Employees at one of the largest transportation companies in the United States have said they are shocked and saddened by the company’s closure on Sunday after nearly 100 years of operation.
Yellow, based in Nashville with 30,000 employees, has struggled for years with heavy debt and a strained relationship with the Teamsters union.
The company, which received $700 million in federal COVID relief funds in 2020, was estimated to be burning between $9 million and $10 million a day shortly before Sunday’s collapse.
Tim Livesay, a forklift driver at Yellow, told me The Wall Street Journal that business ceased operation shortly before the company’s collapse.
“There was nothing to move,” he said, explaining that there had been no cargo on the wharf for three days.
“We sat there waiting for our demise.”
Tim Livesay, a forklift driver for Yellow, said work dried up just days before the company collapsed, so they knew the end was near
A yellow facility has a sign saying the business is now closed
Safety vests line the fence at a Yellow cargo terminal in St. Louis, as a makeshift memorial to the company
On Sunday morning, many of the company’s employees were told work would cease at noon.
But Chris Gordon, a 17-year veteran of Yellow who most recently worked as a truck driver, said he had no idea his company had collapsed and had received no word from his supervisors.
He arrived at work on Monday to learn that the company no longer existed.
“What I thought was that good company fell from under me,” said 49-year-old Gordon.
‘The company had good working conditions and I thought I could retire here.’
Some Yellow employees left their safety vests on the fence around a yard as a memorial to the company.
Chris Gordon, 49, worked for Yellow for 17 years. He said he had no idea the company had collapsed until he showed up for work on Monday
The 99-year-old US trucking company shut down at noon on Sunday, leaving 30,000 workers without a job
Analysts said the collapse will leave business dollars up for grabs in a weakened freight market — good news for the companies poised to take their place in the coming months.
Deutsche Bank analyst Amit Mehrotra said Monday that companies like FedEx and Old Dominion are competing to absorb the freight.
“This development is clearly very positive for those companies that remain open for business,” Mehrotra said in a report, adding that as these carriers compete, a reduction in overcapacity may allow carriers to raise prices.
Mehrotra, a seasoned transportation and shipping analyst, said Yellow’s rapid decline suspends a dip in the U.S. freight market at large — one traced back to the pandemic.
But like several other analysts and industry leaders, Mehrotra added that Yellow’s money problems are due more to pre-existing problems than larger trends affecting the industry.
Thomas Wadewitz, an analyst at UBS, said the collapse was long in the cards.
He said it will help other transportation companies that specialize in “less-than-truckload service,” the term used to describe companies that use a warehouse network to combine several smaller shipments.
“While this disruption has been anticipated for some time, we believe that the increase in volume and pricing for other companies with less than a truckload is likely to support the share prices of competitors such as Saia, Fed Ex and Old Dominion.”
Lee Klaskow, a transportation and logistics analyst at Bloomberg Intelligence, also cited Old Dominion — as well as Connecticut-based XPO — as possible beneficiaries of the sudden change in the shipping landscape.
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.
Stan Koniszewski, a union leader for Teamsters Local 294, said Sunday was “a sad day in the freight industry” and pledged to help members file unemployment claims and look for new jobs
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.
Last week, Yellow, which had revenues of $5.2 billion last year, narrowly avoided a drivers’ strike by Teamster union members after it failed to make a $50 million employee benefit payment. The company had 30 days to catch up on pension and benefit payments.
The Teamsters blamed the executives for poor management.
“Teamsters have kept this company afloat for more than a decade through billions of dollars in wage, pension and work regulation concessions,” a union spokesman said.
“Yellow couldn’t save itself, and it wasn’t for Teamsters to do it for them.”
Stan Koniszewski, a union leader for Teamsters Local 294, said it was “a sad day in the freight industry.”
He said the union “will be there with all the support we can give,” helping them file unemployment claims and trying to find them new jobs.
“Whatever we do, we will do it together as a family – a strong family,” he said.
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 Friday’s 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.”
On Sunday, Yellow blamed the union for its intransigence.
A Yellow spokeswoman said it had not asked the union for concessions on the recent restructuring.
“Yellow offered to pay his employees more,” she said. The union “refused to negotiate for nine months.”
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 was 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 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 squandered 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 business collapsed on Sunday
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 July 23, a pension fund agreed to extend health benefits for employees of two Yellow Corp. operating companies. and 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.
If Yellow files for bankruptcy and customers continue to take their shipments to other carriers, such as FedEx or ABF Freight, prices will rise.