‘Soft’ freight environment doubles quarterly loss at LTL leader Yellow

Yellow Corp. officials blamed the “soft” freight environment nationally for a doubling of their first quarter loss, compared with year-ago results.

Yellow, which controls about 10% of the $58 billion less-than-truckload (LTL) market, suffered a first quarter loss of $54.6 million on revenue of $1.159 billion. That was nearly twice the loss of $27.5 million on $1.26 billion revenue in the year-ago period.

Yellow’s operating loss was $9.3 million in the first quarter. That compared with operating income of $9.2 million in the 2022 first quarter, which included a $5.5 million net gain on property disposals.

“The soft demand environment during the first quarter was similar to the slowing pace we experienced late last year,” Yellow CEO Darren Hawkins said in a statement.

Moreover, freight demand did not pick up toward the second half of the first quarter, as it usually does in the LTL sector.

“The daily shipment count remained steady from January through March without the typical seasonal uplift in demand in the second half of the quarter,” Hawkins said.

However, Hawkins said year-over-year pricing continued to improve despite following exceptionally strong growth a year ago.

“Our results for the quarter were impacted by some remaining costs associated with the execution of Phase One, and planning and preparation for Phase Two of the network optimization and transition to a super-regional carrier,” Hawkins added.

Phase One consisted of approximately 20% of the network and was successfully implemented in the western United States in 2022. Customers are seeing the benefits of Phase One with an improvement in the percentage of shipments going out for delivery before 9:00 a.m. and a reduction in missed pick-ups, Hawkins said.

Phase Two is much larger and will be delayed until the Teamsters union approves the change of operation. This change involves legacy YRC Freight, Holland and New Penn terminals in the Midwest, Northeast and Southeast, and covers approximately 70% of the network. That is being delayed by negotiations with the Teamsters union, which has included those talks in the National Master Freight Agreement that expires next March 31.

“We plan to provide an update on Phase Two once an implementation date has been determined,” Hawkins said.

Hawkins said it was “imperative that we complete our One Yellow strategy,” which will strengthen Yellow’s operations, protect 22,000 union jobs and ensure that customers are well cared for and receive the range of services that today’s market demands.

“Phase One is a success and we continue to work with the International Brotherhood of Teamsters to determine the best path forward to implement Phase Two, and then turn our focus on refinancing the capital structure,” concluded Hawkins.

Yellow’s operating ratio for first quarter 2023 was 100.8 compared to 99.3 in first quarter 2022.

Including fuel surcharge, first quarter 2023 LTL revenue per hundredweight increased 4.4% and LTL revenue per shipment increased 6% compared to the same period in 2022. Excluding fuel surcharge, first quarter LTL revenue per hundredweight increased 2.8% and LTL revenue per shipment increased 4.4%.

Yellow’s available liquidity, which is comprised of cash and cash equivalents under its revolving facility, was $167.5 million as of March 31, 2023, compared to $276.9 million a year ago.

Yellow said its outstanding debt was $1.509 billion as of March 31, 2023, compared to $1.607 billion as of March 31, 2022. Capital expenditures were $29.6 million in the first quarter, compared with $36.4 million in the year-ago quarter.