End of an Era: LTL Giant Yellow Declares Bankruptcy, Ending Monthslong Saga

After struggling for months with challenging labor negotiations, declining volumes, and a turbulent inflationary landscape, LTL carrier Yellow Corp. filed for bankruptcy. The company’s decision to cease operations concludes widespread speculation among logistics experts about the company’s future and brings a close to Yellow Corp’s 99-year legacy in transportation. This signifies the end of a significant chapter for the U.S. overland transportation industry.

Yet, as one era ends, shippers are left asking: what’s next? XPO is taking steps to soak up some of Yellow’s leftover capacity, mega-carrier Maersk is reporting better-than-expected Q2 results, and the world’s largest ocean carrier, MSC, is investing in air cargo capacity. Here is a recap of the latest news and trends shaping the transportation industry. 

Yellow Declares Bankruptcy Following Fight with Teamsters

After nearly a century in operation, Yellow Corp. declared bankruptcy on Aug. 6, 2023. The move to seek protection under Chapter 11 of the U.S. Bankruptcy Code emerged after a tumultuous phase for the overland freight company. Facing rising debt, a challenging inflationary climate, and persistently low freight volumes, Yellow Corp. attributes its primary reason for bankruptcy to a contentious legal battle with the International Brotherhood of Teamsters. This arose from the carrier's effort to engage non-union carriers under a proposed initiative named "One Yellow."

“All workers and employers should take note of our experience with the International Brotherhood of Teamsters (‘IBT’) and worry,” Yellow CEO Darren Hawkins stated in an Aug. 6 press release. “We faced nine months of union intransigence, bullying, and deliberately destructive tactics. A company has the right to manage its own operations, but as we have experienced, IBT leadership was able to halt our business plan, literally driving our company out of business, despite every effort to work with them.”

Teamsters Local Leaders Vote Yes on Tentative Deal with UPS

Meanwhile, Teamsters’ local unions representing 340,000 UPS employees voted 161-1 to approve a tentative deal with the parcel giant. The agreement ensures that workers will receive more paid holidays, climate control in delivery vehicles, notable wage increases, restructured pay scales for part-time drivers, and an end to forced overtime in peak season

“Our tentative agreement is richer, stronger, and more far-reaching than any settlement ever negotiated in the history of American organized labor,” Teamsters General President Sean O’Brien said in a July 31 press release. “The Teamsters are immensely proud of reaching agreement with UPS to improve the lives of our members, their families, and working people across the country.”

Voting among the Teamsters rank-and-file to accept the deal continues through Aug. 22.

As Yellow Halts Operations, XPO Steps In 

As Yellow Corp. halts operations, leading competitor XPO is taking steps to absorb the volume left behind. Connecticut-based XPO plans to increase investments in terminals and equipment to contend with rising demand, following a 9% increase in July volumes year over year. According to FreightWaves, the carrier will ramp up capacity investments, with its spend likely to approach its capital expenditure range limit.

Following Bed Bath & Beyond Purchase, Overstock Sees Improved Vendor Relations

Following the purchase of Bed Bath & Beyond’s intellectual property after the retailer's bankruptcy in June 2023, e-commerce company Overstock.com is seeing increased supplier interest. After rebranding under the Bed Bath & Beyond name, the company has seen a 60% increase in funnel conversion rate, a metric used to measure the merchandising team’s success in partnering with potential vendors. “Simply put, knowing we will be operating as Bed Bath & Beyond has made us more attractive to supplier partners,” Overstock CEO Jonathan Johnson said in a July 27 earnings call

Amazon Outpaces Retail Slump

Following a low period for retailers as consumers contend with a volatile inflationary landscape, Amazon reported its highest quarterly profits in the past 18 months. The e-commerce juggernaut saw an 11% increase in revenue to $134.2B, resulting in a $6.75B profit. The company attributed the results to its efforts to reduce its workforce and limit supply chain network expansion.

Despite Better-Than-Expected Full-Year Earnings Outlook, Maersk CEO Has Grim Predictions

Despite previously reducing its forecast for the second half of 2023, Maersk has increased its full-year earnings outlook due to an unexpected bump in volumes for Q2 2023. The second-largest container shipping company reported a total income of $1.49 billion, outpacing previous expectations. As a result, Maersk has upped EBIT guidance, an important metric for investors and stakeholders, from $3.5B to $5B. Despite this, Maersk’s CEO, Vincent Clerc, predicts a difficult logistics market for the coming years as companies continue to work toward inventory destocking, according to FreightWaves.

