YRC Worldwide (NASDAQ: YRCW) is primarily a trucking company, transporting industrial, commercial and retail goods. YRC charges its customers a base rate and then a variable fee based on the price of diesel fuel, allowing it to pass changes in fuel prices along to its customers. While this fee structure shields the company from immediate changes in fuel prices, its customers may be willing to ship less overall as fuel prices climb. The company earned $5.2 billion in revenue but incurred a net loss of $622 million in net income in 2009.
The company ships a wide variety of goods, making its revenues a barometer for the overall economy's health. YRCW is particularly exposed to the manufacturing and retail sectors, and it depends on the two biggest U.S. retailers, Wal-Mart and Home Depot, for 12% of its business.
YRCW faces particular challenges from increased federal regulation of state and national borders (due to terrorism) as well as more stringent emissions rules set forth by the Environmental Protection Agency (environmental concerns). In addition, 70% of the company's employee base is unionized, exposing the company's operations to potential work shortages/stoppages and the bargaining power of the International Brotherhood of Teamsters.
YRC Worldwide divides its subsidiaries into four business groups:
YRC Logistics is no longer part of YRCW.
YRC Worldwide competes with other companies along the lines of its subsidiary divisions.
Overall, the trucking industry tends to see periodic price decreases by firms, which try to capture extra business. Moreover, many customers use a bidding system, which tend to keep prices fairly competitive. For instance, Wal-Mart Stores (WMT) needs freight shipped, so asks several shipping firms to submit how much payment they are willing to accept. The lowest bid usually wins the contract.
YRC Worldwide approach to gaining market share from competitors and being more profitable is to be a one-stop shop for shipping customers. Through its subsidiaries, YRC offers a range of regional and long-haul LTL destinations. The company’s logistic division also provides customers with access to management solutions of transportation services.