The collapse of Consolidated Freightways gives other struggling trucking companies an opportunity to gain market share and raise prices at a time of soft demand.
Shares of several large rivals made double-digit percentage gains as investors bet they would pick up much of the business left behind by Vancouver, Wash.-based Consolidated, which abruptly shut down Tuesday.
"This is a sea change for our industry," said Bill Zollars, chief executive of Overland Park, Kan.-based Yellow Corp.
Yellow is among the biggest players now vying for business once belonging to Consolidated, which had $2 billion in revenue in 2001 and controlled about 15 percent of the domestic long-haul market.
"We've gotten hundreds of phone calls today from companies that would like us to be their provider and I'm sure that's going on all over the industry," said Zollars, who declined to name any of the new customers.
Consolidated's clientele included Home Depot, the U.S. Postal Service and General Electric and analysts said these companies are likely to face some delivery snags over the next 2 or 3 days.
Because Consolidated's financial troubles were well-known in the industry, many companies had already been making contingency plans and analysts emphasized that disruptions would be limited.
Consolidated, which had been losing money for more than two years, announced plans Monday to file for Chapter 11 bankruptcy and liquidate assets, resulting in 15,500 lost jobs.
The company's demise is expected to bring huge benefits to Arkansas Best, Roadway, Yellow and other leaders in the so-called "less-than-truckload" sector.
Less-than-truckload carriers fill trailers with freight from multiple customers and move it around the country through a hub-and-spoke system. Truckload carriers dedicate entire trailers to one customer and haul their goods from point to point.
On the Nasdaq Stock Market on Tuesday, shares of Arkansas Best soared $5.09, or 25 percent, to $25.67. Shares of Roadway shot up $3.64, or 15 percent, to $27.24 and Yellow's stock price climbed $2.77, 12 percent, to $25.06.
Analysts said these and other less-than-truckload companies will now be able to divvy up 2.3 million tons of freight and raise their rates.
Thomas Albrecht, a trucking analyst at BB&T Capital Markets in Richmond, Va., said the survivors' yields could improve by about 5 percent for the next 2 to 3 years and possibly usher in "a new golden era" for the troubled sector.
Thousands of small- and mid-sized truckload carriers went out of business over the past two years because of the economic downturn, taking hundreds of thousands of trailers off the road. That gave a boost to industry leaders such as J.B. Hunt Transport Services Inc. and Knight Transportation Inc., which have grown and even raised rates despite weak demand.
Now it is the less-than-truckload companies' turn.
Freight tonnage grew 3.5 percent during the second quarter, and the American Trucking Associations predicts "sluggish growth" for the remainder of the year. But analysts now say even modest growth will be multiplied thanks to the significant decline in capacity in the less-than-truckload sector.
Too much supply and not enough demand has been the industry's basic problem.
James Valentine, trucking analyst at Morgan Stanley in Chicago, said truckload carriers will see little, if any, benefit as a result of Consolidated's bankruptcy, which he called the largest in U.S. history among trucking companies.
But thousands of regional carriers, which haul freight over shorter distances, stand to prosper from the disappearance of Consolidated, said Harvey Donaldson, director of the Logistics Institute at Georgia Tech University.
"We're right in the middle to end of the Christmas rush as far as retail shipments are concerned," Donaldson said. "But there is sufficient capacity to absorb Consolidated's business."
Roadway, which has suffered from many of the same economic conditions that led to Consolidated's closing, believes the timing is now right to turn its own business around.
"We have a lot of mutual customers," Akron, Ohio-based Roadway president James Staley said. "Hopefully, some of that business will shift to us."