Yellow is set to auction off its real estate and equipment assets this fall following the collapse of the business, but experts say the company may have trouble getting rid of trucks and trailers in today’s market.
Yellow’s network of approximately 170 truck terminals has already received multiple bids in the wake of the company’s bankruptcy filing – $1.3 billion from Estes Express Lines, and later $1.5 billion from Old Dominion Freight Line. An official, bankruptcy court-supervised auction for Yellow’s properties and equipment will be held on October 18th, but both bids have already surpassed the estimated value of the properties as designated by Yellow in its bankruptcy filing.
“There is a tremendous amount of interest in those assets,” said Paul Svindland, chief executive of Bensenville, Ill.-based logistics provider STG Logistics, to Wall Street Journal.
Lawyer’s working for Yellow have said that the company expects the sale of its assets to cover its debts to creditors. The company has estimated the value of their real estate holding at $1.1billion and its 11,700 trucks and 36,000 trailers at $900 million.
Mike Barker, an executive vice president of real-estate services firm CBRE, believes that the large company that acquires Yellow’s vast portfolio of trucking terminals will likely sell off some of the properties that don’t quite meet their needs. This could give smaller trucking companies a chance to capitalize on the newly available real estate as the construction of trucking terminals grows more difficult due to lack of space and concern over noise and pollution.
“Especially in the Northeast it’s become a huge challenge for LTL companies to acquire terminals and more importantly terminals that have the right dynamics,” said Brett Demmers, chief operating officer at Accurate Transport. “We are still very much aggressively participating in the bid.”
“There’s a handful of really desirable large sites that would be very attractive,” Barker added.
Although Yellow is depending on the sale of its real estate and equipment in order to repay debt, experts in the industry say that auctioning off their trucks and trailers will likely be far more difficult than selling off their terminals due to a reduction in freight demand post-pandemic. While the real estate seems as if it will sell for a higher than estimated value, the tractors and trailers are expected to sell for less than Yellow estimated in bankruptcy documents.
“For the most part, there isn’t a lot of demand for that equipment,” said Avery Vise, a trucking analyst at FTR Transportation Intelligence. “The real jewel of the crown is the real estate.”