Last Monday, the results from the initial phase of the auction and sale of the Yellow terminals were released. Suffice it to say, there were some surprises.
But before covering these surprises and what they mean for LTL shippers in this week's Two Minute Warning, let me cut to the chase and tell you the two things you need to do in the wake of Yellow's auction results:
1. Sign up for our Yellow Auction Impact on LTL Shippers Webinar taking place tomorrow at 11am Central—we'll get you a recording even if you cannot make it.
2. Make an appointment to talk to me about what you need to do in light of the Yellow Auction and other things happening in the LTL space.
On the webcast, we will have a number of valuable insights from our experts--David Ross from Roadrunner and Steve Robinson from The Supply Chain Project.
In tomorrow’s webcast we will discuss the impact of this transaction in much more detail. For now, if you are an LTL shipper, here are some important things that call for your attention.
First, the auction is not over. In essence, the announced results are just the preliminary phase in the auction process. The terminals that have been sold raised almost $1.9 billion. There are still terminals to be sold and some of the ones in metropolitan areas close to places like Chicago, Atlanta, New York/New Jersey and Stockton (Tracy) California, are considered to be the “Crown Jewels” of the Yellow Network. Thus, there is an expectation that these terminals and other terminals in key locations could result in the total proceeds from the auction being in the range of $2.5 – $3 billion.
Second, XPO paid over $870 million for 28 properties. Add it all up and they paid approximately $230,000 per terminal door. Frankly, this price per door was much higher than the historical norm so it raises the question, “Why pay that much for terminals?” XPO is planning for the future and they believe that these doors will be worth it as they realign their network to accommodate future growth.
Third, since so many of the acquirers were existing LTL carriers, it appears that these terminals will continue to be used for handling LTL freight. This is important because there were concerns that if these terminals were purchased and repurposed or just shut down, it would have an impact on the total capacity available. But given the price per door that was paid for the terminals, we will likely see many of them reopened.
Going forward, it will be important for shippers to understand that the changes LTL carriers are making to their networks will have an impact on their sourcing strategies. As we addressed in our LTL webcasts this summer and fall, the best sourcing strategies recognize the importance of analyzing the carrier networks so that your freight is awarded to the carriers that will value it the most. If you want to learn more about how to make that happen, TranzAct can help.
At TranzAct, we have sourced billions of dollars in freight. In addition to looking at lane matching strategies, there are other important attributes to consider so that your sourcing event produces the best possible outcome. Learn more about that on our webinar tomorrow.
To begin a better way to source your LTL freight, give us a call at 630-833-0890, send us an email or schedule a time to meet.
BY MIKE REGAN, CO-FOUNDER OF TRANZACT
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