Trucking company Yellow Corp., a once-dominant player in the less-than truckload (LTL) segment that hauls cargo for multiple customers on a single truck, filed for Chapter 11 bankruptcy protection and laid off 30,000 workers Aug. 7, about a week after it had halted operations.
The move signals another weak link in the supply chain, analysts and customers note.
"I think the Yellow bankruptcy is going to have more of an impact than we think, and I don't believe we've fully seen it yet," said Laurie Harbour, CEO of Harbour Results Inc., which advises tool and die companies and other manufacturers.
Yellow's customer list included major retailers and manufacturers and had a market share of 8-10 percent.
Officials at ID Additives Inc., an additives supplier in LaGrange, Ill., said Yellow's bankruptcy "will have a huge impact" on shipping LTL and full truckload freight.
In a message to customers, ID added that those types of freight "will be seeing delays for a while, until all of Yellow Freight's customers can be absorbed by other large LTL carriers. … In the meantime, other LTL carriers are struggling in parts of the country with backlog of freight just sitting at terminals."
"Our biggest concern for our customer is transit times," ID officials added. Until the issue is resolved, ID will be confirming orders based on ship dates, not delivery dates. The firm also is asking customers to provide at least a 10-business day lead time on all orders so that ID has time to secure a carrier.
"Nothing is guaranteed at this time, and this is out of our control," officials said.
Since the start of the COVID-19 pandemic, manufacturers have dealt with higher costs for logistics and shipping, whether by rail, truck, boat or plane, to the tune of as much as 30 to 40 percent increases when compared with before the pandemic, Harbour said.
Increased transportation costs and greater logistics uncertainty are among the factors that have contributed to the heightened financial pressure many auto suppliers have faced in recent years.
"All of those factors sort of get netted into the ask by suppliers with their customers" when seeking financial relief, said Michael Robinet, executive director of Automotive Advisory Services at S&P Global Mobility.