Cash-strapped U.S. trucking company Yellow Corp has ceased operations and is filing for bankruptcy after failing to reorganize and refinance over a billion dollars in debt, the Teamsters Union said on Sunday. Earlier this month Yellow averted a threatened strike by 22,000 Teamsters-represented workers and last week it said it was exploring opportunities to divest its third-party logistics company. The Associated Press has the story:
Yellow Corp. is ceasing operations, filing for bankruptcy
Newslooks- NEW YORK (AP)
Troubled trucking company Yellow Corp. is shutting down and headed for a bankruptcy, the Teamsters said Monday.
An official bankruptcy filing is expected any day for Yellow, after years of financial struggles and growing debt. Its expected liquidation would mark a significant shift for the U.S. transportation industry and shippers nationwide.
“Today’s news is unfortunate but not surprising. Yellow has historically proven that it could not manage itself despite billions of dollars in worker concessions and hundreds of millions in bailout funding from the federal government,” said Teamsters General President Sean M. O’Brien. “This is a sad day for workers and the American freight industry.”
Yellow did not immediately respond to The Associated Press’ requests for comment on Sunday and Monday. As of midday Monday, no bankruptcy filings from the company could be found on the Securities and Exchange Commission’s website, but the union confirmed that it had been served legal notice.
The company’s collapse arrives just three years after Yellow, formerly known as YRC Worldwide Inc., received $700 million in pandemic-era loans from the federal government. But the company was in financial trouble long before that — with industry analysts pointing to poor management and strategic decisions dating back decades.
Former Yellow customers and shippers will face higher prices as they take their business to competitors, including FedEx or ABF Freight, experts say — noting that Yellow historically offered the cheapest price points in the industry.
Yellow is one of the nation’s largest less-than-truckload carriers. The closure of the 99-year-old Nashville, Tennessee-based company risks a loss of 30,000 jobs.
Safety vests that appeared to belong to former Yellow workers were zip-tied to the fence of a closed YRC Freight terminal in St. Louis, Missouri on Monday. Names and years worked at the company were written on them.
“Ron Fisher 2017-2023 was here,” one vest read.
Reports of Yellow preparing for bankruptcy emerged last week — as the Nashville, Tennessee-based trucker saw customers leave in large numbers, per The Wall Street Journal and FreightWaves. And the company reportedly stopped freight pickups earlier in the week.
Yellow shut down operations on Sunday, according to The Journal, following the layoffs of hundreds of nonunion employees on Friday.
The bankruptcy preparation reports arrived just days after Yellow averted a strike from the Teamsters, which represents Yellow’s 22,000 unionized workers, amid heated contract negotiations. On July 23, a pension fund agreed to extend health benefits for workers at two Yellow Corp. operating companies, avoiding a planned walkout. The fund gave Yellow “30 days to pay its bills,” notably $50 million that Yellow failed to pay the Central States Health and Welfare Fund earlier in the month.
Yellow has racked up hefty bills over the years. As of late March, Yellow had an outstanding debt of about $1.5 billion. Of that, $729.2 million was owed to the federal government.
In 2020, under the Trump administration, the Treasury Department granted the company a $700 million pandemic-era loan on national security grounds. Last month, a congressional probe concluded that the Treasury and Defense departments “made missteps” in this decision — and noted that Yellow’s “precarious financial position at the time of the loan, and continued struggles, expose taxpayers to a significant risk of loss.”
The government loan is due in September 2024. As of March, Yellow had made $54.8 million in interest payments and repaid just $230 million of the principal owed, according to government documents.
The current financial chaos at Yellow “is probably two decades in the making,” said Stifel research director Bruce Chan, pointing to poor management and strategic decisions dating back to the early 2000s. “At this point, after each party has bailed them out so many times, there is a limited appetite to do that anymore.”
A Wednesday investors note from financial service firm Stephens estimated that Yellow was burning daily amounts of $9 million to $10 million in recent days.
Yellow handled an average of 49,000 shipments per day in 2022 according to Satish Jindel, president of transportation and logistics firm SJ Consulting. On Friday, he estimated that number was down to between 10,000 and 15,000 daily shipments.
Yellow’s prices have historically been the cheapest compared to other carriers, Jindel said. “That’s why they obviously were not making money,” he added. “And while there is capacity with the other LTL carriers to handle the diversions from Yellow, it will come at a high price for (current shippers and customers) of Yellow.”
