Greatwide Aims to Diversify with YRC’s Dedicated Assets
By Rip Watson, Senior Reporter
This story appears in the Dec. 7 print edition of Transport Topics. Click here to subscribe today.
Greatwide Logistics’ purchase of YRC Worldwide Inc.’s U.S. dedicated contract carriage assets will expand and diversify its business into new geographical regions and markets, Chief Executive Officer Ray Greer said.
About half of the business acquired is industrial freight, such as steel and auto parts aftermarket business, Greer told Transport Topics Nov. 25 — markets new to Greatwide’s contract business.
Greer said the $34 million ac-quisition announced on Nov. 23 also expands Greatwide’s core markets into the Northwest and Northeast from its Southeast and Southwest base for that freight.
“We saw this as a really good fit,” Greer said. “The timing was right. They [YRC] were looking at something that wasn’t a core asset for them.”
Greatwide, Dallas, which ranks No. 23 on the Transport Topics 100 list of the largest U.S. and Canadian for-hire carriers, came out of bankruptcy earlier this year. The carrier was the largest U.S. trucker to file for bankruptcy during 2008, when its sales reached $1.2 billion.
“This is a sizable expansion for us,” Greer said. “This is the largest transaction we have done since Greatwide was formed in 2000.”
Greer said that most of the consumer business in the purchase was refrigerated freight, which meshes well with Greatwide because 80% of its existing contract business requires temperature control.
The company’s largest business, truckload freight, uses owner-operators for longhaul runs. In addition to contract carriage, it also operates a brokerage business.
Greatwide has been interested for several years in acquiring the contract carriage business formerly operated by USF Corp., which Yellow Roadway Corp., now YRC, bought in 2005, Greer said.
The assets weren’t purchased earlier, he said, because the acquisition of USF was in process at the time.
Greer said he believed other companies also bid for the assets that were purchased.
“This sale is a strategic move toward a more asset-light business model and aligns resources at YRC Logistics to focus on our core offerings, including transportation, distribution and global services,” John Carr, president of YRC Logistics, said in a statement.
YRC said that the proceeds would be used to reduce credit-line obligations.
YRC Logistics last year had sales of more than $600 million and reported a loss of $149.9 million that included more than $156 million in impairment charges. YRC declined to say how much revenue was earned by the business that it sold to Greatwide.
YRC declined to give any additional details about the transaction when that information was requested from its public relations agency.
Greer declined to disclose any added details of the transaction, deferring to YRC. In a Securities and Exchange Commission filing late on Nov. 25, YRC said that $32 million was paid when the transaction was completed, with additional amounts held in escrow for working capital and potential warranty-related obligations.
The purchase also will expand Greatwide’s corps of employee drivers from the 900 that were working for the company before the purchase on contract carriage assignments.
Those trips are more conducive to that type of freight with shorter lengths of haul and regular assignments, Greer said.
He didn’t say how many of the 600 employees of YRC Logistics are drivers.
