Title: Yellow Trucking Company to Cease Operations and File for Bankruptcy
Subtitle: The Bankruptcy of Yellow Could Bring Major Changes to US Transport Sector
By Wyatte Grantham-Philips — The Associated Press
The Yellow trucking company has announced its decision to shut down its operations and file for bankruptcy, according to a report released by the Teamsters union on Monday. The company’s long-standing financial difficulties and growing debt burden have forced it to make this unfortunate move, and it is expected to officially declare bankruptcy in the coming hours. The liquidation of Yellow could have far-reaching consequences for the American transport industry, leaving thousands of workers jobless, who have already been grappling with reduced rates following the pandemic’s impact.
Teamsters President Sean M. O’Brien expressed his disappointment, stating, “Today’s news is unfortunate but not surprising. Yellow has historically shown that it could not be managed despite billions of dollars in concessions to workers and hundreds of millions in bailout funds from the federal government. It is a sad day for workers and the freight industry.”
Yellow, previously known as YRC Worldwide, Inc., received $700 million in federal loans just three years ago. However, the company had been grappling with financial issues for an extended period before that. Analysts consulted by The Associated Press attribute these problems to poor management and strategic decisions that span decades.
Experts predict that Yellow’s bankruptcy will lead to price hikes for its customers and carriers, such as FedEx and ABF Freight, who will now have to turn to competitors. Yellow was historically known for offering the lowest prices in the industry. Thus, this development will require businesses to adjust their transportation budgets.
As one of the largest break-bulk carriers in the United States, Yellow’s closure will impact countless employees across the nation. As of the beginning of this year, the Nashville, Tennessee-based company had a workforce of 30,000.
Reports from The Wall Street Journal indicate that Yellow had been preparing for bankruptcy, and some customers had already migrated to other carriers. The company ceased collecting goods at the start of the week and officially closed its operations on Sunday. Prior to the shutdown, Yellow had laid off numerous non-union employees. Additionally, it narrowly avoided a strike by unionized Teamsters workers after resolving contract negotiations.
In July, Yellow faced further challenges when a pension fund granted an extension of health benefits to its workers. This move prevented a strike but set a 30-day deadline for the company to pay outstanding bills, including $50 million it owed the Central States Health and Welfare Fund.
With a debt of approximately $1.5 billion as of March, including $729.2 million owed to the federal government, Yellow’s financial woes attracted attention. In 2020, the company received a $700 million loan from the Trump administration, citing national security reasons. A recent congressional investigation suggested that mistakes were made in approving the loan, as Yellow’s precarious financial condition and ongoing conflicts put taxpayers at significant risk.
Financial services firm Stephens estimated that Yellow was losing $9 million to $10 million per day in the past few days, while Bruce Chan, director of research at Stifel, attributed the company’s financial chaos to mismanagement and strategic decisions made over the past two decades.
Transportation and logistics expert Satish Jindel revealed that Yellow handled around 49,000 daily shipments in 2022. However, that number plummeted to just 10,000 to 15,000 shipments per day by Friday. Jindel noted that historically, Yellow had the lowest prices in the market. Therefore, the closure of Yellow will likely result in significant price increases for its current customers and operators.
As Yellow files for bankruptcy, the repercussions are expected to impact the entire transport industry in the United States. With the demise of a long-standing player, businesses and workers will need to adapt to a shifting landscape.
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