Keep on truckin’
Roadblocks in the freight industry
Good morning, gear jammers. This is your Stock Market Rundown for July 31st, 2023. Thanks for joining me for another week of goofing around in capital markets. Let’s dig in:
TODAY’S TOP STORY: DIESEL DISASTER 🚛
“It’s a new day. We’ve just got to not blow it up.” So said an executive of Yellow, the third-biggest trucking company in the US, when they were handed a $700 million government bailout three years ago.
Alas, they did blow it up. Yellow is preparing to file for bankruptcy and lay off thirty thousand employees. You may be asking: how much of the $700 million gift from the US government did they pay back? The answer is $230. Not a typo. Thanks, American taxpayer!
So what went wrong at Yellow, which boasted customers like Walmart and Home Depot? Over the years, they purchased competitors in a push to add scale, but failed to fully integrate them. Too much dealmaking added onerous debt that became a noose around their corporate neck. Lesson: never trust an executive team trying to build an empire.
Despite ongoing attempts to street the business away from failure, management just couldn’t make the numbers work. Predictably, the company is pointing fingers at employees for the failure, saying their union blocked a restructuring plan. The Teamsters might’ve overplayed their hand this time—glad Jimmy Hoffa isn’t here to see this.
Whether they’re to blame or not, those employees will soon be plopping themselves behind the wheel of another Kenworth W900, because there’s a chronic truck driver shortage in the US—thanks to a 95% turnover rate. Folks who can bear 60 hour weeks and the loneliness of the open road can pull down $83K a year as long-haul truckers.
But what about autonomous trucks? Weren’t they supposed to take over America’s highways? Didn’t 60 Minutes promise driverless trucks would be “on the road by 2021”? Not so much: it’s 2023 and stuff is still getting to stores in trucks driven by real live humans.
Turns out that driving a big rig through snow, sleet and hail is rather more complicated than programming a Roomba to vacuum the living-room rug.
SO WHAT ELSE IS GOING ON?
Bitchy: the cofounder of Facebook says Tesla and SpaceX are “scams” that Elon Musk “got away with”. Maybe Elon can fight him next?
Speaking of Musk, he renamed Twitter to “X”. This is a worse corporate rebrand than when Brad’s Drink changed its name to Pepsi.
Redditors are trying to mastermind a short squeeze on Tupperware because of course they are. Forum degens with Robinhood accounts versus soccer moms: just another day on Reddit.
Wristwatches of Silicon Valley’s elite: Jack Dorsey wears a rose gold Cartier Crash, Jeff Bezos steps out in an Omega Seamaster, and Bill Gates rocks a $70 Casio Duro. My lime-green Swatch from 1995 still works great.
Surprise: a permabear thinks the S&P is going to plunge by more than half. Look, anybody who “called the 2000 and 2008 crashes” but has been bearish and wrong ever since should probably throw in the towel on forecasting. Just not your forte. How about a job in the trucking industry?
That’s it for today—see you bright and early tomorrow morning. Yours in capitalism, The Axe