Trucking Giant Yellow Ends 99-Year Run Amid Standoff With Teamsters, Debt Woes

Truckers move shipping containers out of the Port of Long Beach, Calif., on July 13, 2022. (John Fredricks/The Epoch Times)

The U.S. trucking giant Yellow shut down operations after 99 years owing to a Teamsters union strike and a series of mergers that left it saddled with debt.

Yellow ended its services after it averted a strike earlier in July by some 22,000 drivers represented by the union in a major blow to the trucking industry.

The company notified its customers and employers on July 30, The Wall Street Journal reported.

Formerly known as YRC Worldwide Inc., Yellow was one of the nation’s largest less-than-truckload freight carriers, with approximately 30,000 employees in the United States.

The shipping firm, which was known for its cheap rates, maintained more than 12,000 trucks in the freight business across the country and shipped items for major companies such as Walmart, Home Depot, and others.

Yellow once handled an average of 49,000 shipments per day in 2022, according to Satish Jindel, president of SJ Consulting, a transportation and logistics firm, but its volume had declined to between 10,000 and 15,000 shipments per day.

Trucking Giant Faced Financial Troubles for Years

The firm’s operational shutdown comes after more than a decade of financial struggles and significant loss of customers. The company warned of bankruptcy in 2014 and in 2020.

Even after Yellow absorbed many of its rivals, won concessions from the Teamsters, and received millions of dollars from a government bailout, it still failed to provide consistent service for customers or earnings for its investors.

In 2003, Yellow bought its rival Roadway, which was also unionized, for about $1 billion in cash and stock. At the time, it was believed that a merger would make the companies become more competitive with their nonunion rivals.

However, the firm never recovered from the blow of the financial crisis of 2008–09, and the COVID-19 pandemic hit the struggling firm hard, despite its receipt of federal loans.

In 2020, the Department of the Treasury granted the company a $700 million pandemic-era loan on national security grounds; the loan comes due in September 2024.

A congressional probe in June concluded that the Treasury and Defense departments “made missteps” in granting the emergency loan, noting that Yellow’s “precarious financial position at the time of the loan, and continued struggles, expose taxpayers to a significant risk of loss.”

At the end of the first quarter of 2023, Yellow had acquired an outstanding debt of about $1.5 billion, of which $729.2 million was owed to the federal government.

The firm made only $54.8 million in interest payments and repaid just $230 million of the principal owed during that period, according to government documents.

Yellow’s financial concerns worsened this year as a plunge in shipping demand across the freight sector cut into its volumes and sent rates falling.

The firm’s cash holdings fell to about $100 million in June from $235 million in December 2022, The Wall Street Journal reported.

Dispute With Teamsters Over Restructuring Provided the Fatal Blow

The trucking firm promised that it would pay out the more than $50 million owed in worker benefits and pension accruals.

Trade publication FreightWaves reported last week that employees were told to expect the filing on July 31.

Last week, Yellow stated that it would look into divesting its third-party logistics company Yellow Logistics Inc. and was in talks to sell it to multiple interested parties.

Yellow laid off the first round of employees on July 28, according to FreightWaves, which cited a memo that stated that the company was planning to shut “down its regular operations.”

After the company made progress in restructuring its business in its western regions and in other parts of the country, it triggered a tense exchange between the Teamsters and the company.

The struggle between the Teamsters and Yellow then escalated in June, when the company sued the union, alleging that it was “unjustifiably blocking” restructuring plans needed for ensuring the company’s survival.

The Teamsters called the litigation “baseless,” and Teamster President Sean O'Brien blamed “decades of gross mismanagement” by Yellow executives for the firm’s problems.

Mr. O'Brien pointed to the alleged mismanagement of the $700 million federal loan that Yellow received during the pandemic as a sign of its leadership’s incompetence.

“Teamsters have kept this company afloat for more than a decade through billions of dollars in wage, pension, and work-rule concessions,” a union spokesman told The Wall Street Journal.

“Yellow couldn’t manage itself, and it wasn’t up to Teamsters to do it for them.”

Representatives for the Teamsters and Yellow didn’t respond to requests for comment by press time.