Summary:
- Rival trucking companies are outperforming in the wake of Yellow Trucking's bankruptcy filing.
- Less than truckload (LTL) companies are experiencing stock surges as freight volume shifts.
- SIA reports strong growth and anticipates high demand throughout the holiday season.
- Improving holiday demand is expected, with suppliers preparing for the Christmas season.
- CEOs view rising diesel prices as a potential tailwind but express concerns about surcharges.
- Interest in acquiring Yellow's real estate assets is high among industry leaders.
The trucking industry is closely monitoring the aftermath of Yellow Trucking's recent bankruptcy filing. Frank Holland reports from the Deutsche Bank transportation conference in New York City, where freight CEOs are discussing the impact of this bankruptcy and the overall state of the trucking industry.
Rival CEOs Optimistic
CEOs of rival companies such as Old Dominion and SIA have seen their stocks outperform in the wake of Yellow's bankruptcy. These stocks have continued to rise as five million dollars in annual freight volume shifts to other carriers following reports of financial and union issues at Yellow in late June.
LTL Companies Benefit
Companies operating in the less than truckload (LTL) space have experienced significant stock surges. This includes major operator FedEx, as well as XPO and SIA, all of which have seen stock gains exceeding 20%. LTL companies consolidate shipments in the same truck, making them attractive options for shippers.
SIA Reports Strong Growth
SIA recently reported a six percent increase in July volume and a double-digit increase in volume for the current month. Their clients include major brands like Starbucks and Home Depot. SIA's CEO, Fritz Holsgraf, anticipates that the demand for capacity will remain high throughout the upcoming holiday season.
Rising Rates and Holiday Demand
While national rates have seen a recent uptick, they remain negative year-over-year. However, there is optimism about improving holiday demand, with suppliers noting low inventory levels and plans to build stock for the Christmas season. This includes suppliers for major players like Tesla, Walmart, and Amazon.
Impact of Diesel Prices
CEOs also discussed the impact of rising diesel prices, which have surged by double digits over the past month. While they believe higher diesel prices will benefit their top and bottom lines, concerns were raised about the impact of surcharges on long-term demand.
Interest in Yellow's Assets
CEOs expressed interest in Yellow's real estate assets, particularly the less than truckload terminals. However, there was less enthusiasm for acquiring Yellow's road vehicles. The value of the real estate lies in its potential as a home base for operations and container movement.
In summary, Yellow Trucking's bankruptcy has triggered significant market shifts in the trucking industry. Rival companies are capitalizing on the situation, and there is growing optimism about holiday demand. CEOs are closely watching rising diesel prices and considering the acquisition of Yellow's valuable real estate assets.