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YRCW Maintained a Steady Share in the Competitive LTL Market

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YRCW’s market share

YRC Worldwide (YRCW) operates under two separate businesses: YRC Freight and YRC Regional. YRC Freight was formed by the combination of Yellow Transportation and Roadway Express in 2003. YRC Freight is focused on long-haul LTL shipping and serves nearly 125,000 customers in North America.

YRC Regional is composed of three separate carriers that serve three distinct regions. These three subsidiaries focus on next-day and time-sensitive deliveries, serving ~150,000 customers.

You can see from the above chart that YRCW almost has a stable market share, measured in tonnage, in North America in the last five years. The company’s share ranged between 23%–25%.

Among the publicly traded less-than-truckload carriers, the company has a 23.4% market share by tonnage in September 2015. The combined network of YRC Freight and YRC Regional covers all 50 US states, Puerto Rico, Canada, and Mexico.

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Competitors’ market share

YRCW’s primary competitor is FedEx Freight (FDX). FDX had a slightly higher market share of 24.3% in the third quarter of 2015. The next rival is Con-way Freight, which is XPO Logistics’ (XPO) recent acquisition, which has a 16.1% share. Major players Old Dominion Freight Line (ODFL) and UPS Freight (UPS) enjoy market shares of 13.4% and 9.0%, respectively.

Major trucking companies in the US make up 11.5% of the iShares Transportation Average ETF (IYT).

Investors should note that scale matters for an LTL operator. It requires a huge capital investment to build a wide hub-and-spoke model. YRC Freight operates the large hub-and-spoke network infrastructure in North America. The other segment, YRC Regional, comprises three carriers that operate direct loading and quick-sort networks. This kind of business model requires huge operating leverage to sustain the model’s fixed charges.

YRCW in recent years, instead of increasing market share and tonnage, focused on prioritizing freight mix, yield improvements, and profitability. The company’s competitive strengths lay in substantial investments in state-of-the-art technology.

In the next part of the series, we will quickly review YRCW’s history.

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