Yellow stares down the precipice
Negotiations between the Teamsters union and Yellow Corp. remain ongoing, with the fate of the nation’s third-largest LTL carrier hanging in the balance. Yellow is facing stiff resistance from the Teamsters over proposed operational changes that would consolidate operations between purchased regional carriers New Penn and Holland and integrate them into Yellow’s nationwide network.
Regarding the impact to the union, FreightWaves’ Todd Maiden wrote: “The union has been adamant that the latest proposal would require too many utility positions, which require drivers to work freight on the docks at various locations. It says its member employees at Yellow have given billions in the form of wage, benefits and pension concessions in the past and that it will not bail out the company again. It plans to honor the current contract in place, which expires next year.”
The situation escalated further on Tuesday when Yellow filed a $137 million lawsuit against the Teamsters alleging that the union is blocking changes the LTL carrier is contractually allowed to implement. If a deal is not reached, the company noted it could run out of cash by the end of July.
ATRI operating costs for trucking reaches all-time high
Recent data released by the American Transportation Research Institute (ATRI) examining the operational costs of trucking reached above $2 a mile for the first time, with the estimated cost of $2.251 per mile in 2022. Most major categories saw increases compared to previous years including payments for trucks and trailers, insurance, driver wages, tires, repairs and maintenance. The only two categories that saw decreases were tolls and permits.
Costs were not unified across all modes. Tyson Fisher of Land Line wrote: “Broken down by sector, the average cost of operations for truckload is $2.15. Comparatively, costs for less-than-truckload is $2.34, whereas specialized freight costs $2.44 per mile.” Fisher added that fleet size and access to fuel buying programs had a notable impact, writing, “Fleet size matters. Small carriers (100 or fewer power units) have an average cost of $2.30 per mile. Meanwhile, the cost for large carriers is lower at $2.223. The most significant difference between the two is the cost of fuel. Small fleets pay on average 72.3 cents per mile while large fleets pay only 61.2 cents per mile.”
Market update: ACT Research: May used Class 8 sales down, prices 31% lower y/y
ACT Research on Tuesday released its latest used Class 8 sales data for May that saw used truck prices decline 31% year over year while used truck inventory levels continue to rise. Connor Wolf wrote the average retail price for a used Class 8 fell 30.9% from $99,054 in May 2022 to $68,411 as of May 2023, while prices fell 3.4% month over month compared to $70,811 in April.
New Class 8s remain elusive as OEM order books remain at capacity while larger fleets continue to trade up for newer equipment. Charles Bowles, director of strategic initiatives for Commercial Truck Trader, told Transport Topics: “We’re starting to see some growth in the number of used units listed on the site, and the preponderance of units on the sites for heavy-duty Class 8 are used. Very few are new because, as you know, they’re sold before they even hit dealer lots now.”
For smaller fleets and owner-operators, a slightly less used truck will suffice until a newer one can be ordered. Trey Golden, VP of used truck sales at Rush Enterprises, told Transport Topics: “You got trade-ins or just people getting rid of their older trucks as they’re getting their new truck. But the other part of it is, in the supply chain-constraint world, we were selling a lot of our used trucks to the people that would traditionally be new truck buyers.”
FreightWaves SONAR spotlight: DOE/EIA diesel prices fall despite geopolitical events
Summary: The DOE/EIA average price for diesel fuel at the pump nationwide fell 1.4 cents per gallon to $3.801 as recent Russian geopolitical turmoil caused a muted boost to oil futures markets. The Monday reading is the 19th time in the last 21 weeks that diesel prices declined. FreightWaves’ John Kingston wrote that some of the price declines can be attributed to gains in Russian refinery output, with a Bloomberg report stating Russian refineries processed 5.6 million barrels a day of crude and crude throughput reached its highest levels in 10 weeks.
The increases in output may be temporary as Kingston wrote: “The Bloomberg report also said Russia is considering reducing subsidies it pays out to its refining sector, as spending is refocused on the war in Ukraine. Facing the loss of those subsidies, the Bloomberg report said, some refineries are cranking up operating rates as high as they can now as they face the prospect of reduced subsidies, possibly as early as September.”
On a FreightWaves Drive Time SiriusXM radio interview with Kingston, a caller asked why crude prices continue to outperform diesel, with gasoline prices at the pump showing greater savings. Kingston said that IMO 2020, which implemented a rule limiting sulfur emissions in maritime fuel sources, created a situation in which ultra low sulfur diesel (ULSD), used in commercial diesel fuel, is now competing for crude refining space with very low sulfur fuel oil (VLSFO). This competition for barrel space is one contributor to the persistently higher diesel prices compared to years past.
The Routing Guide: Links from around the web
Mexico-based mega carrier acquires US logistics firm for $10M (FreightWaves)
Investors continue to pump funding into FreightTech (FreightWaves)
Teamsters demand UPS present last, best, final offer by Friday (FreightWaves)
May US trucking gains a blip – no indicator of a clearer road ahead (The Loadstar)
Trucking, Transportation Sector Sees Substantial Number of Women in Leadership Roles: Study (Supply & Demand Chain Executive)
Yellow is a zombie company — it’s time to let it go (FreightWaves)
