Yellow CEO Blames Teamsters ‘Bullying’ as Trucking Giant Files for Bankruptcy
After nearly a century in business and just three months after receiving $700 million in pandemic relief funds from the federal government, less-than-truckload (LTL) company Yellow has filed for bankruptcy.
The company shutdown operations on July 30, after negotiations with the Teamsters union broke down. Yellow’s Chapter 11 bankruptcy—which was filed in the U.S. Bankruptcy Court of Delaware—outlines the company’s planned operational wind-do“It is with profound disappointment that Yellow announces that it is closing after nearly 100 years in business,” Yellow CEO Darren Hawkins said in a statement. “Today, it is not common for someone to work at one company for 20, 30, or even 40 years, yet many at Yellow did. For generations, Yellow provided hundreds of thousands of Americans with solid, good-paying jobs and fulfilling careers.”
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Yellow’s closure is expected to leave around 30,000 employees, 22,000 of whom are represented by the Teamsters, without a job. The filing will allow the company and its subsidiaries to operate as debtors-in-possession, and included several motions to seek authority from the bankruptcy court to honor financial obligations, including employee wages and benefits, as well as outstanding vendor bills.
In a statement posted on Yellow’s website, Hawkins blamed the Teamsters for contributing to the company’s demise.
“All workers and employers should take note of our experience with the International Brotherhood of Teamsters (IBT) and worry,” Hawkins said. “We faced nine months of union intransigence, bullying and deliberately destructive tactics. A company has the right to manage its own operations, but as we have experienced, IBT leadership was able to halt our business plan, literally driving our company out of business, despite every effort to work with them.”
In late June, Yellow filed a $137.3 million lawsuit against the Teamsters union in a Kansas federal district court, alleging the union prevented the company from implementing its One Yellow turnaround plan, which would have consolidated its four individual trucking firms.
After Yellow was unable to make $50 million in pension and benefits payments, the Teamsters threatened a strike, only backing off after the company said it would pay by August.
“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. This is a sad day for workers and the American freight industry,” Teamsters General President Sean M. O’Brien said after Yellow’s July 31 shutdown.
At the end of June, Yellow had more than $100 million in cash, a paltry sum compared to its $1.5 million in debt, including $730 owed to the U.S. government. Yellow received a $700 million Paycheck Protection Program (PPP) loan in 2020 during the Covid-19 pandemic. According to a U.S. Department of Treasury audit, the company has paid around $66 million in interest on the loan, but has only paid $230 million toward the principal on the loan, which is due in 2024. As part of the loan, the federal government assumed a 30 percent equity stake in Yellow.
Yellow reported having around $39 million in accessible funds, which it said would not be sufficient to support its wind-down.
According to court documents, Yellow plans to sell “all or substantially all” of its assets. Some of those assets include a 3PL wing it put up for sale in July, as well as a network of 317 terminals. The company estimated in court documents that it has more than 100,000 creditors along with more than $1 billion in liabilities. Some of its largest unsecured creditors include Amazon, which is owed more than $2 million, and Home Depot, which claimed nearly $1.7 million.
Yellow has a roughly 8.9 percent share of U.S. revenue and 6.8 percent of shipments, according to logistics and transportation consultancy SJ Consulting. Disruptions are expected to be felt in the short term as Yellow’s freight partners seek new providers.
“The industry is well positioned to pick up about 6.8 percent share of U.S. shipments, or some 48,000 a day since most carriers are running with slack capacity,” Lee Klaskow, senior freight transportation and logistics analyst at Bloomberg Intelligence, told Sourcing Journal in July. “Carriers can be selective about which freight they accept, and the market consolidation should provide them with pricing power.”
