In a major blow to the U.S. trucking industry, Yellow shut down on Sunday, abruptly closing down its operations and leaving approximately 30,000 workers without jobs.
According to The Wall Street Journal, this closure represents the largest loss of jobs and revenue in the country’s trucking sector.
Yellow, known for its competitive pricing and a fleet of over 12,000 trucks delivering freight for prominent brands such as Walmart and Home Depot, has been struggling with mounting debts in recent years — $1.5 billion as of late March.
The company had sought federal assistance during the pandemic, receiving $700 million in COVID relief funds in 2020.
Learn the benefits of becoming a Valuetainment Member and subscribe today!
However, despite its efforts, the financial burden proved too great, and the company is now preparing to file for bankruptcy. Talks are underway to explore the possibility of selling off all or parts of the business.
The company’s strained relationship with the Teamsters Union added to its troubles. Hundreds of non-union employees were laid off on Friday, and around 22,000 Teamster members faced uncertain job prospects.
Yellow had been implementing a cost-cutting plan since 2021 in a bid to recover but it faced additional challenges this year as shipping demand declined substantially across the freight sector.
The situation escalated further when Yellow narrowly avoided a driver strike, initiated by Teamster Union members after the company failed to make a $50 million payment for employee benefits. The Teamsters blamed the executives and their poor management.
The company’s financial woes were further exacerbated by a congressional report that questioned a controversial pandemic-era loan of $729.2 million extended by the Treasury Department in 2020 on national security grounds. The report suggested that the Treasury Department had circumvented its own policies, and the decision was a mistake.
Financial analysts estimated that the company was burning through significant amounts of money each day, which could lead to a breach of its $35 million liquidity requirement at any moment.
In response to the ongoing turmoil, Yellow and the Teamsters engaged in heated exchanges, with Yellow suing the union over allegations of obstructing restructuring plans essential for the company’s survival.
If Yellow files for bankruptcy, there are concerns that customers might shift their shipments to other carriers like FedEx or ABF Freight, potentially leading to increased prices.
As Yellow’s fate hangs in the balance, thousands of workers await clarity on their future, and the once-prominent trucking giant faces an uncertain road ahead.
Add comment