to better align with mar-
ket demand,” Smid says. “In each of our
companies we provide more tailored solu-
tions that in many cases are specific to a par-
ticular business or industry.”
Asset providers have to move in this
direction “or be left behind in the traditional
role of competing on price for standard LTL
transportation,” he says. “That is not where
any carrier wants to be going forward.”
C.H. Robinson is an asset-light company,
offering truckload, intermodal and other 3PL
services, but Senior Vice President Jim Butts
agrees with this assessment. “Everybody
went after low rates last year because it was
easy to do, but a company can’t achieve its
supply chain and customer service objectives
through low rates,” he says. “Carriers need to
bring value-added services to the table that
enable them to achieve their goals in other
ways, such as by taking advantage of inter-
modal or better consolidation strategies or
shorter lead times.”
Butts does believe, however, that asset-
light companies are less vulnerable to eco-
nomic downturns. “We have a variable-cost
model and that helped us get through this
period,” he says. “I think you will find that a
key characteristic of companies that weath-
ered the recession well, regardless of indus-
try, was a reliance on variable costs and the
ability to lower costs rapidly.”
This observation is underscored by IDC
Manufacturing Insights in its top 10 supply
chain predictions for 2010. The overall
theme for the predictions “is the notion of
rethinking supply chain structures in an
effort to move to more of a variable-cost-
driven rather than a fixed-cost-driven net-
work.” IDC’s research indicates that this
mandate will drive an acceleration in sup-
ply chain modernization as the economy
recovers, with a focus on capabilities like
strategic outsourcing, shared capacity and
collaborative innovation.
challenged more of those partnerships than
we ever have seen previously,” says
Leathers. “A lot of folks that we thought of
as partners decided in the end to treat trans-
portation and their supply chain more as a
commodity, and that is unfortunate.”
At the same time, there were cases
where prior investments in relationships
paid off and customers were willing to
work with them to look for ways to take
costs out, Leathers says. “Those customers
that took a longer-term view will be
rewarded during the upturn because we are
going to go to great lengths to make sure
their loyalty is well served and to show
them that their vision was the correct one,”
he says. “We challenge ourselves every day
to make sure we are taking care of those
partners above and beyond anyone else.”
and other services to balance its asset oper-
ations “because the truckload long-haul
segment is clearly undervalued by the ship-
ping community,” he says.
Global and Regional
Another lesson that the recession brought
home was the speed with which customers’
businesses can change, says Tyler Ellison,
