Yellow, a prominent trucking company, has collapsed, leaving around 30,000 employees without jobs. The closure marks the biggest shutdown in the U.S. trucking industry in terms of jobs and revenue. Despite receiving $700 million in federal COVID relief funds in 2020, the company has struggled with debt and faced contentious relations with the Teamsters union.
In recent years, Yellow has faced financial challenges, worsened by a decline in shipping demand across the freight sector this year. The company narrowly avoided a driver strike after failing to make a $50 million payment for employee benefits.
The Teamsters union blamed Yellow’s management for their poor handling of the company. As Yellow prepares to file for bankruptcy, discussions are ongoing to sell off parts or the entire business.
The situation has become increasingly dire, with Yellow dealing with a debt of about $1.5 billion, including a controversial pandemic-era loan of $729.2 million from the federal government. A June 2023 congressional report criticized the Treasury Department for issuing the loan against its policies.
Yellow reported a loss of $54.6 million for the first quarter of 2023, and its liquidity has been under pressure. Estimates suggest that the company could be burning between $9 million and $10 million per day.
The company’s dispute with the Teamsters union has added to its challenges. While a recent strike was averted, the tension between the parties led to uncertainties, affecting some Yellow customers’ decisions.
If Yellow files for bankruptcy, it may cause customers to turn to other carriers, potentially leading to increased shipping prices. The collapse of Yellow has significant implications for the trucking industry and the thousands of workers impacted by the closure.