These companies are set to benefit from Yellow trucking firm's demise, says Susquehanna

By James Rogers

The auction of Yellow's properties is looming

A number of trucking companies are set to benefit from the demise of Yellow Corp., according to Susquehanna Financial Group.

In August the Nashville, Tenn. less-than-truckload company announced its bankruptcy filing, which it blamed on the International Brotherhood of Teamsters union.

Susquehanna Financial Group analyst Bascome Majors says that the Yellow's woes present opportunities for other companies in and around the LTL space. "We see more risk in anchoring to the past than looking optimistically toward LTL's future," he wrote, in a note released Wednesday.

Related: FedEx set to benefit from Yellow's demise, analyst says

In particular, Majors highlighted XPO Inc. (XPO), TFI Internationals Inc. (TFII), Forward Air Corp. (FWRD), Saia Inc. (SAIA), and Old Dominion Freight Line Inc. (ODFL). "We remain buyers of purer LTL XPO (turnaround gaining momentum), LTL-adjacent TFII (value) and FWRD (special situation), and look for entry points in SAIA or ODFL as post-YELL enthusiasm settles," he wrote.

Citi recently highlighted FedEx Corp. (FDX) as a beneficiary of Yellow's demise. Last month, the package-delivery company raised its full-year profit outlook. During FedEx's earnings call, the company's executives cited "upside" from disruption at rivals, such as Yellow's bankruptcy.

"FedEx Freight gave us a taste a few weeks ago with their August quarter results," wrote Susquehanna's Majors on Wednesday. "But we'll see what Yellow's exit really means for LTL bottom lines over the coming weeks."

Related: Tupperware and Yellow have skyrocketed, but don't confuse them with meme stocks

The analyst is also weighing the long-term impact of the forthcoming auction of Yellow's terminals. Some 540 prospective bidders are qualified to participate in an attempt to put together a more attractive offer than large privately held carrier Estes' $1.525B "stalking horse" bid, according to Majors. "With the buyer(s) still unknowable, the re-deployment of Yellow's terminals can play out in endless ways," he wrote. "Given synergy opportunities, our base case has Yellow's assets ending up in the hands of an incumbent LTL operator and not a startup carrier."

"If we're right, much but not all of that footprint ends up back in the LTL market over a multi-year period," the analyst added.

The reverberations from Yellow Corp.'s closure continue to be felt. In a recent survey of 332 truckers by Lance Surety Bonds, almost 70% of respondents said they were worried about their job security because of Yellow Corp.'s shutdown. Some 86% of the truckers surveyed also expected their companies to hire new drivers before the holiday rush.

Bill Peters contributed.

-James Rogers

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10-04-23 0916ET

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