Very interesting article in yesterday’s Wall Street Journal by Alex Roth highlighting how YRC’s competitors are ‘going for the kill’ by undercutting YRC’s prices and talking up its financial problems with clients (see “As YRC Struggles, Rivals Stalk Clients”).  In a conference call with analysts last week, William Zollars, the CEO of YRC, said, “We believe our volumes are being impacted by tactics from our competitors that are clearly targeted at buying market share at any price, and attempting to make our financial position seem worse than it is.”  YRC’s freight tonnage declined 35 percent in the second quarter, a steeper decline than its competitors.

The article cites some of the tactics competitors are using.  For example, Saia sent a letter to some YRC customers offering prices “equal to a 12% discount off the current pricing the [customer] currently has in place with [Yellow or Roadway].”  Others are highlighting how their freight could be stranded across the country if YRC suddenly goes out of business because “companies in trouble never give customers a heads-up that they are near the end.”

There’s nothing illegal about these practices, but are they the “ideal” way to compete?

I remember several years ago, there used to be a marketing executive at a leading software company who would spend the first hour of every briefing telling me how much their competitors sucked.  Although I never had the nerve to cut him off, what I wanted to tell him was: Don’t talk to me about your competitors; tell me about what’s new with your products, how your customers are benefiting from using your solutions, and about your product development plans. 

Yes, I know, highlighting your competitors’ weaknesses is a common selling tactic.  But in my view, it should come at the backend of the process, after you’ve demonstrated your unique capabilities and value proposition.  Take the high road first is my philosophy.

(Then again, we’re talking about trucking services here.  Is there even a high road to take?)

Is YRC too big to fail?  This was the question I asked earlier this year, and I still don’t have a clear answer.  Some folks believe YRC will survive, others are betting against it.  For example, in a Credit Suisse report published last month about Con-way (“What If Yellow Doesn’t Fade to Black? A Contrarian View of CNW”), the authors argue that if YRC were to file for Chapter 11, and the case is resolved in an expedited manner like the bankruptcies of GM and Chrysler, its customers wouldn’t necessarily flee in droves to competitors.  But when it comes to bankruptcies, GM was the exception rather than the rule.  What if YRC files for bankruptcy and it takes a year or more for the company to emerge from it?

It’s a dog-eat-dog world out there.

Are you concerned about YRC’s viability?  Have you shifted your freight spend to other carriers? Would you stick with the company if it filed for Chapter 11?  Are YRC’s competitors knocking at your door spreading fear, doubt, and uncertainty?  Are you influenced by these tactics or do they turn you off?  Post a comment and share your viewpoint!