Check Call: Here lies Yellow
Welcome to Check Call, our corner of the internet for all things 3PL, freight broker and supply chain. Check Call the podcast comes out every Tuesday at 12:30 p.m. EDT. Catch up on previous episodes here. If this was forwarded to you, sign up for Check Call the newsletter here.
In this edition: The fallout from Yellow’s anticipated bankruptcy, UPS loses big to FedEx, and Hub Group throws down against the competition.
It’s said that when one door closes another one opens. Here’s hoping that’s true for anyone affiliated with Yellow, which is expected to file for bankruptcy. It stands to be the largest trucking company to file for bankruptcy in U.S. history. All operations stopped on Sunday, and negotiations with the Teamsters effectively ended. Union members will have no issues finding new jobs given that carriers are always on the lookout for good drivers.
Sean O’Brien, Teamsters general president, said, “Today’s news is unfortunate but not surprising. Yellow has historically proven that it could not manage itself despite billions of dollars in worker concessions and hundreds of millions in bailout funding from the federal government. This is a sad day for workers and the American freight industry.”
It’s likely that one of the major factors stopping Yellow from filing is its 3PL Yellow Logistics, formerly HNRY Logistics. The company is likely looking to sell off that division before ultimately filing for Chapter 13.
Now is the time for all of those contingency plans, and for customers who insist on using the lowest-cost carrier, rest assured there are still low-cost less-than-truckload carriers available. However, it might be worth remembering that there are cost savings that come from using a higher-priced carrier, which typically has fewer claims, damages and hassles on every front.
UPS avoided a strike and consumers across the country celebrated. In preparation for the threatened strike, shippers had made other plans for their parcel deliveries. The fallout of those plans comes in the way of a 5% loss of domestic average daily volume. It virtually all went to FedEx. That equates to about 1 million parcels a day that left UPS for FedEx. About half of that volume is expected to stay with FedEx as its rates are lower than those at UPS.
As for the UPS and Teamsters fight, it’s so close to being over. Mark Solomon writes, “By a vote of 161-1, Teamsters local unions representing 340,000 full- and part-time workers at UPS Inc. voted Monday to endorse the tentative five-year agreement reached with the delivery giant on July 25 and recommend its passage by the full membership.” This leaves most of August for local unions to ratify the agreement. Here’s hoping UPS will start putting air conditioning in vehicles before that ratification date as the hottest parts of summer are ahead of us.
(SONAR TRAC Market Dashboard)
TRAC Tuesday. This week’s TRAC Tuesday is a lane from Charleston, West Virginia, to Savannah, Georgia. Spot rates on this lane have been consistent for the month of July. The slight trend upward was no surprise when it comes to quoting spot rates, especially as it’s in line with the National Truckload Index. Outbound tender rejections in Charleston are at 9.77%, more than triple the OTRI of Savannah, which is 2.67%. Loads coming out of Charleston will need a little more lead time as capacity is tighter.
(Image:makeameme.org)
Who’s with Whom? Intermodal giant Hub Group has decided to expand its intermodal service to include auto parts from Mexico into the U.S. Most of the moves will happen with Union Pacific. Hub Group has a new service named the Falcon Premium that provides the fastest transit times from the U.S. and Mexico border to Chicago and Detroit, the hub of car manufacturing. This move is likely a response to Schneider National, rival to Hub Group, announcing it’s Midwest Mexico Express route.
On the more stationary side of things, VanTrust Real Estate has acquired a 60.4-acre parcel of land in Terrell, Texas, about 25 miles outside of Dallas. This land is going to be developed into 702,000 square feet of space. The end goal is to attract e-commerce and 3PLs. Given the fact that nearby customers are Amazon and Goodyear, it stand to become a strong backhaul market for major customers.
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