In a story that's been big news in the freight world and beyond, Yellow Trucking - an LTL provider with a lengthy history in the industry - officially shut down earlier this week. The company's 30,000 workers are left without jobs, and its long list of shipper customers are left needing other less-than-truckload shipping arrangements. Why did Yellow (and its affiliates Holland, Reddaway, New Penn and YRC) close the doors? While there was plenty of talk of labor unrest, the underlying issue was simple - a lack of cash.
Yellow reportedly had outstanding debt of roughly $1.5 billion as of late March, with $1.3 billion in loans that come due next year, including $729.2 million owed to the federal government stemming from a pandemic-related loan. While a bankruptcy filing is forthcoming, the company ceased operations and began laying off employees Sunday. There's reasonable optimism that drivers can find other employment, though union jobs - the 99-year old Yellow Corp. was one of very few (some say under 5) union shops remaining - are unlikely.
With the uncertainty around Yellow's status persisting over the past couple of months, many of Yellow's biggest customers, reportedly including retailers you may have heard of like Home Depot, Wal-Mart and Amazon, already moved much if not all of their LTL business elsewhere. But if you're a smaller shipper, you may be scrambling for a solution. Find out what do do.
LTL Options Instead of Yellow Corp.
With Yellow Corp. no longer an LTL delivery option, many companies are left looking for the best arrangement to move their pallet-sized freight. There are roughly 200 licensed less-than-truckload carriers operating in the U.S., so those who've been using Yellow face the daunting task of sifting through the market to find their best option. Add on the fact that Yellow rates were generally considered on the low side compared to other providers, and shippers may be wondering how to maintain the level of LTL service they're accustomed to without busting their budget.
Backing up a bit, LTL shippers are those who take advantage of the fact that these trucks carry multiple loads at once. These companies don't have quite the freight volume to make full truckload or intermodal make sense (though there are some special cases for intermodal consideration). The typical criteria for less-than-truckload shipping is freight weighing more than 150 pounds, but less than 15,000 pounds. LTL offers residential, inside delivery / pick-up, expedited, liftgate, temp-control and limited access capabilities. Shippers may use contract or spot rates just as with other modes, and LTL has the added option of a blanket agreement or a more specific one tailored to freight-type.
Industry experts expect LTL rates to spike in the high single digit or even double digit percentages for the near-term, with the worst pain likely felt by customers switching from Yellow to a new provider. While due to generally depressed freight volume, other carriers should be able to pickup Yellow's slack, specific lanes may be more of a challenge. And shippers lacking a transportation management system (TMS) solution may struggle to find the right option.
That's where the best third-party logistics providers (3PLs) can help. They have a firm grasp on the overall market and an integrated TMS that helps with real-time booking and market conditions. They're connected to those aforementioned 200 LTL providers and likely have existing relationships with many of them, so they can work with these carriers to find the best option for each shipper - also accounting for fluctuating rates to find the best deal. And if more creative solutions are required incorporating other freight modes, 3PLs can help with that, too.
One 3PL who can help with your LTL needs: InTek. Simply fill out our brief contact form and we'll get back to you with LTL freight options that fit your company. For more information about InTek, or logistics and supply chain issues in general, check out our Freight Guides.
