Truck giant Yellow stops: the 99-year-old company with almost 30,000 employees and 12,000 large oil rigs immediately stops working

Trucking giant Yellow collapsed on Sunday, immediately halting operations and leaving some 30,000 workers without jobs.

The closure is the largest in terms of jobs and revenue in the U.S. trucking industry, according to The Wall Street Journal — which first reported its closure.

The company, which received $700 million in federal COVID relief funds in 2020, is preparing to file for bankruptcy and is in talks to sell all or part of the company.

Known for competitive pricing, the nearly 100-year-old company has more than 12,000 trucks moving cargo across the US for brands like Walmart and Home Depot.

But in recent years it has struggled under the weight of debt and had a highly contentious relationship with the Teamsters union: on Sunday, both sides blamed each other.

Hundreds of non-union yellow employees were laid off Friday at the Nashville, Tennessee company, and about 22,000 Teamster members were told their jobs were on the line.

On Sunday morning, the company sent messages to customers and employees that it was ceasing all operations at noon.

Yellow is the third-largest U.S. carrier in the so-called less-than-truckload segment, where operators transport goods for multiple customers on the same trailer

Since 2021, the struggling brand has implemented a cost-cutting plan that executives hoped would get the company back on track.

The company’s circumstances have become all the more dire as demand for transport in the freight sector has fallen significantly this year.

In a memo sent Friday, Teamsters told local unions that “the chances of Yellow surviving are becoming increasingly bleak.”

They urged employees to collect their personal items and prepare for the worst.

In a memo to staff, Yellow wrote, “The company is closing its regular operations on July 28, 2023 and is closing and/or firing employees at all of its locations, including yours.”

Last week, a company official told the New York Times that the company was preparing for “a series of unforeseen events.” A spokesperson for the company would not tell on Friday Time anything else.

Yellow is saddled with about $1.5 billion in debt at the end of March, including $729.2 million owed to the federal government for a controversial pandemic-era loan made by the Treasury Department in 2020 on national security grounds.

A June 2023 congressional report concluded that the Treasury Department had circumvented its own policies to issue the loan and that the previous administration had erred in doing so.

In May, Yellow reported a loss of $54.6 million, down $1.06 per share, for the first quarter of 2023. Operating income was approximately $1.16 billion in the period.

An investor note from financial services firm Stephens last week estimated that Yellow could burn between $9 million and $10 million every day.

Yellow is saddled with about $1.5 billion in debt at the end of March, including $729.2 million to the federal government for a controversial pandemic-era loan made by the Treasury Department in 2020 for national security reasons

Teamsters threatened to strike when they learned the company had stopped paying pensions and benefits last week

Using a liquidity disclosure made earlier this month, Yellow had about $100 million in cash at the end of June, the note added — it estimates the company has been wasting more and more money through July.

It is reasonable to assume that the company could breach its $35 million. liquidity needs at any time,” wrote Stephens analyst Jack Atkins and contributor Grant Smith.

The reports of bankruptcy preparations come just days after a strike by the Teamsters, representing Yellow’s 22,000 union members, was averted.

Pictured is Yellow CEO Darren Hawkins. His company is in danger of going bankrupt

A series of heated arguments have ensued between the Teamsters and Yellow, who sued the union in June after claiming it was “unjustifiably blocking” restructuring plans necessary for the company’s survival.

The Teamsters called the lawsuit “baseless” — with President Sean O’Brien pointing to Yellow’s “decades of gross mismanagement,” including exhausting the $700 million federal loan.

On Sunday, a pension fund agreed to extend health benefits for employees of two Yellow Corp. operating companies. Welfare Fund on July 15, the union said.

While the strike didn’t happen, rumors of a strike may have caused some Yellow customers to pull out, Chan said.

Talks between Yellow and the Teamsters, who also represent UPS union employees, are ongoing. The current contract expires in March 2024.

“Yellow’s financial problems are not related to the union and the contracts,” Jindel said, noting management’s responsibility with regard to its services and prices. He added that Geel’s union wages are “lower than any competitor.”

If Yellow files for bankruptcy and customers continue to take their shipments to other carriers, such as FedEx or ABF Freight, prices will rise.