Less-than-truckload carrier XPO announced Wednesday it has begun opening the service centers it acquired from bankrupt Yellow Corp.
XPO (NYSE: XPO) purchased 26 owned terminals and two leased locations from Yellow (OTC: YELLQ) in the estate’s first auction in December. XPO’s $870 million bid for the terminals represented the largest allocation of Yellow’s properties at the time. XPO was not active in a second auction where privately held Estes added five locations to bring its total acquisitions from Yellow to 29 properties. However, the value of those sites ($284 million) is one-third that of XPO’s acquisition.
The three facilities XPO has opened are in the Nashville, Tennessee area; Grand Junction, Colorado; and Nogales, Arizona. The Nashville location has 100 doors and is the first of two sites that the company will open in that market during the second quarter.
“Our first three acquired facilities have launched on schedule, following our landmark investment in our network,” stated XPO CEO Mario Harik in a news release. “With a deeper presence in strategic markets, we are introducing new premium services and expanding our existing offerings, such as our cross-border service with Mexico.”
In total, XPO acquired approximately 2,900 doors from Yellow’s estate, which will complement the roughly 17,000 it was operating prior to the deal. The entirety of the acquisition is expected to produce a 10% to 15% increase in total door capacity as some of the additions are not fully incremental. XPO will be replace existing facilities with larger locations in some markets.
The release said the new space will enhance operational efficiencies and improve linehaul capabilities, ultimately improving service metrics.
On its fourth-quarter call in February, XPO said it planned to open the first 12 locations within three to six months, the next dozen in six to 12 months and the remaining sites in 12 to 18 months. Upgrades, repairs and rebranding need to be performed before the sites can be relaunched into service.
On the February call, management said it had opened a dozen service centers in recent quarters and those sites were accretive within 30 to 60 days. In totality, the acquired terminals will have little impact on the carrier’s operating ratio this year even as depreciation and amortization expenses increase. The sites are forecast to be accretive to earnings in 2025, with the guide assuming incremental margins in the 30% to 40% range.
XPO has been very aggressive in seizing the freight opportunity created by Yellow’s closure.
The company continues to post tonnage gains ahead of most peers despite industrywide declines in weight per shipment. It showed positive volume trends in a first-quarter update provided a month ago, following tonnage and yield growth in the fourth quarter. It has forecast first-quarter yield (excluding fuel surcharges) to again increase by 10% year over year.
On Monday, LTL competitor Saia (NASDAQ: SAIA) said it has opened two new terminals, including a location it acquired from Yellow. It acquired a total of 28 terminals from the estate valued at $244 million.
Roadrunner (OTC: RRTS) announced Wednesday it opened a 75-door facility in Atlanta that was formerly operated by Yellow.
With the three openings, XPO now operates 297 service centers.
Angel Ortiz
I got hired towards the end of Yellows era, they trained me to be a driver in there academy in Carlisle Pa., and it worked out for the best for me, but being in warehousing for years, they were running that place like everyone do for own and not care for others or the company, guys were doing what ever and the leadership was bad, I read comments about the union but if you really look at the whole picture Yellow it self was destroying itself, example I went to the shop to replace a turn signal bulb and was told that they were told by Management not to buy any, ICC bumpers were hanging on by a thread, were told to drive with check engine light on it was really bad,, then at the end we were told by Management to stop all pick ups and only deliver and customers were asking me what’s wrong and I couldn’t give then answers, and when I ask what was going on I was told that everything was ok but it wasn’t, you think they didn’t know they were going to shut down we were told on Friday in the locker room that we will still working on Monday and without notice at all we all got phone calls on Sunday that we were laid off, you don’t shut down a company as big as Yellow was in a day or week they had this planned out for months and just put over 30k people out of work overnight not even a heads up for those that bust there butt’s trying to help the company stay afloat, they always took and took and didn’t even give a heads up like by law with the Warn act should have, I hear people talk about the Union sucks, that’s not true because UPS and others companies have the same Union and they are moving along just fine UPS drivers are among some of the best paid drivers in the industry so if you want to point the finger do it right at Yellow Owners and the Management teams that brought Yellow to ther own doom,
JBG
I worked in the LTL industry for 24 years, starting in the early 70’s where rates were set by the government and all the carriers could do to win customers was by service. The big three carriers, CF, RDWY and YFSY were the kings. 1980 was the beginning of the end for them and many other LTL companies. Discounted rates replaced service as the main sell to the customer. The rapid rise of discounted rates from single digits to highs of 70 to sometimes 80% with little thought of reducing costs was their downfall. Too often they claimed profits could be made by increased volume. Yellow was a long haul carrier, when they bought Roadway nobody could understand stand why when there was no gain, then compounded the problem buying Holland, Reddawy and New Penn. The final big mistake was when the announced they were going to compete in next day and 2 day freight . So their downfall was a series of bad business decisions. Fortunately the carriers that have survived have learned from these bad mistakes and are thriving, ie: Old Dominion, Estes, SAIA, and even ABF.
Freight Zippy
Nice to see a company live off of Yellow’s disaster. It may have been close to impossible to get terminals this quickly in so many locations.
My guess is these terminals for the first time in decades will generate profits. While Yellow owned many outright with a union workforce they still could not generate any profits.
Being a union LTL carrier is a death sentence…
Gary Mitchell
I was an ops supv for Yellow Freight at a 14 door terminal in New London, Ct. (NLO) from ‘85 to ‘92. Back then, Yellow ran a superior operation. Service was excellent, operating ratio was in mid nineties , stock price was stable and they made money with over 600 terminals in the system. The Powell family knew how to run a successful, national trucking company. The buying of Roadway on the credit card was disaster #1. Then they compounded that disaster with the purchase of USF on the credit card. That was disaster #2. I’m surprised Yellow survived as long as it did with over a billion dollars in debt . Sayanara Old Yella
Jim
33 years with yellow and was lucky enough to get into union construction.Im going to retire in 4 years at 60.Started right out of high school.42 years at 60 and out NEPF 👍
Dave Signorello
Yellow Freight was a great company. Not the YRC or Yellow/Roadway company that existed in the end. I was there for 28yrs and saw the changes first hand. When you take $ from your employees and break a contract (yes, the company didn’t hold up their end of the deal) and stop making pension payments….. things get ugly. Trying to hire people gets difficult when you can’t offer what your competitors do. Veteran Drivers
and dockworkers leave and you’re replacing them with inexperienced, underpaid and under qualified people ( for the most part…..some guys worked out). Equipment wasn’t maintained and facilities were duct taped. Top end management left and the people running things at the end only cared about their own well being and didn’t know freight. Period.
As I’ve always commented here. There’s ALWAYS enough freight to spread around. Greed kills companies and it WILL happen again. Yellow and Roadway had there time (CF, Preston….to name a few others) . I was
proud to be a part of Yellow. Who will be next? Time will tell. Maybe it’ll be your company……good luck to all truckers and dockworkers.
Brad
Good for them. They will do well.
Hope they are charging the right rates and giving better service than Yellow Corp was doing. Hope dock worker don’t destroy or damage freight like Yellow employees did.
Eric Schumacher
Need to get with your company.