Yellow And Roadways Essay

In the wake of recent industry consolidation, Yellow and Roadway Corporation were looking for ways to strengthen their businesses. In 2003, Yellow Corporation, the nation’s second largest trucking company, acquired the industry leader, Roadway Corporation, creating Yellow-Roadway Corporation. The combination strategy was to bring both the companies strengths together to capture significant synergies and growth opportunities. Management decided to keep both company brands operating separately, continuing them to compete against each other. In an effort to expand their geographic scope and operate regionally, Yellow-Roadway bought USF Corp in 2005; and continued to operate each brand separately. Unfortunately over the next couple years Yellow Corporation and Roadway Corporation were forced to merge operations together. In 2009, they changed their name to YRC Worldwide, Inc. to reflect their
The chairmen from both companies emphasized that their combination was strictly a merger, not a buy-out, since both companies were effectively operating on their own. The near term strategy for the combination was to reduce back-office costs, not to compress the delivery network by closing terminals and laying off truckers. Since both brands were so powerful in the marketplace, the decision to operate separately and compete with each other seemed like a good decision to continually reach new markets and gain more customers. Yellows chairman, William Zollars estimated that by combining back office operations, the newly formed company could save about $45 million in the first year. The result was a 13% increase in revenue and a 43% increase in income from continuing operations from the previous quarter. Upon the realization of these additional cost reductions, this strategy appeared to have paid