Freight Recession Hits C.H. Robinson, Yellow (YRC Freight), and Surge Transportation
The third largest US trucking company Yellow (YRC Freight), and Surge Transportation recently declared bankruptcy, while C.H. Robinson’s Q2 Profit fell 72%: Here’s what it means for shippers and transporters with commentary from Freightera CEO Eric Beckwitt
Recent developments have sent ripples through the entire freight industry. Yellow, a $5.2 billion freight giant that has been in operation for almost a century, and Surge Transportation, a digital freight brokerage with $200 million in revenue in 2022, have filed for bankruptcy. Yellow assets are being liquidated, so it seems they are down for good. C.H. Robinson is one of the world’s largest logistics platforms, with $30 billion in freight under management and 2022 total revenues of $24.7 billion. Yet, according to the Wall Street Journal, their Q2-2023 profit fell 72% versus the previous year, and revenue fell 35%.
Freightera’s core automated division, meanwhile, grew profit by 155% YOY in Q2-2023, while reducing freight costs to shippers, increasing operating efficiency, and cutting greenhouse gas emissions by 20-50% for many firms. Freightera has been profitable since Q1-2023, making it one of the few freight automation startups to achieve profitability, according to unaudited management statements provided by the firm.
These events have sparked discussions about the broader implications for shippers, carriers, and the freight landscape at large.
Yellow Corp: A giant is stepping down
Yellow Corp, formerly known as YRC Worldwide, stood as one of the leading U.S. trucking companies specializing in the less-than-truckload (LTL) segment.
With a history spanning nearly a century, Yellow faced insurmountable financial challenges, leading to its decision to halt operations and file for bankruptcy. The International Brotherhood of Teamsters, the labor union representing many of Yellow’s workers, confirmed the company’s closure, and the company’s assets are being liquidated.
It’s no secret that Yellow Transportation has been having issues refinancing in order to start paying off their hefty 1BN$+ of debt.
Despite receiving worker concessions and bailout funding, Yellow’s inability to navigate through its financial burdens ultimately led to this unfortunate outcome. This announcement has raised concerns about the well-being of the American freight industry and the fate of its employees.
Our CEO, Eric Beckwitt had the following to say about Yellow’s predicament: “The sentiment in the industry is very unfavorable. Yellow should have failed years ago. They were operating below cost with substandard service and were just dragging the whole industry down.”
Surge Transportation: Likely to return
On the other side, Surge Transportation, a digital freight brokerage, also faced a similar fate as it filed for Chapter 11 bankruptcy protection. While Chapter 7 means that a business is shutting its doors permanently and will be liquidating its assets with the proceeds going to its creditors, Chapter 11 allows the company to restructure its debts while continuing with operations. Surge has presented a plan to pay off its debts which should bode well for their future, if everything goes to plan.
Surge’s journey took an unexpected turn after experiencing significant growth during the COVID-19 pandemic. However, a rapid decline in online orders following the lifting of pandemic-related restrictions caught Surge off guard.
The company’s attempts to find a buyer and the strategic decision to cut rates to maintain volume resulted in eroded profit margins.
The Chapter 11filing by Surge Transportation highlights the need for adaptability in the ever-changing freight landscape. The challenges faced by digital platforms underscore the importance of resilience, strategic planning, and a thorough understanding of market dynamics.
Eric Beckwitt commented on Surge’s Chapter 11 filing as follows: “They are not yet out and will probably come back. Lessons learned for other online freight brokerages and platforms: be lean, nimble, and get profitable and sustainable as if your life depends on it, because it does.”
Impact on the Freight Shipping Industry
The bankruptcy of Yellow Corp and Surge Transportation, and the rapid decline of C.H. Robinson’s profit and revenue, have shaken the freight shipping industry, leading to opportunities as well as disruptions. Shippers and carriers are facing uncertainty as they navigate a landscape with diminished capacity and disrupted supply chains. Simultaneously, numerous opportunities for offering better services (carriers) and discovering better shipping solutions (shippers) are available. As some doors have closed, new ones have opened.
Are you affected by this development? Looking for affordable carriers in Canada, the USA, and cross-border? Are you looking for comprehensive technology-enabled solutions for shipping freight?
Freightera’s innovative freight marketplace offers a reliable digital platform with instant freight shipping quotes from 100s of reliable carriers. You can create a free account for your business and be approved to ship in a couple of minutes and get all-inclusive current rates ready to book online in just 15 seconds. Our award-winning platform has a stellar customer service reputation and comes with automation of shipping labels, BOLs, POs, and invoices. It provides easy access to order history, online tracking, and customs forms, offers cross-border and NMFC assistance, as well as a Rate Defence™ policy to protect shippers from unfair surprise charges by carriers.
Diversification is critical to having reliability and to minimizing supply-chain disruptions. Our focus remains on supporting shippers and carriers alike in navigating these challenging times by ensuring simple and reliable freight shipping solutions for customers, as well as a smooth and reliable experience for large carriers and owner-operators.
The recent closures of Yellow Corp and Surge Transportation serve as poignant reminders of the challenges and opportunities within the freight shipping industry. These events underline the importance of adaptability, financial sustainability, and strategic foresight for both shippers and carriers. As the industry evolves, Freightera remains dedicated to facilitating a seamless and sustainable freight experience for all parties.