U.S. Steel Manufacturers Invest in Infrastructure, Despite Falling Demand

Despite slowing demand and declining shipments, U.S. steel manufacturers like Nucor, Steel Dynamics, and United States Steel are increasing investments in manufacturing infrastructure throughout the U.S. According to The Wall Street Journal, U.S. steel manufacturers are expanding capacity in an attempt to capture the anticipated growth of federal infrastructure products, automotive manufacturing, and electric battery manufacturing.

Canadian Drivers Join Forces Against ‘Driver Inc’

Following a year of high-profile labor negotiations, Canadian truck drivers are joining forces to claim unpaid wages. Much of these unpaid wages occurred due to a practice known as ‘Driver Inc,’ in which carriers intentionally label truck drivers as independent contractors rather than employees. 

“The majority of cases that come to us regarding wage theft or anything else, the driver has been misclassified by their employer,” Navi Aujla, Executive Director of Canada-based Labour Community Services of Peel, said in an interview with FreightWaves. “When there’s misclassification, employees aren’t getting their full rights; employers are taking part in practices that would never be acceptable when someone is an employee.”

Werner Driver Survives Shootout, Hostage Situation

A truck driver for Nebraska-based Werner Enterprises escaped with injuries from a kidnapping at an Ohio truck stop on Aug. 3. The suspects, Elaine and Rodney Helman, took a driver hostage after a police officer stopped them for driving without tail lights and a visible registration. They fled from the police, abandoned their vehicle at a truck stop, and then escaped with the hostage driver. Hours later, a police chase ensued, during which law enforcement deployed 'stop sticks' to immobilize the truck. The pursuit culminated in a shootout, resulting in the deaths of the Helmans.

“A harrowing situation involving a Werner professional driver occurred this morning in west central Ohio. At this time, we know our driver is safe, and out of respect for the privacy of our driver and his family, we will not release a name. The Werner driver sustained injuries, and we are focused on making sure he is receiving all the care and treatment he needs,” a Werner spokesperson said in a statement given to WHIO TV 7,  “Werner Enterprises thanks the state and local authorities who rescued our driver, and they have our full cooperation during this investigation.”

With Purchase of AlisCargo, MSC Expands Air Cargo Capacity

MSC, the world’s largest container shipping line, has purchased a majority stake in Italian air cargo carrier AlisCargo Airlines SpA, intending to take complete control of the carrier by 2024. Despite low demand for air cargo, the purchase will enable MSC to further bolster its air cargo capabilities and increase its growing fleet of cargo aircraft. 

Climate Change Promises a Grim Future for Europe’s Most Important Waterway

For centuries, Europe has relied on the Rhine River, which flows from the mountains of Switzerland to the North Sea, as a means of transportation. However, climate change poses a significant hazard to this historically reliable shipping lane. Significant droughts and increased heat throughout Europe have caused record-low water levels, forcing many ships to halve their loads. The ongoing drought has rendered the river impassable for some vessels with deeper drafts. While experts are considering many proposals to solve the ongoing crisis, the high price tag associated with dredging channels and overhauling existing ships have prevented many nations and businesses from taking action. 

“At the moment, no state acts with the necessary urgency — unfortunately not even Germany,” Claudia Kemfert, Professor of Energy Economics at the DIW research institute in Berlin, said in an interview with BNN Bloomberg. “We have an enormous obligation because we are so emissions-intensive and are not living up to our responsibility of recognizing this climate emergency as real.”

Smart Shippers Survive and Thrive in the New Era of Transportation

If there’s one thing that the closure of Yellow Corp. has taught the transportation industry, it’s the importance of resilience. Shippers struggle to contend with a faster-than-ever logistics landscape without reliable, standardized data, tech-enabled flexibility, and an accurate understanding of transportation spend. 

With Intelligent Audit, shippers can access an ever-expanding suite of transportation software assets, including: 

Get started with Intelligent Audit, and see what 25 years of smarter shipping can do for your business today.

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