Yellow’s Hawkins dismisses LTL merger rumors with a no-way, no-how response

There will be no merger, acquisition or combination of any sort involving Yellow Corp. and any of its rival less-than-truckload (LTL) carriers.

That’s the final word on that from none other than Yellow CEO Darren Hawkins, who says he has enough going on within his $5 billion company.

The subject arose during a conference call with analysts following release of Yellow’s fourth-quarter earnings.

One of the analysts, Jack Atkins of Stephens Inc., inquired whether Hawkins was interested in merging with any other unionized LTL carrier. The issue popped up during Montreal-based TFI International’s similar earnings call. TFI now owns the former UPS Freight unit, now known as T-Force Freight, which formerly was called Overnite Transportation.

Atkins asked whether Hawkins was interested in finding ways to “collaborate with other unionized carriers in a way to reduce costs, improve efficiency, improve density, that sort of thing.”

Hawkins was emphatic, if nothing else, in his no-way, no-how response.

“I’ve been working with four companies under the Yellow umbrella for the last five years,” Hawkins said, referring to three regional LTL carriers (New Penn, Holland and Reddaway and long-haul carrier YRC Freight) which are being merged under the “One Yellow” consolidation that is ongoing. So we’re well down the road on a lot of that discussion just right here at home with the companies that were part of (Yellow). And it’s been a multiyear transformation for us. We’re in the final year [of] that and we’re just terribly excited about what’s going on at Yellow. I don’t really have any input for those competitor comments. But we’ve had four companies that we’re working through, and we’re proud of what we’re (building) here.”

Hawkins went on to say he’s “bullish on America and bullish on LTL” because of the high barriers to entry in building expensive hub-and-spoke networks. There is also pricing power in the $83 billion LTL industry that does not exist elsewhere in trucking.

For instance, according to figures supplied by SJ Consulting, the top 25 carriers in the LTL market have a 90% market share of the industry revenue.

By comparison, in the highly fractured $332 billion truckload market, the top 25 TL carriers have about $31 billion revenue, or less than 10% market share.

“I think the reason so many people are interested in LTL is the barriers to entry are so high,” Hawkins said on the earnings call. “Everyone who follows and is part of the industry is aware of (that). We’ve just simply got a real estate portfolio that cannot be replicated.”

Yellow will celebrate its centennial anniversary next year. Hawkins said the expected economic rebound combined with pent-up demand next year for LTL freight services should make 2024 a banner year.

“We’ve got tremendous opportunity right here in front of us at Yellow, and that’s what we’re wholly focused on,” Hawkins said. “And looking forward to what 2023 is going to bring, especially after the nice progress we had in 2022 of delivering improvements that we hadn’t seen in over 16 years. So it’s just exciting time to be at Yellow.”

TFI International recently revealed that the Montreal-based transport conglomerate held a 4% stake, or a little more than 1 million shares, in ArcBest Corp., the nation’s seventh-largest LTL carrier.    

Alain Bédard, TFI’s chairman, president and CEO, did not discuss the possibility of any type of deal other than to say that TFI would like to explore mutually beneficial operating opportunities.

“There are some things that we could work together and improve over time,” Bedard said on his earnings call.

That may very well be. It’s just that any of those work-together items will not include Yellow.