"Streamlining our dry freight services will greatly reduce, but not eliminate our ability to handle dry freight. We will continue to move dry freight via our temperature-controlled trailers, as it meets the needs of customers and provides a profitable contribution margin," said Russell Stubbs, president and chief executive officer. "At the same time, these actions should greatly improve our operating efficiency and allow us to focus in other areas where we offer differentiated service."
The plan includes the sale of approximately 435 dry van trailers, which account for all of the company's dry van trailer fleet. FFE will maintain its current fleet of approximately 3,250 leased and owned temperature-controlled trailers to provide truckload, Intermodal, and less-than-truckload services.
FFE also plans to reduce its tractor fleet by approximately 290 power units during the fourth quarter as a result of the reduction in the dry van services. Sales of these tractors and trailers are expected to be completed during the fourth quarter of 2011. It will use the proceeds of these sales, which it anticipates to be approximately $15.5 million, to reduce debt.
In an effort to reduce overall tractor fleet age, the company will also trade an additional 240 of its oldest tractors for new units, which will reduce the average fleet age significantly.
"Fleet age is one of the largest drivers of cost in our company," said Stubbs. "The cost to maintain an aged fleet has seriously deteriorated our operating results in 2011 and had to be addressed. Due to higher maintenance costs, loss of warranty and reduced fuel efficiency, older model tractors cost considerably more to operate than newer models. Additionally, a younger fleet significantly improves driver morale and retention, which is an industry-wide challenge."