According to a recent Goldman Sachs research note, Yellow’s freight is experiencing a significant shift, with up to 50% moving towards carriers outside the top 10 less-than-truckload (LTL) providers. This change not only benefits larger carriers but also presents new opportunities for smaller regional companies.
Even before Yellow filed for bankruptcy on Aug. 6, shippers were diverting their freight, resulting in a surge of activity for smaller LTL providers. This trend indicates that the industry is evolving, and customers are seeking alternative options.
One example of this shift is the rise of Saia as a provider of choice. The increase in shipments with Saia may not solely be a result of new business but rather the transfer of customers previously serviced by Yellow.
Yellow’s current freight landscape presents challenges and opportunities for LTL providers. As the industry continues to adapt, it is crucial for companies to remain agile and responsive to meet the changing demands of customers.
LTL providers have experienced an increase in volume following Yellow’s exit from the market. As a result, they are adopting new approaches to handle the additional loads. Shippers may prefer to choose a unionized carrier, according to Sayers. This could explain the volume boosts seen by ABF Freight and TForce Freight.
Meanwhile, multiple carriers are focused on ensuring that their existing customers continue receiving the same service level. The President and CEO of Old Dominion Freight Line, Kevin “Marty” Freeman, assured investors on July 26 that the company will maintain its service capabilities for its current customers.
“We’re not going to do anything to trash our service by taking on too much freight,” Freeman said on an earnings call.
Goldman Sachs analysts have stated that the interim Q3 reports will offer valuable insights into which players in the freight industry are bearing more load than others.
Considering evolving market trends in consolidation helps shippers mitigate the impact of price increases caused by the disruption in LTL transportation, according to industry analysts.
“I think you’re going to see more of that truckload activity, particularly coming from the Midwest going out to the West, going to California, for example,” said United Shippers Alliance Executive Director Gene Graves.
Yellow subsidiaries New Penn and Reddaway have played a vital role in handling consolidated freight for shippers. Their closure had a significant impact on shippers’ ability to consolidate. This affects both independent shippers and those who rely on consolidators.
“Two of the carriers that played a big role in making this happen are no longer around,” Sayers said. “Yellow’s closing has been disruptive because it shut down some of the capacity for consolidations that was there.”
Source: Transport Dive
