The demise of Yellow Corporation is nothing short of an epic failure.

How epic?

First, as a 99-year-old company, Yellow was an institution in the industry. Second, Yellow was the nation’s third-largest LTL carrier. Third, it was the fifth-largest transportation company with over ^5 market share.

Yellow Corporation was once a leading player in the trucking industry, with a legacy dating back to the early 20th century. Its fleet consisted of over 12,000 trucks, and Yellow employed over 30,000 workers. However, the company has faced financial difficulties in recent years, leading to its eventual demise.

Yellow's downfall impacted the U.S. trucking industry and supply chains. It also has expected ripple effects that will likely continue into the near- and mid-term.

Yellow Corporation: A Brief History

Yellow was founded in 1924 in Oklahoma City, Oklahoma. Over the years, the company grew into one of the largest trucking companies in the United States. Yellow's success was due in part to its innovative use of technology. That included satellite tracking and real-time data analysis.

However, in the early 2000s, Yellow began to face financial difficulties. The rise of e-commerce led to increased competition from companies like Amazon and FedEx. Also, rising fuel costs and a shortage of drivers put a strain on Yellow's finances.

In 2009, Yellow merged with Roadway Express to form YRC Worldwide Inc. to stave off bankruptcy. Despite this merger, YRC Worldwide struggled financially, leading to Yellow's troubles in 2020.

Yellow’s financial struggles would continue affecting the trucking industry and supply chains.

The Impact of Yellow's Demise on the Trucking Industry

The struggles of YRC have had a significant impact on the trucking industry. Yellow was once one of the largest LTL carriers in the U.S. with a nationwide network. In February 2021, it changed its name from YRC to Yellow Corporation. With the loss of Yellow,  LTL capacity declined. That loss of capacity declined so much that it led to increased rates for shippers.

The failure of YRC reverberated through the trucking industry in several ways:

• Capacity Shift: The sudden closure of Yellow led to a disruption in freight capacity. Specifically, it created a 10% gap in capacity. Existing shippers had to find alternative carriers swiftly. This abrupt loss of capacity could lead to potential delays and increased costs.

• Pricing Dynamics: With one major player exiting the market, supply and demand dynamics shifted, influencing freight rates. Shippers and carriers experienced pricing fluctuations as the industry recalibrated. And pricing issues will persist until the capacity gap dissolves.

• Employment Impact: The closure of Yellow resulted in job losses for thousands of drivers, mechanics, and administrative staff. In total, Yellow laid off 30,000 workers. The sudden influx of job seekers further strained local labor markets.

• Disrupted Labor Relationships: Now Yellow is suing the International Brotherhood of Teamsters. Yellow claims the union thwarted Yellow’s corporate modernization plan. The suit charges that the Teamsters obstructed Yellow’s efforts for eight months. Yellow is suing for $137 million in damages. And if Yellow collapses entirely, the union may be liable for up to $1.5 billion.

Yellow's demise has also led to increased consolidation in the trucking industry. Smaller carriers struggling to compete with larger companies like FedEx and UPS may have to merge or go out of business. This consolidation led to an increase in competition, which increased rates for shippers.

The Impact of Yellow's Demise on Supply Chain Management

Yellow Corporation was a critical player in supply chain management. The company's extensive network allowed for efficient transportation of goods across the country.

With the loss of Yellow, supply chain managers had to scramble to find other carriers. This disruption has led to increased costs and longer lead times.

Yellow's collapse had a cascading effect on supply chain management:

• Disrupted Shipper Relationships: Companies that relied on Yellow Corporation had to find alternative carriers. And they had to do this immediately. Dealy meant disrupting supply chain flows. Even so, this reaction potentially disrupted established supplier-customer relationships. After Yellow's collapse, shippers and supply chain managers diversified their carrier networks. They did that to avoid relying too much on a single provider.

• Redundancy Planning: Yellow’s collapse prompted shippers and supply chain managers to mitigate the risks associated. As a result, they reassessed their overreliance on a single provider. That forced them to diversify their carrier networks and consider their redundancy plans.

• Resilience Emphasis: Yellow's downfall underscored the need for enhanced supply chain resilience. Organizations began investing in strategies to manage disruptions.     These strategies included leveraging digital platforms, optimizing transportation networks, and adopting real-time tracking technologies.

Yellow's downfall has also highlighted the need for supply chain managers to implement contingency plans. The sudden loss of a critical carrier significantly impacts supply chain operations. That makes it critical to have backup carriers.

Beyond that, you must have viable contingency plans to ensure continuity of operations.

With the implosion of Yellow, we can apply lessons learned to future operations.

The Future of the Trucking Industry and Supply Chain Management

Yellow's bankruptcy highlights the challenges facing the trucking industry and supply chains. As e-commerce continues to grow and fuel costs rise, carriers will need to adapt to compete. And supply chain managers will need to prepare for abrupt disruptions.

One potential solution comes with increased collaboration between carriers and shippers. By working together, carriers can better understand their customers' needs. And a better understanding of needs will provide more efficient transportation services. Besides that, a better understanding can lead to reduced costs for both parties.

Investing more in technology is a viable solution. Carriers need to utilize real-time data analysis and satellite tracking. Doing so can aid them in optimizing operations and reducing costs. Technology can also help in tracking shipments and improving response time to disruptions.

Although the future is uncertain, we can adapt and prepare for the future. That is, we can prepare with the benefit of hindsight. With foresight, we can identify and prioritize workable solutions.   Properly applied, hindsight and foresight can ensure success.

Conclusion

Yellow’s ruin has significantly affected the trucking industry and supply chain management. With the loss of one of the largest LTL carriers in the U.S., capacity declined, and shipping rates increased.

Also, supply chain managers scrambled to find other carriers. That led to increased costs and longer lead times.

However, this disruption also presents an opportunity for carriers and shippers to collaborate. We know that collaboration and technology investment can improve efficiency and reduce costs.

The trucking industry and supply chain managers can meet challenges by working together and innovating. In fact, adapting is necessary in meeting today's competitive and challenging business environment.

Your Next Steps

Yellow’s collapse will negatively affect the trucking industry operationally and financially. Our clients aren’t scrambling to find the capacity they need at the price they want. 

That’s because, at American Global Logistics, we know trucking. We cover everything from LTL to FTL and more. Also, we have a vast network of contacts that ensures we can get you the capacity you need at the best prices.

If you’re scrambling for capacity at competitive prices, maybe it’s time to get some help. AGL can help you adapt to today's turbulent business environment. 

Contact us to find out how you can benefit from partnering with AGL.