Yellow, a once-dominant US trucking company, has ceased operations and laid off all 30,000 of its workers, marking a significant blow to the American shipping industry. The embattled firm intends to file for bankruptcy following unsuccessful attempts to reorganize and refinance its staggering debt, which amounts to over a billion dollars.
The Teamsters union, representing employees of Yellow, confirmed the company’s decision to halt operations and lay off its entire workforce. Despite having high-profile customers such as Walmart and Home Depot, Yellow has faced financial challenges for years.
To aid its financial struggles during the pandemic, Yellow received a $700 million relief loan from the federal government in 2020. However, this additional debt further burdened the already struggling company.
Earlier this month, Yellow faced a potential strike by 22,000 Teamsters-represented workers. Last week, the company announced its exploration of opportunities to divest its third-party logistics company as part of its efforts to stabilize its finances.
The Teamsters general president, Sean O’Brien, criticized Yellow’s management, stating that despite significant worker concessions and substantial bailout funding from the government, the company failed to properly manage itself.
Yellow executives claimed that the Teamsters union hindered restructuring and modernization efforts collectively known as “One Yellow.” The union was in the process of negotiating a new contract with Yellow when it received notice of the company’s decision to cease operations.
The company’s restructuring efforts were deemed essential for its survival and ability to refinance approximately $1.3 billion of debt due to be repaid by 2024. A significant portion of this debt can be attributed to the pandemic-era $700 million loan received during the Trump administration. Notably, an investigation in June found that the loan had been provided to Yellow mistakenly and that the company did not meet the necessary standards to qualify for the disbursement.
Since receiving the loan, Yellow’s stock has significantly declined, losing 82% of its value. This situation highlights the significant financial challenges the company has been facing for some time.
As Yellow files for bankruptcy and suspends operations, the fate of its workforce and the overall implications for the shipping industry remain subjects of concern. The impact of the pandemic, coupled with financial mismanagement, has culminated in a severe setback for the once-prominent trucking company.