How the YRC Deal is Impacting the LTL Marketplace
Jul 22, 2020
Like the economy, the LTL marketplace is facing some hurdles. In some areas, customers are busier than ever and booking plenty of freight, while others are hunkering down.
One thing that hasn’t changed in a long time is that the LTL market is made up mostly of 25 larger LTL carriers. Based on 2019 revenue, YRC comes in fourth after FedEx Freight, Old Dominion and XPO. This makes their capacity critical to providing a stable rate environment. Overall this market has managed to sustain stability despite ups and downs in the economy, and this is a signal to expect that to continue.
While a disappointing 2019 played a role in the closing of regional LTL carriers like New England Motor Freight (NEMF) and LME, other carriers expanded last year, such as Old Dominion, Estes and Saia. Pricing discipline last year also enabled many LTL carriers not to lose revenue and shrink or go out of business. YRC exiting this market could have altered this trend. That is why YRC’s deal with the government and the resulting infusion of capital under the Cares Act was so important.
It is important to note that with this week’s news that the YRC deal will now be subject to review by the Congressional Oversight Commission, some shippers are concerned. But based on numerous conversations with industry experts, we continue to believe that the deal will go through and YRC will continue to pursue its strategic plan.
If your company is planning on conducting an LTL sourcing event, it is important to understand that the dedication to building outstanding costing models and prioritizing profit over revenue is serving LTL carriers well. If you’re a shipper working with them, it’s important to know that these carriers know how much it costs to serve each and every shipper! They’re not taking your information and creating an estimate based on similar circumstances – they’re using the exact details of your freight to create a highly customized rate for each company.
This gives shippers the opportunity to improve their rates by improving their individual relationship with LTL carriers. One tool for making this happen is our Carrier Yield Test. This can be used as a basis for discussing with your carriers how you can come together and find areas of mutual benefit.
As the pandemic continues to flare up throughout the United States, we hope you can use tools like these to find some stability and sense in unpredictable times.