Following the demise of Yellow (OTC:YELLQ) Corp., a significant portion of shippers and brokers are still seeking new carriers for their less-than-truckload (LTL) shipments, according to a recent survey by investment firm Morgan Stanley (NYSE:MS). Conducted on Monday, the survey revealed that 35% of over 300 shippers and third-party logistics providers (3PLs), who had recently worked with Yellow, are exploring other carrier options for their LTL shipments.
Yellow Corp., which held approximately 9% of the LTL market share, ceased its operations in late July. The company's shutdown led to a swift redistribution of freight to other carriers. However, many newly formed shipper-carrier relationships may be temporary, as pricing, service, and network fit have emerged as reasons for a potential shake-up in the LTL landscape.
While large, growth-oriented carriers run their networks with 15% to 20% excess capacity to stay ahead of a longer-term demand curve, the absorption of Yellow's share was not uniform across the industry. Many smaller and regional players benefitted from Yellow's fallout, which was managed with minimal disruption due to ample door space among competitors.
The reconfiguration of the LTL sector was evident in third-quarter updates from large public carriers. Saia (NASDAQ:NASDAQ:SAIA), XPO (NYSE:XPO), and ArcBest (NASDAQ:NASDAQ:ARCB) all noted some type of inflection in shipments in July and August. Saia recorded a 14% year-over-year increase in shipments in August while ArcBest reported a 20% jump in volumes at its core accounts, many of which also relied on Yellow.
Morgan Stanley's (NYSE:MS) report suggested that carriers appear more content with the current status quo than shippers, which could lead to an unexpected second phase of the freight reshuffle. Only 7% of the carriers surveyed stated that the onboarded Yellow customers were not a good fit for their networks. However, 46% acknowledged that the pricing and freight mix was worse than that of its base business.
The report also indicated that 35% of shippers and brokers are planning to move carriers, with half planning to do so this year and the majority of the remainder aiming for the first half of next year. A significant 80% of carriers reported they have stopped receiving inbound requests from Yellow's former customers. This potential significant movement of LTL freight could come as a surprise to carriers who believe their new customers are satisfied, the report concluded.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.