After Yellow Shutdown, the LTL market has enough capacity to absorb the shipments left open.
The impact of Yellow Corp.’s shutdown is reverberating throughout the less-than-truckload (LTL) industry, causing freight volumes to shift towards competing companies.
Yellow Corp., based in Nashville, Tennessee, and a long-standing player in the transportation sector, ceased its operations on July 30 after operating for nearly a century. The company filed for bankruptcy approximately a week later. The company’s primary focus was on the LTL segment, primarily through subsidiaries like YRC Freight. In the aftermath of its closure, its freight volumes have begun to migrate to rival companies, with assets anticipated to follow suit. Kevin Day, AFS Logistics’ President of the LTL business, stated that the LTL sector has sufficient capacity to accommodate the influx of Yellow’s business. He noted that the gradual nature of Yellow’s shutdown has contributed to this transition, as it was not a sudden event but rather a gradual process.
TD Cowen, in its review of second-quarter earnings, highlighted that discussions within the LTL segment were dominated by Yellow Corp.’s bankruptcy. The investment banking firm identified ArcBest Corp., TFI International, and XPO as the most well-positioned companies to capture the additional freight due to their comparable weight and pricing structures. The report also indicated that while the LTL network has the capacity to absorb the extra freight, carriers might become more aggressive in terms of pricing, despite the relatively softer volume environment when excluding Yellow’s impact.
ArcBest witnessed a 10% year-over-year increase in its core LTL shipments per day in late July. Old Dominion Freight Line reported a gradual rise in shipments, adding 3,000 to a total of 50,000 by late July. Saia observed a 5% year-over-year increase in shipments for July, with a 2.5% rise in tonnage. XPO reported intensified tonnage growth throughout July.
Uber Freight’s Q3 Market Update and Outlook Report projected that the shutdown of Yellow Corp. would lead to higher LTL rates. The report also anticipated a several-month-long adjustment period for the market to absorb the additional volumes, as Yellow had accounted for about 9% of the LTL market share.
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