NEW YORK — Troubled trucking company Yellow Corp. is shutting down and filing for 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. This is a sad day for workers and the American freight industry,” said Teamsters General President Sean M. O’Brien.
The Associated Press reached out to Yellow for comment on Monday. No bankruptcy filings were found as of the early morning.
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 99-year-old Nashville, Tennessee-based company had 30,000 employees across the country as of earlier this year.
On Wednesday, The Wall Street Journal and FreightWaves reported that Yellow was preparing for bankruptcy — with some noting that customers had already started to leave the carrier in large numbers. And the company reportedly stopped freight pickups earlier in the week.
Yellow shut down operations on Sunday, according to The Wall Street 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 — and giving Yellow “30 days to pay its bills,” notably $50 million that Yellow failed to pay the Central States Health and Welfare Fund on July 15.
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 amount of $9 million to $10 million in recent days.
According to Satish Jindel, president of transportation and logistics firm SJ Consulting, Yellow handled an average of 49,000 shipments per day in 2022. 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.”
—-
AP Business Writer Matt Ott contributed to this report.
Sourse: abcnews.go.com
