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US trucking giant Yellow shuts down after failing to restructure and refinance up to US$1.5 billion debt
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Yellow precluded a threatened strike by 22,000 Teamsters-represented workers and said it was looking for opportunities to divest its third-party logistics company
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Reports said the trucking company had shut down offices, notified employees of the closure, and grounded its trucks in certain cities by Friday, July 28
US trucking company Yellow shuts down as its bid to restructure and refinance debt estimated at US$1.5 billion has failed. The company is now reported to be filing for bankruptcy as soon as this week, the Teamsters Union and US media reports said.
The International Brotherhood of Teamsters said in a press statement on Sunday, July 30, that Yellow, formerly called YRC Worldwide, served the union legal notice about its closure.
“Today’s news is unfortunate but not surprising. 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,” said Teamsters general president Sean M. O’Brien.
“This is a sad day for workers and the American freight industry,” he added. Teamsters announced Yellow’s fate barely a week after the union sealed a tentative deal with UPS on a new five-year contract that averted a crippling nationwide strike set for August 1 by the union at the US logistics giant.
The Wall Street Journal reported earlier on Sunday the closure of the trucking firm’s operations, citing notices sent to customers and employees. The WSJ also reported that Yellow has laid off a large number of non-union workers.
Other media outlets reported that the trucking company had shut down offices and grounded its trucks in various cities by Friday, July 28.
On Thursday, July 27, Yellow announced that it was selling out its Yellow Logistics unit apparently to settle its debt, which the Associated Press said, totaled about $1.5 billion at the end of March 2023, of which $729.2 million was owed to the federal government.
But an investment banking analyst told AP that granting the logistics unit would find a buyer, the sale proceeds would not be enough to avert bankruptcy of the trucking company.
O’Brien said the union is committed to ensuring that its members are protected and notified with all the latest information. It is putting infrastructure in place to help affected members get the assistance they need to find good union jobs throughout freight and other industries.
Yellow averted a threatened strike by 22,000 Teamsters-represented workers and last week it said it was exploring opportunities to divest its third-party logistics company, a Reuters report said. The company had 30,000 employees including non-union members.
Yellow was the third-biggest US trucker specializing in the less-than-truckload (LTL) segment that combines shipments from different customers in the same trailer.
Reuters said Yellow customers included US retailer giants Walmart and Home Depot, manufacturers and Uber Freight.
The company said in June that the Teamsters Union was blocking restructuring and modernization efforts, collectively known as “One Yellow”, which, Reuters reported, were critical for Yellow’s survival and ability to refinance about $1.3 billion of debt due to be repaid by 2024.
That debt includes a $700 million pandemic relief loan provided in 2020 by the Donald Trump-led US government in exchange for a 30% stake in the Nashville, Tennessee-based company, Reuters said.
