LTL Carriers Dialing Down Labor Expenses as Volumes Sag

  • LTL Carriers Dialing Down Labor Expenses as Volumes Sag

    LTL Carriers Dialing Down Labor Expenses as Volumes Sag

    Less-than-truckload carriers have been vocal that they will be rightsizing head counts to match a recent pullback in volumes.

    On Tuesday, XPO (NYSE: XPO) confirmed to FreightWaves that it will be offering voluntary furloughs.

    “As we’ve done in the past, some of our terminals are doing local voluntary furloughs to rightsize their teams over the holidays,” a spokesperson with XPO stated. “As furloughs are voluntary, we don’t expect it to [impact] a meaningful number of employees.”

    Individuals opting for the furlough will retain their benefits and are expected to be back at work by the end of January, the representative said.

    Appearing at an investor conference last week, LTL heads noted that year-over-year (y/y) tonnage declines so far in November have accelerated from the levels recorded in September and October. The update was the latest sign that the traditional peak shipping season has not materialized this year as general softness in the retail sector is only partially being offset by firmer demand in the industrial complex. XPO’s recent tonnage trends have bucked those of the broader market, turning positive y/y during September with October seeing an even higher growth rate. The company’s guidance calls for volumes to increase y/y in the fourth quarter.

    At the event, Yellow’s (NASDAQ: YELL) CEO Darren Hawkins said the company would look to align labor to freight volumes. He said the company’s unionized employee base allows it to “utilize contractual layoffs to match our hours available to the workload that’s presented to us on a daily basis.”

    “For the short term, I think about the opportunity of managing that closely,” Hawkins said.

    On Nov. 12, the nation’s largest LTL FedEx Freight (NYSE: FDX) said it planned to implement voluntary furloughs for drivers beginning in December. FedEx workers affected by the 90-day furloughs are expected to continue to receive health benefits. The company will also try to balance shipment demand and head count in some geographies by offering permanent transfer opportunities.

    After several quarters of record financial performances, the LTL sector is recalibrating to the downside of the freight cycle. During the pandemic, carriers took on great expense in the form of recruiting and hiring to staff networks appropriately to prop up service levels. Now that demand is receding off of all-time highs, companies are adjusting the labor line.

    Carriers use furloughs as a means of reducing expenses during periods of contraction, without completely terminating an employee relationship. Carriers contend the process allows a quicker onboarding of staff when demand increases.

    By: Todd Maiden / Freightwaves

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