Transportation firm Yellow Corp. files for bankruptcy after years of financial troubles

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NEW YORK (AP) — The Yellow Corp. trucking company has filed for bankruptcy after years of financial troubles and mounting debt, news that would have consequences for the U.S. trucking industry.

The bankruptcy filing, filed Sunday, came just three years after the firm received $700 million in pandemic-related loans from the federal government. But the company had been in financial trouble long before, which industry analysts blamed on decades of mismanagement and strategic decisions.

Yellow’s former customers would face higher prices at rival carriers such as FedEx or ABF Freight, according to experts, who noted that Yellow traditionally offered the lowest prices in the industry.

“It is with deep disappointment that Yellow announces its closure after nearly 100 years in business,” CEO Darren Hawkins said in a press release Sunday evening. “For generations, Yellow has provided rewarding, strong, and well-paying careers to thousands of Americans.”

Yellow, formerly known as YRC Worldwide Inc., is one of the largest medium-capacity trucking companies in the country. The Nashville, Tennessee-based firm had 30,000 employees nationwide.

The Teamsters, the organization that represents the firm’s 22,000 unionized workers, said last week that the company had suspended operations at the end of July after laying off hundreds of non-union employees.

Yellow had narrowly avoided a strike after tense contract negotiations. The firm attributed the end of the company to those nine months of negotiations, stating that in that period it had not been able to establish a new business plan to modernize operations and become more competitive.

The company said it has asked the federal bankruptcy court in Delaware for authorization to make more payments that would include employee wages and benefits, taxes and essential vendors.

Yellow had accumulated considerable debt. Last March they amounted to 1,500 million dollars, of which 729.2 million were owed to the federal government.

In 2020, during the Trump administration, the Treasury Department granted the company a $700 million pandemic-related loan for national security reasons.

A congressional inquiry recently concluded that the Defense and Treasury departments “erred” in that decision, given the company’s “precarious financial condition,” which had “exposed taxpayers to substantial risk of loss.”

The financial chaos at Yellow “has probably built up over two decades,” said Stifel research director Bruce Chan, citing poor management and strategic decisions dating back to the early 2000s. “Right now, after being bailed out so many times by all parties, there is limited interest in doing it again.”