Yellow Corp. may not have been the first name you thought of when you thought about trucking companies, but chances are you’ve seen its trucks on the road. The (inexplicably) orange and black logos have been a fixture on America’s highways for nearly a century, but as of Sunday, the 99-year-old trucking company ceased operations and filed for bankruptcy on Monday.
The company laid off most of its non-union workforce on Friday and stopped picking up new loads earlier last week. It placed notices at all of its terminals over the weekend.
“Separate internal documents showed the procedures for closing the facilities as well as ‘talking points’ to be used when informing union employees not to show up for their shifts. The documents indicated the company plans to issue a public statement Monday updating ‘the state of the company and the operation,’” Freightwaves reports.
No public statement appeared on Yellow’s website or on any of its social media platforms as of the writing of this article. Representatives of the company did not respond to a request for comment from PJ Media (however, we will update this article if we do receive a comment).
The end of Yellow Corp. (at least as we know it) comes after weeks of back-and-forth negotiations with the Teamsters union, after which both parties avoided a strike while still reaching an impasse on any agreement. In the ongoing negotiations with the union, “the carrier has been unable to reach terms over proposed operational changes it has said were required for its survival,” as Freightwaves explains.
“The Teamsters had made a series of painful concessions that brought them close to wage parity with nonunion carriers,” Tom Nightingale, CEO of third-party logistics firm AFS Logistics, told CNN Business. “Now [Yellow’s] debt service is just enormous.”
Related: UPS Could Take a Huge Hit if Its Drivers Go on Strike
Yellow filed a breach-of-contract lawsuit last month against the Teamsters, and documents revealed that the company expected to be out of money by mid-July. “We do not take this action lightly, but the Union’s leadership has left us with no choice,” Yellow’s management stated in a press release at the time. “For many months, we have made good faith efforts to meet with the IBT to propose a path forward that works for all parties, but they refuse even to meet, let alone engage in honest talks.”
“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 President Sean O’Brien in a statement. “This is a sad day for workers and the American freight industry.”
It’s an easy temptation to look at Yellow’s fate and conclude that the company is a victim of “Bidenomics,” and to an extent, that may be true. The Biden administration has done nothing to ease the burden on America’s supply chain, and the general economic woes that all of us are facing have much to do with the Democrats’ policies.
But many of the problems that plagued Yellow are the company’s own fault. For many years, Yellow positioned itself as a carrier with lower rates than its competition, and its less-than-truckload (LTT) model allowed drivers to carry loads for more than one client at a time. Unfortunately, that strategy didn’t prove sustainable in a changing 21st-century marketplace.
Over the years, Yellow gobbled up many of its competitors in ambitious mergers, which also meant taking on the debt that those companies had incurred. Government largesse during the pandemic may have been one of the straws that broke Yellow’s back, however. The carrier took on a $700 million COVID-19 rescue loan from the federal government in 2020, and as a result, the government owns roughly 30% of Yellow’s rapidly declining stock.
“It’s an incredibly sad situation because there’s the potential that this company that was about to celebrate its 100-year anniversary next year may not be around,” board member Chris Sultemeier told the Wall Street Journal.
What’s next? Yellow’s 30,000 employees are out of a job, and customers are scrambling to find another carrier. Consumers could also feel the ripples from Yellow’s plight — and not just because taxpayers are holding the bag for that COVID loan.
“Yellow Freight’s shutdown could lead to decreased capacity in the freight industry,” writes analyst Cheryl Tibbs. “This could mean longer lead times, potential delivery delays, and increased costs — all of which could be passed on to the consumer.” Tibbs does point out the bright side of opportunities for other carriers to step up and fill the void.
Yellow has learned the hard lessons of capitalism, and as a result, it’s sad to think that a carrier that’s been around since the Coolidge administration may be out of business. Hopefully, other companies can learn from Yellow’s mistakes.
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