Yellow, a trucking company, has experienced several bankruptcies over the past 20 years, but has not survived the recent crisis. The 99-year-old less-than-truckload (LTL) carrier closed its doors for the past few days, and on Sunday it closed for good.
previously employed 30000 people, including 22000 Truckers Union employees, to move nearly 50000 loads a day in 2022. The collapse of the company, which was founded in 1924, would leave a big hole in the industry: pushing up LTL pricing while losing 30000 jobs.
According to SJ Consulting Group, even shippers who have not partnered with Yellow, LTL rates could rise by mid-single-digit percentages.
Yellow reportedly halted cargo shipments following a threatened strike a week ago, with many big customers diverting cargo to other carriers, meaning there may be less cargo stranded at the company's truck terminals than expected. Other carriers, including LTL and trucking, will immediately benefit from Yellow's misfortune.
Immediately after the shutdown, thousands of Yellow customers, especially small businesses, began looking for LTL capacity and faced significant rate increases, with other LTL operators absorbing Yellow's goods, but not at the prices charged by Yellow. Hub Group, the multimodal marketing and logistics company that manages more than $1 billion in LTL freight operations through its third-party logistics services, sees this as a great opportunity to continue expanding its solutions with customers, according to its chief operating officer Brian Alexander.
Huge impact on trucking market
Ranked by revenue 2022, Yellow is the third-largest LTL operator in the United States and has been one of the top three LTL operators in the United States since deregulation in 1980. Its collapse left only two large syndicated LTL operators: TForce Freight (sixth in SJ Consulting Group's ranking of 25 LTL operators) and ABF Freight Systems (seventh). Previously, the largest trucking company that closed in 2002 was a $2.2 billion LTL transportation company Consolidated freight.
According to data from SJ Consulting Group (SJ Consulting Group), removing companies of the size of yellow, idle LTL capacity may quickly tighten. Shippers have been relying on less-than-truckload suppliers for smaller rate hikes, and while there is enough capacity to handle Yellow's shipments, shippers' costs will rise from single-digit to high-single-digit rates.
for LTL carriers, Yellow's collapse will have a hurricane-like effect on the trucking market. Industry capacity will immediately decline while prices rise. Yellow operates about 305 terminals across its four subsidiaries, national carrier YRC Freight and regional fleet Holland,New Penn and Reddaway.
Fritz Holgrefe, president and chief executive of Saia, said they began turning to other LTL carriers a few weeks ago when Yellow warned it could run out of cash. LTL freight demand, while down from 2022, remained "solid" in the second quarter ". As the entire quarter progressed, the rate of decline in sales slowed month by month and had actually turned positive by July. "
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