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New Penn Changes Course, Keeps Two Terminals Open

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New Penn Changes Course, Keeps Two Terminals Open

New Penn Motor Express, the Northeast U.S. unit of less-than-truckload (LTL) carrier YRC Worldwide, Inc. (NASDAQ: YRCW), will maintain terminal operations in Rochester, New York and Milton, Pennsylvania rather than shutter them as part of a proposed change to its network, according to two sources.

During the first week of February, Lebanon, Pennsylvania-based New Penn filed a required "change of operations" with the International Brotherhood of Teamsters union to close its Rochester terminal and consolidate its operations there at Buffalo and Syracuse, and to shut the Milton terminal, 50 miles north of Harrisburg, and spread the freight around to four locations in the general area. However, New Penn has experienced a surge in demand since it filed the request with the Teamsters, and the additional volumes compelled its management to keep the facilities open at least for the time being, one source said.

Neither source would state the reasons for the volume spike. However, the sudden Feb. 11 bankruptcy and imminent closure of Northeast LTL carrier New England Motor Freight, Inc. (NEMF) is likely to have resulted in significant bleed-off to New Penn, among other LTL carriers that serve the region. Most NEMF customers were caught off-guard by the bankruptcy filing, and have been scrambling to hook on with other carriers. NEMF stopped picking up freight almost immediately, and is expected to clear out its existing pipeline sometime next week.

Under the National Master Freight Agreement between labor and management, a company has the right to implement a change of operations. Management must meet with the union to discuss the proposal, and labor has substantial input into how the changes are executed. However, the Teamsters have little power to block its implementation.

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Besides the proposed terminal closures, New Penn also wants to eliminate trucker Central Freight Lines as its interline carrier for freight moving to and from Florida and Texas, and replace Central with YRC Freight, YRC's long-haul LTL unit. A fourth change would add Trenton, New Jersey as a second consolidation terminal for freight originating in the New Penn service area and headed west through an interline arrangement with Reddaway, New Penn's West Coast sister company.

New Penn originally said it wanted all the changes to take effect during the first week of April, which would follow on the heels of the March 31 expiration of a five-year collective bargaining agreement between YRC and 20,000 to 25,000 unionized employees. Negotiations are continuing, with the two sides expected to butt heads over contentious economic issues.

Change of operations requests are not unusual in the LTL industry, where carriers regularly explore ways to streamline often-complex networks in an effort to operate more efficiently without sacrificing reliability. According to a source close to YRC, a persistent problem over the years was that the company's three regional U.S. networks (the other being Holland, which serves the Midwest) would overlap YRC Freight's operations, thus effectively pitting the regionals against the national operation to compete for the same freight.

Neither YRC nor the Teamsters responded to requests for comment on the latest action. YRC, based in Overland Park, Kansas, has previously declined to comment on the proposed change of operations because it involves labor issues.

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