Dive Brief:
- Yellow Corp. reported a 12% YoY drop in LTL tonnage per day in Q1, “without the typical early spring acceleration in demand that we are accustomed to seeing in March,” CEO Darren Hawkins said on an earnings call Wednesday.
- The drop was driven by a 13.3% decrease in LTL shipments per workday. The results were in line with Yellow’s expectations, Hawkins said, given a slow economy and negotiations with the International Brotherhood of Teamsters over the company’s network overhaul.
- “In the near term, demand continues to be relatively flat, due in part to ongoing destocking,” Hawkins said.
Dive Insight:
Overall freight demand continued to struggle in the quarter, dashing hopes of a Q2 bounceback and instead fulfilling analysts’ more recent projections of ongoing uncertainty about when the market will turn.
Yellow saw LTL tonnage per workday dive 17.2% YoY in January, increase 1.3% in February, then drop 16.9% in March, CFO Dan Olivier told investors and analysts on the call.
Preliminary results show April LTL tonnage per workday down about 16% YoY, the CFO said.
“I would expect that the second quarter in total would be below [the] historical 6% sequential increase,” he said.
The tonnage decline follows a 25% nosedive in volume in Q4. Paying the $66 million due in controlled disbursement agreement notes left the carrier with just $167.5 million in total liquidity in Q1.
Hawkins emphasized that financial results, as Yellow executes one of the largest network changes by any unionized LTL carrier, “are not linear.”
“We expect the changes that we are making today will benefit customers, employees and shareholders for many years to come,” Hawkins said.
Yellow’s LTL competitors are navigating a similarly challenging freight environment.
Old Dominion Freight Line revised its forecast of a Q2 freight rebound as Q1 tonnage dropped 12%. TForce Freight’s volumes sank by 20% in Q1. XPO saw a 1.8% drop in daily LTL tonnage. ArcBest achieved a 3% increase but saw revenue per hundredweight simultaneously drop by 4%.
