The US trucking industry recently bid adieu to one of the sector’s oldest firms – Yellow. On the heels of turning 100, Yellow shut down in July and at the time was the third-largest US carrier in the less-than-truckload (LTL) market. LTL firms like Yellow work with terminal networks to haul in freight pallets, transfer the merchandise onto trailers, and push the products out to their final destinations.
Terminals are highly valued as they are generally close to cities to help speed the delivery process to regional businesses. Yellow owned a network of approximately 170 terminals, estimated to be worth roughly $1.5 billion. As the nearly 100-year-old behemoth was dismantled, a host of rivals lined up to consider the purchase of said terminals. Rival trucker Estes Express Lines came in with an initial offer of $1.3 billion. Old Dominion Freight Line followed with $1.5 billion.
A bankruptcy court-supervised auction is slated for October 18th. While Old Dominion is the likely buyer there will be plenty of bids from rival trucking firms as well as the industrial real-estate sector. The sheer quantity of ready-to-operate facilities that will be available is quite rare. Trucking terminals are expensive to build and the space, especially in large cities, is scant.
Earlier this summer Yellow sold a Compton, California single terminal for $80 million. The terminal was situated in a high-demand area – close to two of the country’s busiest seaports as well as Los Angeles City. The hefty price tag had to do with the population density. Terminals in less densely populated areas are much cheaper.
Yellow will be seeking to repay its largest creditors. One of those is the US government to the tune of approximately $700 million. Yellow holds $1.92 billion in total liabilities and the company’s lawyers have let the bankruptcy courts know that they expect to raise the funds necessary to repay all creditors. The rumored real estate value of Yellow’s portfolio is $1.1 billion coupled with $900 million worth of trucks (11,700) and trailers (36,000).
It is more than likely that one buyer ends up with all the terminals. Yellow will want to find the quickest and easiest transaction as opposed to negotiating with smaller, regional carriers on separate terminals. Some industry analysts are not confident Yellow will receive the appraised value of its equipment. Yellow’s fleet of newer trucks could go for as much as $100,000 but the models with high mileage will see suppressed offers. Used trailer and truck values skyrocketed during the pandemic but lagging freight volumes have suppressed the demand for trucks since midway through 2022.
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