Less-than-truckload carrier Yellow Corp. saw tonnage turn positive in February for the first time since May 2021. However, depressed comps from a year ago were the primary catalyst.
Yellow’s (NASDAQ: YELL) February tonnage increased 1.3% year over year (y/y), but that was compared to a comp of down 27.4% in February 2022. January tonnage was down 17.2% y/y, following a decline of 15.9% in January 2022.
Shipment counts in each month were off by more pronounced percentages, with the gap to the reported tonnage declines being closed by increases in weight per shipment.
Stacking the monthly comps for the last two years showed Yellow’s tonnage was down 33.1% in January and off 26.1% in February. By comparison, two-year stacked comps for LTL competitors like Old Dominion (NASDAQ: ODFL) and Saia (NASDAQ: SAIA) range from flat to up low-double-digit percentages for the same months.
The massive declines are part of a companywide restructuring wherein Yellow is consolidating its separate operating brands onto the same platform and closing redundant terminals.
The last phase of the overhaul, which seeks operational changes across approximately 70% of the network, was met with resistance from Teamsters, forcing the company to make revisions. Yellow remains hopeful for implementation of the changes no later than April 30.
The end goal is to improve fluidity, lower operating costs and increase yields on the freight the company hauls.
While the carrier has lost almost one-third of its volumes in the process, a nadir may be in sight. Tonnage per day was up 0.5% sequentially from January to February.
Yellow’s revenue per hundredweight, or yield, was up 12.9% y/y in January and 1.4% in February. Both months faced formidable comps to the prior year, with February 2022 seeing yield climb 33.8%.
On a two-year stacked comp, Yellow’s yields (up 38% in January and 35.2% in February) have outpaced the industry significantly, roughly 8 percentage points higher than the closest competitor. However, overall revenue growth for the company has lagged.
Yellow’s revenue per hundredweight in February was flat with January.
Yellow normally books a tonnage decline of approximately 3% from the fourth to the first quarter. On a quarterly call with analysts a month ago, management said it was hopeful to outperform that seasonal change rate. However, management was less constructive on outrunning seasonal changes to the operating ratio, which normally deteriorates 200 basis points over that period.
Yellow booked a 96.6% OR in the fourth quarter, 99% excluding gains on real estate disposals.
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