99-year-old trucking company Yellow shuts down, putting 30,000 out of work

[Spartan]

Yellow Corp., a 99-year-old trucking company that was once a dominant player in its field, halted operations Sunday and will lay off all 30,000 of its workers.

The unionized company has been in a battle with the Teamsters union, which represents about 22,000 drivers and dock workers at the company. Just a week ago the union canceled a threatened strike that had been prompted by the company failing to contribute to its pension and health insurance plans. The union granted the company an extra month to make the required payments.

But by midweek last week, the company had stopped picking up freight from its customers and was making deliveries only of freight already in its system, according to both the union and Satish Jindel, a trucking industry consultant.

While the union agreed not to go on strike against Yellow, it could not reach an agreement on a new contract with the trucking company, according to a memo sent to local unions Thursday by the Teamsters’ negotiating committee. The union said early Monday that it had been notified of the shutdown.

“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. This is a sad day for workers and the American freight industry,” said Teamsters President Sean O’Brien in a statement.

Company officials did not respond to numerous requests for comment Sunday and Monday.

While the company is based in Nashville, Tennessee, it is a national company with terminals and employees spread between more than 300 terminals nationwide. Experts in the field said it was primarily an unaffordable amount of debt, more than the cost of the union contract, that did in Yellow.

“The Teamsters had made a series of painful concessions that brought them close to wage parity with nonunion carriers,” said Tom Nightingale, CEO of AFS Logistics, a third-party logistics firm that places about $11 billion worth of freight annually with different trucking companies on behalf of shippers. He said the company began taking on significant amount of debt 20 years ago in order to acquire other trucking companies.

“Now their debt service is just enormous,” he said, pointing to $1.5 billion in debt on its books.

There are two other national competitors in Yellow’s segment of the trucking market which are also unionized, ABF Freight and TForce. Both were far more profitable in recent years than Yellow, which posted only a narrow operating profit in 2021 and 2022 and a $9.3 million operating loss in the first quarter.

There were reports last week that a bankruptcy filing would come by July 31, although the company said last week only that it continued to be in talks with the Teamsters and that it was considering all of its options. The Teamsters said Monday the company is filing for bankruptcy.

[hunkyfunky2]

All losses will go to creditors and banks.

Same assets and same employees will start the operations as orange trucking in few weeks/months after buying the entire company at cents on the dollar.