The sudden collapse of Yellow Corp., which recently filed for bankruptcy protection and exited the less-than-truckload (LTL) transportation market, has sent shockwaves through the industry. With Yellow previously holding 8%-9% market share, analysts are now assessing whether its departure represents a crisis or an opportunity for competitors.
Can the Market Absorb Yellow's Legacy?
Industry experts generally agree that the LTL market has sufficient elasticity to absorb the capacity vacuum left by Yellow. Glenn Koepke, General Manager of Network Collaboration at FourKites, notes that significant excess capacity currently exists in the LTL market. Both national and regional LTL carriers appear capable of handling additional freight volumes without major operational disruptions.
"LTL networks are typically fixed, asset-intensive systems," Koepke explains. "In the current soft market environment, other carriers have ample capacity to absorb this business."
However, Yellow's downfall serves as a cautionary tale. Koepke warns that national carriers must maintain caution, scalability, and flexibility, emphasizing that pursuing volume growth without profitability is unsustainable. He predicts increased opportunities for regional LTL carriers to acquire Yellow's equipment, assets, and workforce.
A Predicted "Soft Landing"?
Dave Menzel, COO of Echo Global Logistics, observes that Yellow's exit hasn't created the catastrophic scenario some anticipated. Many shippers reportedly anticipated Yellow's collapse and developed contingency plans in advance. The timing proved relatively favorable, as the current trucking market remains soft compared to the pandemic-driven capacity crunch of 2020-2022.
Menzel notes that despite economic headwinds, LTL carriers have maintained pricing discipline. Following Yellow's bankruptcy filing, some carriers reportedly implemented rate increases ranging between 5%-15%, though these adjustments appear concentrated in spot markets rather than affecting shippers with established contracts.
The Ripple Effects
Kevin Day, LTL President at AFS Logistics LLC, describes Yellow's decline as a gradual process that allowed the industry time to prepare. While all carriers gained additional freight volume, T-Force and XPO emerged as primary beneficiaries, achieving double-digit shipment growth in Q2.
From a pricing perspective, carriers are carefully evaluating network compatibility for incoming freight. As expected, oversized and non-conforming shipments face greater scrutiny, with some carriers refusing such loads entirely. This creates a cascading effect where rejected freight moves to secondary carriers.
"Few shippers will remain completely immune to rate increases," Day observes. "Even XPO, currently the most prevalent market alternative, is reviewing client rosters and may decline business that doesn't meet operational standards."
The market transition appears orderly overall, avoiding the 10% capacity shock some feared. However, some modal shifts are occurring, with certain shippers opting for truckload alternatives when LTL rates become prohibitive.