Zollars Sees More Consolidation After CF Collapse

The bankruptcy of Consolidated Freightways amounts to a “sea change” for the less-than-truckload freight business that will bring greater yields but demonstrates the need for still more consolidation, the chairman of Yellow Corp. said Tuesday.

In interviews with CNN-FN and Bloomberg News’ Forum, Bill Zollars said: “Any time you take $2 billion worth of capacity out of the industry it has a tremendous impact on the industry.”

Zollars called the CF bankruptcy a “classic case of too much capacity,” pointing out most major industries that have gone through a post-deregulation phase have had to consolidate.

“In our case,” he said, “of the 30 top trucking companies in our industry during the beginning of consolidation, there are only four left.”

And, he said, there is more to come.

“If you just look at the history of other industries I think we've got a little bit more consolidating to do before supply and demand comes into good balance."

At that, he said the profits in LTL freight sector should improve.

"I think that any time you take out this much capacity, the laws of supply and demand work pretty effectively. So, I would expect the yield will improve in this business as a result of the reduction in capacity,” Zollars said in the Bloomberg interview.

Zollars said situation will evolve over the next weeks and months, as the market reaches a new equilibrium.

“But it is going to take some time for that to sort itself out,” he said.

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