(Montreal) In the midst of the “trucking recession”, the misfortunes of the American company Yellow Corp are making the happiness of the Quebec company TFI International, which believes that it will profit financially from the bankruptcy of its competitor.
Yellow ceased operations on Sunday and filed for court protection as it failed to refinance $1 billion in debt and has strained relations with unionized workers. The company is the third largest LTL carrier in the United States.
These setbacks will “greatly benefit” the trucking industry in the United States, where TFI operates. “Their prices were lower than the market,” said President and CEO Alain Bédard during a conference call to discuss second quarter results. Now that they’re gone, it’s going to help the industry as a whole. »
The repercussions of this debacle are already visible, according to Mr. Bédard. “We’ve been doing about 23,000 daily deliveries since January,” he says. And then that number went up to 26,000 lately. He adds that the “quality of earnings” also improved in the last weeks of July.
TFI may acquire assets from Yellow. Mr. Bédard confirms that the company is interested in the bankruptcy process. “Obviously we’re going to have conversations with them, but to say there’s going to be anything big coming out of it on the employee side, real estate side, or equipment side, I don’t think. »
As Yellow and its unionized employees blame each other for the company’s troubles, TFI announced that its unionized employees in the United States have ratified a new five-year collective agreement.
The employment contract will lead to an increase in payroll costs of approximately 3% per year, said Mr. Bédard.
Asked by an analyst if the presence of a union could slow the growth of TFI, its big boss said that the negative perception of the American business community did not necessarily reflect the reality on the ground. “The presence of a union can be an excuse to justify bad management,” he launches in a thinly veiled point at Yellow.
“In Canada, we are in a unionized workplace and we do well because we have managers who pay attention to cost and quality of service. In the United States, there is the perception that a unionized workplace is unfavorable. We want to change this perception. »
He recognizes that payroll costs are higher in a unionized workplace, particularly because of benefits such as pension plans. “Of course if we’re competing against a company that doesn’t have a pension plan, that’s a disadvantage. On the other hand, our turnover rate is lower. Our guys know they have good conditions. »
TFI announced net profit down by half from 276.8 million US to 128.2 million US, the day before after the markets closed. Earnings per share were US$1.59. Revenues, for their part, fell by almost a quarter to settle at 1.8 billion US.
Prior to the earnings release, analysts had expected earnings per share of US$1.77 and revenue of US$1.9 billion, according to financial data firm Refinitiv.
The market conditions were “terrible”, defends Mr. Bédard. “The year 2022 was a celebration. The year 2023 is the day after. »
With the end of confinement, consumers are thirsty for experiences such as travel and outings. They have less appetite for consumer goods. This left retailers with too much inventory, which slowed demand for trucking delivery services.
“We believe that 2023 will continue to be a difficult year, but it is starting to recover for excess inventory,” said Mr. Bédard. We have a better feeling compared to 2024. The Federal Reserve says that the risk of recession is receding in the United States. Consumer confidence is correct. »
The stock gained $4.56, or 2.69%, to $173.81 on the Toronto Stock Exchange late morning.
