The dominant player in the less-than-truckload transportation industry, Yellow Roadway
Yellow Roadway announced that it was acquiring rival USF
Yellow Roadway had been nonexistent in the next-day and second-day delivery market until this month. It only began service two weeks ago, but says it achieved a 98% on-time performance during its rollout. The idea is to become the primary carrier for all LTL shippers, winning over the next-day service and then grabbing the long-haul business, too. The combined Yellow Roadway-USF is going to be a formidable competitor with more than $9 billion in revenues, 70,000 employees, and 1,000 service locations.
Industry trailer volume in the fourth quarter of 2004 was at its highest level in five years, and that of 28-foot trailers, those favored by LTL haulers, grew 19% for the quarter. The American Trucking Association said that truck tonnage overall grew more than 6% for the year, though this year is not expected to be as robust. Still, as Fool contributor Stephen Simpson has also noted, truckers like Arkansas Best
While USF suffered some during 2004 due to labor union problems, consolidation of units, and a CEO who resigned suddenly in November, it also reported $6.6 million in fourth-quarter earnings, down 64% from the previous year. Yellow was also a heavily unionized company, but it was able to integrate with Roadway without ruffling the feathers of the Teamsters, and analysts expect the USF merger to go smoothly.
The good times in trucking won't roll on forever. When United Parcel Service
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Fool contributor Rich Duprey thought the Jan-Michael Vincent movie White Line Fever was cool when he was a teen. He does not own any of the stocks mentioned in the article.