TAKEAWAYS
YELLOW WENT UNDER. NOW WHAT? Now that Yellow Corp. is out of business, what can shippers do to keep freight moving while limiting costs? With Yellow’s operations accounting for 9% of total U.S. LTL capacity, its collapse immediately tightened up the market. Other carriers are happy to keep former Yellow freight moving—for a price. Analysts say Yellow rates were 10-20% below competitors, and carriers are raising rates in the aftermath of the bankruptcy. Pricing aside, carriers are also using the Yellow collapse to optimize the freight they move. If new loads from former Yellow customers are a better, more profitable fit for the carrier’s network than existing freight, they take action to purge less-desirable freight. How? Mid-contract, out-of-cycle pricing actions. Shippers receive notice of a major rate increase or accessorial charge, and they have the choice to accept it or cancel their contract. An example of this tactic is a carrier changing their rules tari on lightweight shipments.
Carriers have a rule in their taris document called the “cubic capacity minimum” that applies an alternate rate or the standard rate— whichever is highest—to lightweight, low-density shipments of 750 cubic feet and greater that weigh 6 pounds per cubic foot or less. For some carriers, the cubic capacity minimum now has been updated to apply to shipments of 350-750 cubic feet at 4 pounds per cubic foot—targeted to price out light, fluy freight and smaller shipments. The shift makes shipments as small as three pallets eligible for the cubic capacity minimum, down from the previous 6 pallets threshold. The cyclical nature of transportation supports the fundamentals for shippers: Build lasting relationships and maintain favorable contracts by upholding practices that make them a shipper of choice. But careful analysis can also pay o. Identifying lane imbalances can allow shippers to capitalize on major dierences among carriers that yield meaningful cost savings. Success in today’s LTL market requires investing in the give-and- take of long-term carrier relationships and digging deep to capitalize on opportunities when market conditions work in their favor. – Kevin Day, President, LTL, AFS Logistics
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22 Inbound Logistics • September 2023 FOOD AND BEVERAGE • PARCEL SHIPPING • AUTOMOTIVE • MANUFACTURING • HEALTHCARE CONSTRUCTION MATERIALS • RETAIL/CONSUMER PRODUCTS • ELECTRONICS • PAPER PRODUCTS
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