U.S. trucking firm Yellow Corp has filed for Chapter 11 bankruptcy protection and announced it will wind down operations. The company has cited a mounting debt load and tense contract negotiations with the Teamsters Union as the primary reasons for its financial troubles.
With Yellow’s bankruptcy filing, approximately 30,000 workers are now at risk, which adds to the challenges faced by the already struggling freight industry.
Yellow is a major player in the “less-than-truckload” segment, responsible for hauling cargo for multiple customers on a single truck. Its clients include major retailers such as Walmart and Home Depot, as well as manufacturers and Uber Freight. Several companies had previously halted shipments to Yellow due to concerns about potential losses or being stranded if the trucking firm were to go bankrupt.
Before its bankruptcy, Yellow held around 8% to 10% of market share, making it one of the largest trucking companies in the United States. The company has also expressed its intention to fully repay a $700 million loan issued by the previous administration under a pandemic relief program.
According to Yellow’s bankruptcy filing, the company estimates its assets and liabilities to be in the range of $1 billion to $10 billion, with over 100,000 creditors. Additionally, Yellow has significant debt payments scheduled for 2024, including a private-equity term loan and the aforementioned U.S. loan.
Despite the challenges faced by the company, Walmart is not expected to be negatively impacted by Yellow’s bankruptcy. The retail giant has a diversified transportation network to rely on, ensuring minimal disruption to its operations.
The decision to file for bankruptcy comes after tense negotiations between Yellow and the Teamsters Union. The union, which represents a significant number of Yellow’s workers, has accused the company of mismanagement despite worker concessions and a previous federal bailout. Yellow, on the other hand, has blamed the union for its financial troubles, stating that it was the union’s actions that drove them into bankruptcy.
Yellow’s bankruptcies are also a consequence of its past acquisitions, particularly its acquisitions of Roadway in 2003 and USF in 2005, which have burdened the company with significant liabilities.
Upon the announcement of Yellow’s bankruptcy filing, the company’s shares fell by 34.4% in early trading. However, the stock had experienced a surge in interest from retail investors, causing the shares to soar five-fold the previous week.
In addition to its financial troubles, Yellow is now facing lawsuits from workers alleging that the company failed to provide the required 60 days’ notice before firing them.
The bankruptcy filing of Yellow Corp highlights the challenges faced by the trucking industry as a whole, and the ripple effects it can have on various sectors. The future of the company and its workers remains uncertain as efforts to repay debts and resolve contractual disputes continue.