Highway Funding Is Urgently Needed, CEOs of Two Top Trucking Fleets Say

YRC Worldwide CEO James Welch and FedEx Freight President William Logue, the top leaders at the two largest less-than-truckload carriers, last week underscored the urgent need for highway funding legislation and the potential for longer trailers to improve productivity.

Welch and Logue, speaking in separate interviews with Transport Topics staff, also had cautious views about the 2012 U.S. economic picture, while saying driver supply largely wasn’t an issue for them.

Logue spoke one year after the integration of FedEx Freight’s regional and national units into a single business that offers both priority and economy LTL services, while Welch was interviewed six months after taking the helm at YRC.

“We think we need a multiyear highway bill that’s well-funded,” Logue said, speaking in a week when a $260 billion federal transportation spending bill was introduced in the House (see story, p. 1).

“It’s a great opportunity to do a jobs bill at the same time,” Logue added. “There is no national program or plan to improve efficiency.”

Welch also stressed the importance of the measure, saying, “We need to get something done.”

“The nation’s infrastructure is not like fine wine — it’s not getting better with age,” Welch observed. “I think [Congress understands] the problem. It’s hard to get a gauge of how important this is to them. That’s understandable, given all the other needs of the country.”

One feature of the House measure is a provision that would permit double 33-foot trailers. That would help LTL fleets by adding cubic capacity over the current 28-foot industry standard.

“Thirty-three-foot trailers are an interesting concept,” Welch said, noting the benefits of greater capacity, fewer trucks on the road and lower emissions.

He also said that longer LTL trailers would be a welcome development because it would increase available cubic capacity and productivity.

“What’s important for us is the need for us to have the extra length,” said Logue. “Thirty-three-foot [trailers] would reduce the number of trucks on the road and reduce congestion and emissions.”

The two executives had similar views on driver supply, which traditionally hasn’t been an LTL concern.

Over the past two years, LTL driver turnover has remained below 10%, while truckload turnover has more than doubled to 89%.

Welch said the company’s Holland unit has had some challenges in finding drivers because of recent increased freight volume as U.S. manufacturing recovers.

Welch added that driving for the YRC Regional unit remains a desirable job because of pay and benefits.

Logue acknowledged that finding drivers can be challenging at times.

“If you need some large number of drivers in one city, it may take longer than you’d like” to hire them, he explained. “In general, it hasn’t been a big issue.”

“We may not be as challenged as other carriers,” Logue said, referring to its driver corps. “We’ve had a driver development program for 10 years.”

On the commercial front, Welch said YRC’s fourth-quarter business “has improved considerably over the previous year,” particularly from a revenue standpoint.

Logue declined to discuss speci-fics about FedEx Freight’s load and pricing trends.

“We’ve said publicly that we expect 2.2% GDP and 4% industrial production [growth],” Logue said, adding that variables such as Europe’s financial situation and the U.S. election could affect that forecast.

“I don’t think the economy is hitting on all cylinders, but 2012 may be a little better than 2011,” Welch said.

Both executives also said they planned to maintain their current use of intermodal.

The FedEx unit uses rail for about 10% of linehaul moves, relying on intermodal as a cost-saving alternative for moving its economy shipments, Logue said.

“We are very happy with our initial foray in rail,” said Logue, whose company began using intermodal last year.

Welch said that service im-proved after YRC officials met with railroads in an effort to rebuild relationships with the freight carriers.

YRC and its predecessor companies have been using intermodal for decades.