U.S. Xpress Enterprises announced a corporate restructuring Thursday that the company expects to improve its OTR operations and generate $25 million in annual cost savings beginning in Q4.
Most of the savings, an estimated $20 million, will come from layoffs announced last month, the company said.
After finding “certain successes” in its vision of building a digitally enabled OTR fleet, the carrier seeks to rightsize its cost structure in a softening freight market, President and CEO Eric Fuller said in a statement. The company plans less than $100 million in capital expenditures in 2023 after spending $150 million this year.
The realignment focuses on improving OTR operations, with limited effect on the dedicated and brokerage businesses. U.S. Xpress is working to grow its contract business after finding itself overly exposed to the spot market, which has faced softening demand in recent months, Fuller said on a Thursday webcast. The company has eaten more in fuel costs as fuel surcharges aren’t applied to the spot market, he said.
The company is also scaling back its strategy around its digital fleet Variant after business deteriorated last quarter due to issues with driver availability.
U.S. Xpress has implemented a disciplined capital allocation program to reduce its debt “through a combination of trade cycle management, reduction of IT development costs, and sale proceeds from non-core real estate holdings,” the company said in its news release.
A terminated lease for a property in Atlanta will also save U.S. Xpress $2 million per year beginning in Q4, CFO Eric Peterson said on the webcast. And the carrier will cut costs by running its tractors 100,000 more miles annually beginning in 2023, which will raise the average age of its trucks from 22 months to 27 months by the end of next year.
The realigned U.S. Xpress will have two units: highway services and dedicated.
As part of the restructuring, Justin Harness will oversee operational and commercial functions of the OTR and brokerage businesses as president of highway services. Brandon Danneffel, formerly senior vice president of brokerage, will replace Harness as president of dedicated.
The new executive roles follow Chief Commercial Officer Jake Lawson’s departure from the company Aug. 12.
“We have this market that is deteriorating and continuing to deteriorate, and that's also creating some headwinds,” Fuller said on the call. “So we think right now focusing on back to the basics, ... driving near-term results is the right answer.”
Sarah Zimmerman contributed to this story.
