News / Saia set for $1bn expansion as LTL market feeds on Yellow carcass

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The combination of relatively stable market conditions and the gap left by the demise of Yellow is turbo-charging the expansion drives of a rising number of US LTL carriers.

After XPO and Knight-Swift signalled aggressive expansion after their buying sprees of Yellow terminals and leases, Saia has unveiled plans to spend $1bn in capex this year, including buying 17 Yellow terminals outright and acquiring leases on a further 11.

This outlay will account for about a quarter of this year’s spend, with about $300n planned for real estate and $400m to $450m on equipment.

This may auger a drive to get hold of a good-sized chunk of Yellow’s tractors and trailers when they go on the block later this year. Faced with a rise of up to 20% in demand in the wake of Yellow’s collapse last year, Saia has had to rent tractors and trailers to cope.

Another $50m has been earmarked for investment in technology – chiefly handheld devices for drivers, IT upgrades and to beef up security at terminals.

“Saia will approach record levels of capital investment in 2024, but at no time in the company’s 100-year history have we had a similar opportunity,” CEO Fritz Holzgreve said in the carrier’s earnings call with analysts.

Carriers have gorged themselves on the carcass of Yellow. Top executives of ArcBest and XPO have described its collapse and the ensuing availability of its terminals and other assets as a once-in-a-lifetime opportunity to turbo-charge their networks and growth potential.

XPO CEO Mario Harik referred to the Yellow terminals added to his company’s footprint as the “crown jewels” of the Yellow network.

XPO, which has spent $870m on Yellow terminals, was one of the first out of the blocks, back in December, to beef up its footprint via its failed competitor, while Knight-Swift jumped at the opportunity to turbo-charge its quest to set up a nationwide LTL operation. Having scooped up 13 Yellow terminals plus leases on two more in the first auction, it took on 10 more leased buildings in another round this month.

Knight-Swift CEO and president Dave Jackson said the target was to have the full network in place by the end of next year.

Estes Express has forked out about $285m on Yellow facilities, with a sizeable chunk – those in Burlington, Buffalo and Detroit and Tacoma – aimed squarely at the US-Canada cross-border market, where management sees a promising opportunity to expand.

ArcBest has been less gung-ho, spending just $30m on Yellow facilities in Des Moines, Columbus and Springdale, and another $7.6m on a lease in Bethlehem, Pennsylvania.

Few of the large LTL players have resisted the siren call of Yellow’s shuttered terminal network. One notable exception is Old Dominion Freight Line, which, although it had put down a $1.5bn stalking horse bid in the run-up to the Yellow auction, did not buy in the end. CFO Adam Satterfield cited high costs as the main reason.

Meanwhile, Fast week Flexport launched its Convoy platform from the carcass of the trucking platform start-up. It acquired the technology from Convoy and took on its co-founder and CEO, Dan Lewis, and just a handful of the 500 or so staff laid off when Convoy went under. Flexport claimed it had brought back some of Convoy’s customers and dispatched almost 200 full truckloads on day one. But Flexport has also had to cut staff in recent months.