Old Dominion Freight Lines Friday submitted a higher bid for terminals of troubled carrier Yellow, Freight Waves reported. The North Carolina-based freight line made the $1.5 billion offer in a filing in U.S. Bankruptcy Court in Wilmington.
Yellow received a $1.3 billion offer for its terminals from rival Estes Express earlier. The companies could recoup some of those funds by selling off real estate or, in some cases moving to the acquired terminal if it represents an upgrade. There is still demand for properly zoned logistics and warehouse sites in some areas.
After shutting down operations, Yellow filed for Chapter 11 bankruptcy protection in Delaware. The shutdown came on news of Yellow’s financial woes and warnings it was running out of cash. That led to shipments being diverted to other motor less-than-truckload (LTL) carriers. Delaware remains a popular venue for Chapter 11 filings by mid-sized and even large companies.
Yellow and Old Dominion have terminals in Delaware. Estes, a family-owned non-union company, added an upgraded terminal in nearby Elkton, MD. Yellow earlier obtained a high-interest-rate loan from a private equity company as it plans to sell off assets such as terminals and trucks. Old Dominion is a unionized truck line.
Estes’ $1.3 billion offer is known as a “stalking horse” that shuts out lower bids but does not stop higher offers like the one from Old Dominion.
Yellow has blamed the Teamsters Union for not making concessions that would allow the company to remain in operation after agreeing to previous deals, according to the union, ran into the billions of dollars. Teamsters represent more than 20,000 Yellow workers. The union blamed long-running mismanagement for the shutdown.
There also continues to be a shortage of truck drivers, with former Yellow, blue-collar drivers having a greater chance of finding work.
Yellow was a survivor of the rates and routes deregulation of the trucking industry that led to the demise of many if not most regional carriers like Preston and New England Motor Freight. Instead, Yellow snapped up competitors, the largest being Roadway Express. However, it struggled to integrate acquisitions while dealing with recessions.
During the Covid pandemic, Yellow received a $700 million loan from the Trump administration, making Uncle Sam a minority owner. Any bankruptcy settlement is expected to include paying back the loan.
The less-than-truckload market is now suffering from overcapacity, with competitors expected to take up the slack should Yellow remain closed.
Tonnage and revenues are down due to “destocking” – a reduction of inventories now affecting chemical and other industries. Reasons for destocking range from improvements in the supply chain leading to leaner inventories and a slowdown in some industries.
Competition remains stiff. For example, Saia, a fast-growing Georgia LTL carrier, is the newest entrant in a crowded Delaware market.
Yellow, Estes, and Old Dominion each have revenues in the $4 billion to $5 billion range. FedEx is the largest LTL hauler, with $7 billion in sales.
