Roadrunner to downsize dry van business, layoff 450

Dive Brief:

Roadrunner Transportation Systems will lay off 450 workers as part of downsizing its dry van business, which the company called unprofitable in a press release announcing the decision. The layoffs represent about 10% of the company's workforce.
The carrier will also cut its dry van tractor and trailer capacity by 50% and close five terminals. These reduction activities will be mostly completed by the end of the year, the release said.
Roadrunner CEO Curt Stoelting said in a statement the downsizing would allow the company to focus on its logistics and asset-light LTL segments, and that this decision would improve its operating margins and cash flow.

Dive Insight:

Roadrunner approved this plan on September 23 and affected employees were told September 30, the same day it was made public.

It is was one of the 20 largest for-hire trucking companies in the country, ranking 17th in 2019, according to Transportation Topics rankings based on revenue.

In its most recent quarterly earnings, Roadrunner reported a more than $77 million (nearly 14%) decline in revenue. Stoelting spoke about the struggling dry van segment in August.

"The improvement in temperature-controlled and flatbed was offset by declines in dry van which had higher costs and intermodal services which experienced reduced volumes in Q2 compared to the prior year due to soft market conditions," he said on a call with investors. Revenue for the dry van segment actually went up for the quarter, but it was outpaced by the cost of running the segment.

The company has seen some shuffling in both its C-suite and board room in the time between that call and the announcement it would be downsizing.

Roadrunner appointed Patrick J. Unzicker as its new CFO less than a month ago. Unzicker will receive a base salary of $450,000 and can also earn bonus compensation equal to 75% of his base salary. The company's former CFO, Terence R. Rogers, resigned on August 30, according to filings with the Securities and Exchange Commission.

The company's director and chairman of its Audit Committee, Brian C. Murray, also resigned in late August. Filings say it was for personal reasons " and did not involve any disagreement on any matter related to our operations, policies or practices."

The company will incur restructuring costs ranging from $12 million to $16 million as a result of the fleet reduction, real estate consolidation and worker termination cost.

Workers who will lose their jobs are being given either severance or 60 days notice.

This news comes toward the end of what has been a rough year for trucking companies. The number of trucking companies to go out of business in 2019 already exceeds the total for 2018. While Roadrunner isn't shuttering, its decision shows that even the largest trucking companies have been hit by the market turbulence.