Yellow Corp news: 99-year old trucking company to lay off 30K workers after shutting down operations
BENSALEM, Pa. (CBS/CNN) -- Yellow Corp., a 99-year-old trucking company that was once a dominant player in its field, halted operations Sunday and will layoff all 30,000 of its workers.
The unionized company has been in a battle with the Teamsters union, which represents about 22,000 drivers and dock workers at the company. Just a week ago the union canceled a threatened strike that had been prompted by the company failing to contribute to its pension and health insurance plans. The union granted the company an extra month to make the required payments.
But by midweek last week, the company had stopped picking up freight from its customers and was making deliveries only of freight already in its system, according to both the union and Satish Jindel, a trucking industry consultant.
While the union agreed not to go on strike against Yellow, it could not reach an agreement on a new contract with the trucking company, according to a memo sent to local unions Thursday by the Teamsters' negotiating committee. The union said early Monday that it had been notified of the shutdown.
"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. This is a sad day for workers and the American freight industry," said Teamsters President Sean O'Brien in a statement.
Company officials did nor respond to numerous requests for comment Sunday and Monday.
Workers arrived at the Yellow Corp. facility in Bensalem to find a padlocked gate and a sign saying operations have ceased. They said it's the culmination of a long fight with the company.
"It's real sad. It hurts. I got a family to worry about," John Figueroa said.
Figueroa, who's worked for Yellow Corp. for 28 years says he was given no notice.
"Empty parking lot. A couple of guys pulled up and asked me. I told them I don't know what's going on," Figueroa said.
"Basically we've been doing everything that we can for this company for the last 18 years," said Joe Suarez, who has worked at Yellow for 18 years. "They couldn't just pull their head out of their *expletive* to get anything going."
There were reports last week that a bankruptcy filing would come by July 31, although the company said last week only that it continued to be in talks with the Teamsters and that it was considering all of its options. The Teamsters said Monday the company is filing for bankruptcy.
The closing is bad news not only for its employees and its customers, who generally used Yellow because it offered some of the cheapest rates in the trucking sector, but also for U.S. taxpayers. The company received a $700 million loan from the federal government in 2020, a loan that resulted in taxpayers holding 30% of its outstanding stock. And the company still owed the Treasury department more than $700 million according to its most recently quarterly report, nearly half of the long-term debt on its books.
Yellow's stock lost 82% of its value between the time of that loan and Thursday close after reports of the bankruptcy plans, closing at only 57 cents a share. It bumped up 14 cents a share on Friday, but still remained a so-called penny stock.
The company had received that loan during the pandemic, despite the fact that at the time it was facing charges of defrauding the government by overbilling on shipments of items for the U.S. military. The company eventually settled the dispute without admitting wrongdoing but was forced to pay a $6.85 million fine.
Yellow handles pallet-sized shipments of freight, moving shipments from numerous customers in the same truck, a segment of the trucking industry known as less-than-truckload, or LTL. The company had been claiming as recently as June that it was the nation's third largest LTL carrier.
But the company handled only about 7% of the nation's 720,000 daily LTL shipments last year, said Jindel. He said there is about 8% to 10% excess capacity in the LTL sector right now, so the closure of Yellow shouldn't cause a significant disruption in supply chains. But he said it will cause higher rates for shippers who depend on LTL carriers, since it was the excess capacity that sent prices lower.
Higher prices will hit Yellow customers, Jindel said.
"The reason they were using Yellow was because they were cheap," he said. "They're finding out that price was below the cost of supporting a good operation."
