The Roadmap to Supply Chain Success in the Wake of the Yellow Corp. Bankruptcy

In the aftermath of the Yellow Corp. bankruptcy, a seismic shift has rippled through the supply chain landscape. As the former third-largest carrier in the U.S., the downfall of Yellow Corp. has unleashed a cascade of challenges and opportunities for supply chain organizations. Both are demanding a swift and strategic response.

But how can shippers traverse these rough waters in the overall supply chain landscape to come out of the waves triumphantly? In this blog, we'll dive into the challenges supply chain companies are currently facing in the wake of YRC's bankruptcy and share our expert opinion on how to overcome them. Let’s jump in!

Challenges Supply Chain Companies Face Post-Yellow Corp.

Yellow Corp. “accounted for 10% to 15% of the LTL market share,” according to NBC News. Without Yellow to service this wide range of customers, especially as the peak season comes into view, shippers and shoppers alike can expect higher shipping prices. 

As mentioned in the same NBC News article, Ken Adamo, the principal for global freight market intelligence at DAT Solutions, said, “Its competitors have already indicated they will not be honoring Yellow's pricing structure as they pick up its customers.”

If other carriers refuse to honor Yellow Corp.’s pricing and the demand for capacity is now increasing, what does this mean for the cost of shipments? Let’s do some basic math.

Increased demand for capacity + fewer carriers & fleets = Increased shipping costs.

“If 10% of [LTL] volume is going up 20%, that’s material,” continued Ken. 

Sequentially, according to FreightWaves, UPS is likely to implement double-digit general rate increases in 2024, around 11% - 12%. And this is just one example of increased shipping costs. We expect other carriers to do the same. 

Another issue today’s supply chain organizations face in the wake of the Yellow Corp. closure is the need to adapt to new carrier partnerships and negotiate new contracts. We know how difficult it can be to negotiate a new contract with a carrier or renegotiate a standing contract. Too often, shipping companies are forced to deal with poor negotiations that lead to shipping overages, damaged shipments, subpar pricing agreements, and inefficient accounting processes. We get it—no one wants to deal with these headaches.

How to Achieve Supply Chain Success and Overcome These Roadblocks

Yellow Corp. filing for bankruptcy has its detriments, sure. But amidst these challenges also lies an opportunity for reinvention. Below, we’ve listed a few ways to overcome these disruptions and ensure supply chain success throughout this year’s peak season and beyond.

Diversify Your Carriers

Switching to a multi-carrier model with both national and regional carriers has recently become a popular (and smart) choice. Often, regional carriers offer more cost-effective shipping options, which is critical now knowing shipping costs are on the rise.

To stay competitive in a rapidly changing market after Yellow Corp.’s downturn, it’s essential to diversify your carriers to remain flexible. Carrier rates can vary due to market conditions, fuel costs, or geopolitical factors. Having multiple carrier options provides you with greater leverage in negotiating competitive rates and avoiding overreliance on a single carrier's pricing. 

Plus, as in the case with Yellow Corp. shutting down, having multiple carriers in your network allows you to quickly adapt and continue operations even if one carrier faces a disruption. 

Work with a 3PL 

Working with a third-party logistics partner (3PL) to help you negotiate your carrier contracts and optimize your supply chain is key to ensuring on-time shipments at low costs. But not all 3PLs are built the same. It’s important to vet each 3PL on their ability to:

• Identify cost-saving opportunities
• Optimize shipping routes and ensure fair pricing
• Navigate the complexities of carrier negotiations 
• Secure favorable terms that ultimately lead to enhanced efficiency and reduced shipping costs

The best 3PLs *cough* LynnCo *cough* have established relationships with carriers, warehouses, and other service providers, allowing them to negotiate better rates and terms. Outsourcing your supply chain and logistics needs to a 3PL can lead to cost savings through economies of scale and optimized operations. In fact, our negotiation customers save on average 17% of total annual spend!

Final Thoughts

The timing of the downfall of a top-tier LTL carrier like Yellow Corp., plus the upcoming peak season, is understandably a bit scary. LynnCo is here to ease your worries and your supply chain processes. 

For over 25 years, we have built a leading supply chain platform of solutions and technology for companies with complex transportation needs. Want to learn more? Get in touch with us to uncover the optimization and cost-saving opportunities we can bring about in your organization.