U.S. Trucking Giant Yellow Corp Comes to a Halt After Almost a Century in Operation
In a stunning turn of events, Yellow Corp, a prominent player in the trucking industry with nearly 100 years of history, has made the decision to shut down its operations. The Wall Street Journal reported that the company sent notifications to both customers and employees, marking the end of an era for the once-thriving business.
The demise of Yellow comes on the heels of avoiding a massive strike by around 22,000 Teamsters-represented workers just a few weeks ago. The company managed to pacify the situation by committing to paying over $50 million in owed worker benefits and pension accruals. Despite this effort, the writing was on the wall as Yellow faced an uphill battle against financial challenges and witnessed a considerable exodus of customers over the past decade.
Seeking to explore alternatives, the company announced plans to divest its third-party logistics division, Yellow Logistics Inc., and has engaged with numerous potential buyers. Formerly known as YRC Worldwide Inc., Yellow was once among the nation’s largest less-than-truckload carriers, employing over 30,000 individuals across the country.
FreightWaves reported that employees were informed to anticipate a filing on Monday, and the situation escalated as Yellow laid off an undisclosed number of employees on Friday, stating they were “shutting down its regular operations,” according to a company memo.
Satish Jindel, president of transportation and logistics firm SJ Consulting, revealed that in 2022, Yellow handled an average of 49,000 shipments daily. However, that number sharply declined to just 10,000 to 15,000 daily shipments recently.
Yellow’s financial struggles had become increasingly apparent, with outstanding debts amounting to roughly $1.5 billion as of late March, and a substantial portion of it, $729.2 million, owed to the federal government.
The company’s predicament has also been subject to scrutiny on the political front. Under the Trump administration in 2020, the Treasury Department granted Yellow a $700 million pandemic-era loan on national security grounds. However, a congressional investigation concluded last month that there were “missteps” in this decision. The probe also highlighted Yellow’s “precarious financial position at the time of the loan” and the continued risks it posed to taxpayers.
The government loan is scheduled for repayment in September 2024, and up until March, Yellow had only managed to repay $230 million of the principal owed, along with $54.8 million in interest payments.
Tensions between the Teamsters and Yellow have been escalating, leading to a lawsuit by the company in June. Yellow accused the union of “unjustifiably blocking” crucial restructuring plans vital for the company’s survival. In response, the Teamsters dismissed the litigation as “baseless,” with their general president, Sean O’Brien, pointing fingers at Yellow’s “decades of gross mismanagement,” which included exhausting the $700 million federal loan.