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Yellow’s big tonnage declines part of network restructuring

Q3 tonnage down mid-teen percentages

Phase one of Yellow's restructuring remains on track for Sunday implementation. (Photo: Jim Allen/FreightWaves)

A third-quarter update from less-than-truckload carrier Yellow Corp. was reflective of the network restructuring the company has undertaken. Through the first two months of the third quarter tonnage was down by mid-teen percentages year over year (y/y), which significantly outpaced mixed results from peers.

Yellow (NASDAQ: YELL) is currently executing a network overhaul in which it has consolidated all of its separately run LTL brands onto the same tech platform. It is also rationalizing some terminals to reduce redundancy, improve asset utilization and lower its cost structure. The transformation and yield initiatives, which include culling lower-margin freight, have weighed on volumes.

Tonnage was down 17.2% y/y in July and 15.7% lower in August, the carrier reported Monday after the market closed. The y/y declines were in line with a 16.4% drop recorded during the second quarter but improved from a February peak of down 27%. On a two-year stacked comparison, tonnage was down 23% in July and 24% in August.

Table: Company reports

Yellow’s improved freight selection led to higher yields in the period, up 23.8% y/y in July and 19.9% higher in August. Higher diesel prices have been a boost to yields for LTL carriers, however the per-gallon retail price has come down roughly 5% on average since the second quarter and 13% from the peak in June. 

“The network transformation is one of the final steps on our journey to One Yellow and the expected benefits include enhanced customer service, greater efficiencies, cost savings and additional network capacity,” CEO Darren Hawkins stated in a news release.

He said the company remains on track with phase one of the integration at YRC Freight and Reddaway terminals, with implementation scheduled for Sunday.

Improved pricing metrics and early wins from the restructuring showed up in the carrier’s second-quarter results. During the period, it recorded its best operating performance in 15 years, posting a 93% operating ratio.

Third-quarter updates from other LTL carriers showed moderating trends from the peak of the cycle.

Last Wednesday, Old Dominion Freight Line (NASDAQ: ODFL) reported modest y/y declines in shipments and tonnage but yields continued to expand at a high clip. Saia’s (NASDAQ: SAIA) volume trends so far in the quarter were also muted as small declines in shipment counts were offset by higher weight per shipment, which produced minimal tonnage gains.

“We continue to see rational and disciplined pricing in the marketplace,” CFO Dan Olivier, commented at an investor conference on Thursday. “Considering that and with all of the capacity requirements that are out there we do believe in the fact that we can continue to achieve sequential pricing growth even though the year-over-year comparisons will continue to moderate … irrespective of if there’s a recessionary environment on the horizon or not.”

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One Comment

  1. Dick Bischoff

    Even with a 93 OR last quarter, this company is nowhere close to being out of the woods. Appears to me customers are leaving them more than they are dumping ugly freight. Long term, I still see them going in the LTL union graveyard.

    Good Day

Comments are closed.

Todd Maiden

Based in Richmond, VA, Todd is the finance editor at FreightWaves. Prior to joining FreightWaves, he covered the TLs, LTLs, railroads and brokers for RBC Capital Markets and BB&T Capital Markets. Todd began his career in banking and finance before moving over to transportation equity research where he provided stock recommendations for publicly traded transportation companies.