Roadrunner Transportation Systems says it will downsize its unprofitable dry van business, part of the company’s truckload segment.
The downsizing effort will reduce the company’s dry van company tractor and trailer fleets by over 50% and will include the closing of five terminal locations and cutting 450 jobs, or about 10% of the company’s total workforce. Employees affected by the cuts will receive either severance or a 60-day notice.
Equipment sales and terminal closures are expected to be complete by the end of 2019 and workforce reductions will be effective in the next 60 to 90 days.
“We factored in the impact of this downsizing as part of the strategic review of our truckload segment,” said CEO Curt Stoelting. “We believe downsizing the dry van business will improve operating margins and cash flow, reduce lease obligations and debt, improve internal controls, and allow greater focus on the significant value-creation opportunities within our other businesses.”
When Roadrunner reported its second quarter financial results in August, the company showed higher operating losses compared to the same period in 2018, which it attributed to challenging market conditions, specifically in the dry van truckload segment.
While the company saw increased revenue from its less-than-truckload segments and improvement in the temperature controlled and flatbed truckload segments, the gains were offset by declines in dry van. At the time, Stoelting said that the company planned to put “less focus on the truckload segment in favor of our logistics and asset-light LTL segments.”
In May, Roadrunner announced plans to buy 500 new trucks and acquire or refinance over 2,100 dry van and refrigerated trailers in an effort to reduce its overall fleet age, reduce breakdowns and improve efficiency. By August, the company reported investing over $50 million in the new equipment. It is not certain how the downsizing effort will affect the company’s investment going forward.