A strike that was scheduled to begin this Monday at Yellow was narrowly averted by an agreement made this past Sunday to extend health care benefits for workers. The Central States Health and Welfare Fund is giving Yellow 30 days to make a $50 Million payment, and the Teamsters are asking for this to happen within a shorter deadline of 2 weeks.
Ongoing issues at Yellow have taken a toll on its customer base and stock price, further exacerbating its financial problems. However, thus far they've been finding ways to overcome the challenges at hand. Add it all up and I can state definitively: If your company doesn’t have a written LTL plan/strategy that addresses multiple contingencies in play right now, you're playing with fire.
Personally, last week was an interesting week for me on the Yellow front. First, I had the opportunity to speak with Paul Berger from the Wall Street Journal to add perspective to his article on Yellow. One of the thoughts I shared is that a shuttering of Yellow would likely cause LTL rates to increase since “Carriers will review their pricing and they will cherry-pick business that makes sense for them.”
Then on Thursday, I spoke to a sold out audience from the Traffic Club of Chicago on Yellow. The talk addressed the cause of their troubles, why the “One Yellow” initiative is vitally important to their future viability, and why both carriers and shippers should be rooting for Yellow to survive.
For the past month I have been reaching out to several senior executive at various LTL carriers. Interestingly, I learned that there is not nearly as much excess capacity in the LTL market as the financial analysts would have you believe. For example, one executive noted that today, there are fewer terminal doors than the number of doors at the time of Consolidated Freightways closure.
I was surprised by the number of carriers who came up to tell me that every shipper should hear this message. In short, they agreed with me about the implications of the Yellow situation and how it could impact LTL costs.
Third, after my talk a reporter interviewed me about the message and also about the larger issues on the table in the wake of the Teamsters negotiations with ABF, TForce, UPS and Yellow. Candidly, I’ve been pleasantly surprised by the overwhelmingly positive response to the article/interview and the fact that it identifies issues that could affect your transportation and supply chain areas.
Finally, as noted above, now is the time to make sure you have a written, up to date LTL Logistics Strategy that addresses the use of a Carrier Yield Test, your LTL sourcing and carrier selection processes, and contingencies that could cause disruptions.
If you’d like to learn more about how TranzAct can work with your team to get a dynamite written LTL Logistics Strategy in place, I encourage you to get in touch. Simply give us a call, send us an email, or if you’d like to talk in person with me, let’s schedule time to meet on Calendly.
Update on UPS
This week the stalled negotiations between UPS and the Teamsters over the new contract resumed. There's less than one week now before the current contract expires on July 31 and there hasn't been any indication that a strike would be postponed if that date is missed. However, Sean O’Brien has appeared to be more conciliatory in his comments and we are seeing concessions from both sides. So on that bright and cheery note, things are looking more promising for shippers at this point in avoiding a strike.
BY MIKE REGAN, CO-FOUNDER OF TRANZACT
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