2023 has been a turbulent year in the logistics industry with several well-known transportation providers and brokerages closing their doors. After 99 years in business (!!), Yellow, formerly known as YRC and one of the top 5 trucking companies in the United States, filed for bankruptcy and will be liquidating assets including roughly 12,000 trucks and numerous freight terminals. With layoffs near 30,000, Yellow’s closure has impacted thousands of shippers reliant on their services.
Shortly on the heels of Yellow, digital freight broker Convoy closed after a series of employee layoffs due to the financial pressures of the current trucking market (lower freight demand, lower revenues, and lots of capacity). Convoy executives were unable to find a buyer, likely due to being massively overvalued because of their initial hypergrowth.
Funding and capital infusions to both Convoy and Yellow, combined with the current downcycle placing added pressure on those companies, led to their closures. The previous “trucking recession” in 2019 led to the closures of other large companies such as Celadon, New England Motor Freight, and Falcon Transport. Unfortunately, the reality is that more are going to close before year end.
Closures in the logistics industry are certainly not unheard of or new. This industry is incredibly competitive, entwined with the global economy, and ripe for disruption. The barrier to entry is also very low to start a trucking company, which is why we are currently seeing a glut of driver capacity going after a smaller pool of available freight. Since supply is greater than demand, capacity correction inevitably happens and companies are driven out of the industry.
Ultimately, the companies that stand the test of time are those with robust financial management, ethical leadership, updated technology, and contingency planning. Knichel Logistics has been in business for over 20 years operating with consistent year over year growth, even during the most turbulent freight markets. Our financials include consistently strong P&L statements and a variety of ways for customers to remit payment (including online). Over the course of 2022, Knichel leadership invested over $1 million into technology upgrades companywide in order to create a better customer experience. Further technology enhancements are in the works for 2024.
The freight market changes and the economy fluctuates, but Knichel Logistics is a financially strong, customer focused logistics provider that you can count on no matter what.