Yellow Roadway Corp. has elected not to renew its existing tire and wheel service agreement with Bandag Inc.
The outsourcing deal for tires and wheels used by Roadway Express had been in place since 1999.
Roadway is obligated to repurchase all tires and wheels owned by Bandag and used on its vehicles by Aug. 1, 2004.
Bandag estimates the total value of the tires and wheels involved is approximately $37 million.
The Roadway contract generated $27.5 million in revenue for Bandag last year, including sales of retread materials to dealers who performed services under the agreement.
"We understand that philosophically, Yellow prefers to in-source services, such as tire and wheel maintenance," says Bandag Chairman and CEO Marty Carver.
Carver adds that Bandag is "continuing to work with several fleets to develop future outsourcing partnerships."
