It’s been about a week since Yellow Transportation, one of the nation’s largest and longest running trucking companies, announced its demise. The fallout has been rapid, and as with any business collapse, supply chain winners and losers are emerging from the situation. The dust hasn’t settled entirely, but we have a decent picture of how various areas of the supply chain will likely feel its impact.
The chief beneficiaries considering Yellow’s end are clearly its rivals in the less-than-truckload sector. These former competitors are reporting an uptick in orders along the lines of 2,000 to 3,000 additional shipments per day. Some of this began in mid-July before Yellow folded, but this new business has spiked substantially in the past week. These same competing carriers are well positioned to raise rates, as well—Yellow was the king of low-priced trucking and now that it has left the building, competitors don’t have to worry about keeping pace. Stakeholders have given their nod of approval and stocks at these various carriers has gone up in the double-digit range for most of them.
Another way in which Yellow’s rivals benefit is the potential to snap up real estate left behind by the company. Yellow held dozens of truck terminals around the nation, many in choice locations near large populations. This is a boon to carriers who struggled to find real estate in communities opposed to their building new terminals.
On the flipside, the list is growing for those who stand to lose out in the wake of Yellow’s collapse. Its 30,000 employees had little notice that they were losing their jobs and were left scrambling for something new. Truck drivers are likely best situated for new positions, as the driver shortage continues –many competitors will be happy to add experienced drivers with good reputations to their existing fleets.
Shippers are also going to lose out if carriers do indeed raise rates. One of Yellow’s big customers was the federal government, which held contracts with the carrier in both the Department of Defense and the General Services Administration. Competitor carriers are already looking for the opportunity to bid for the work, but it’s unlikely they will offer it at Yellow’s discount rates.
One stakeholder that may be surprised to feel the fall out of Yellow’s shut down is the American taxpayer. In 2020, Yellow took full advantage of the Trump administration’s Covid aid package, borrowing $700 million. The Treasury Department took a 30 percent stake in the company as a condition of that loan. While Yellow is claiming it will pay back the loan, the Treasury Department may stand to lose all of its equity unless Yellow is able to recoup the money by selling its assets and return it to the government.
We’ve yet to learn the final tally of who will win and who will lose in Yellow’s collapse, but one thing is for certain: without the company’s constant presence, the supply chain will look very different going forward.
