July 31, 2023
SIU logistics expert: Yellow Corp. trucking shutdown may delay deliveries, raise costs
CARBONDALE, Ill. — After nearly a century in business, the trucking company Yellow Corp. halted operations Sunday and announced plans to lay off all 30,000 of its workers, apparently intending to file bankruptcy, according to experts. This development will affect the economy and people in numerous ways, said Gregory D. DeYong, Southern Illinois University Carbondale associate professor of operations management, who specializes in supply chain issues and costs.
DeYong said Yellow is one of the largest LTL (less-than-truckload) carriers, and although its share has been slipping fast, it still handled about 20,000 shipments a week. This means some other method of delivering those shipments must be found, and deliveries may be late or costs may increase.
“We are all affected by it in another way because the federal government took a 30% ownership stake in Yellow in 2020 in exchange for COVID relief assistance,” DeYong said. “In essence, we all own a little bit of Yellow. The writing has been on the wall for a few days. Shippers started to pull shipments in anticipation of a potential strike. Once a carrier loses the confidence of its customers, financial survival is doubtful.”
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Gregory D. DeYong, an SIU Carbondale professor who specializes in supply chain issues and costs, is available for interviews and can be reached at gdeyong@business.siu.edu.
DeYong said there is excess capacity in the LTL market, so the closure of Yellow shouldn’t cause an overall shortage of shipping capacity. If Yellow’s assets are liquidated as anticipated, he said, its trucks, terminals and other assets will likely be put back into use by other carriers.
DeYong also notes that LTL shipments are very competitive, particularly with the expansion of large players like UPS and FedEx Freight over the past 10-20 years. This often leads to problems for less-efficient firms and can cause some shakeouts. He said that unlike with over-the-road (OTR) carriers, many individuals receive their residential deliveries directly from LTL carriers, especially as more and more people order large items such as appliances, televisions and so forth directly online.
“That brings this problem a little closer to home for the general public instead of just being a ‘big business’ problem,” DeYong said.
Before becoming a faculty member, DeYong worked as an import/export manager where he was responsible for about $100 million in products annually. DeYong is currently working to establish a Center for Supply Chain Management and Logistics within the College of Business and Analytics.
A variety of other factors, from the worst drought in 70 years limiting shipping in the Panama Canal to the war in the Ukraine to ongoing COVID-19 recovery continue to create supply chain issues as well.