By Mark B. Solomon of DC Velocity

May 3, 2013- Less-than-truckload carrier YRC Worldwide Inc. and its YRC Freight long-haul unit today both reported operating income in the first quarter of 2013, the first time since 2007 that YRC and its struggling unit have posted operating gains during what is normally the weakest quarter of the year.

YRC Freight posted operating profit of $2.4 million, a $58.5 million year-over-year increase from the 2012 year-earlier period and the third consecutive quarter of positive operating income. The unit's operating ratio fell to 99.7, meaning YRC Freight was spending $99.70 for every $100 in revenue. By contrast, the unit's operating ratio stood at over 107 in the first quarter of 2012, meaning expenses had significantly exceeded revenue.

For the company as a whole, operating income hit $9.9 million in the quarter, compared to a $48.8 million loss in the year-earlier period. The 2013 results were positively affected by a $4.5 million gain on asset sales, while the 2012 results included an $8.3 million loss on asset disposal, the company said in releasing its first quarter results.

Operating revenue for the company totaled $1.16 billion, down 2.7 percent from the 2012 period. The decline was paced by YRC Freight, which reported a 4.5 percent year-over-year revenue drop. YRC's regional less-than-truckload (LTL) division, YRC Regional, reported a 1.2 percent year-over-year revenue gain and a 0.6-percent increase in operating income. The unit posted a 97.1 operating ratio for the quarter.

YRC Freight posted year-over-year declines in daily tonnage and shipment count. However, revenue per-hundredweight, a key metric of a carrier's yield-generating capabilities, rose 3.4 percent. Revenue in the quarter may have been affected by adverse winter weather in some regions. However, the increase in revenue per-hundredweight amidst declines in tonnage and shipment count is likely to reflect a better shipment mix, improved operating efficiencies, and a willingness to maintain price stability and shed business deemed either unprofitable or marginally profitable.

James L. Welch, YRC's CEO, said the pricing environment remained rational for both units during the quarter.

The U.S. equity market seemed to react favorably to the results, bidding up YRC shares to $10.35 a share as of noon Eastern Time on Friday, a gain of $2.59 a share. The price of YRC shares are adjusted by massive reverse stock splits in October 2010 and December 2011.

RIVAL SHOWS WEAKER QUARTER
The YRC announcement came three days after rival Arkansas Best Corp., the parent of ABF Freight System Inc., reported a $13.4 million first quarter net loss, compared with an $18.2 million net loss in the year-earlier quarter. The company reported a $23.3 million operating loss in the first quarter, compared with a $22.9 million operating loss in the year-earlier quarter.

Revenue for Arkansas Best rose to $520.7 million from nearly $441 million, driven in large part by the $53.3 million in revenue from the unit's "premium logistics and expedited freight" segment, which took form after ABF bought expedited transport provider Panther Expedited Services Inc. last June. The former Panther did not contribute to Arkansas Best's first quarter 2012 results.

The company's widening operating loss reinforced management's call for a "more rational labor agreement" that reflects the present-day realities of the LTL industry. ABF and the Teamsters union, which represent about 7,500 employees, are currently negotiating a new contract. The existing pact, which initially expired March 31, has since been extended twice. The new extension expires May 31.

ABF, which has the highest labor costs in the LTL sector, has tried for years to bring its wage and benefit structure closer to alignment with YRC and with the cluster of nonunion LTL carriers. Its freight transportation unit, which accounts for about 80 percent of its revenue and is unionized, reported higher year-over-year revenues but also higher operating expenses. "Salaries, wages, and benefits" rose by slightly more than $2 million to $267.2 million.