The country’s largest less-than-truckload operation recently filed for bankruptcy, leaving a wake of uncertainty for truckers, warehouse workers, creditors, and taxpayers. Yellow Corp, a 99-year-old freight transportation company, slipped into a death spiral after accumulating unwieldy debt despite turning a profit last year as a $5.2 billion business. These are critical issues everyday people and trucking industry professionals need to know about the potential fallout from Yellow shuttering.
1: What Happens to 30,000 Employees?
Officials at Yellow may not have handled closing operations with adequate planning and care. Karen Anders, the wife of a Yellow truck driver, went on the record pointing out that the company left her husband in the lurch. In the field, he was reportedly forced to pay expenses the company usually covers out of his own pocket. She also noted Yellow “had discontinued all the payments for the insurance.” Teamsters union officials are helping truck drivers and warehouse personnel apply for unemployment until they catch on somewhere else. Reports indicate workers’ last week’s checks were late. Vacation time benefits totaling $92.9 million remain unsettled.
2: What is Happening with Yellow’s 50,000 Daily Shipments?
To say Yellow shutting down sent ripples across the supply chain would be something of an understatement. Many of the outfit’s clients had already begun brokering deals with other less-than-truckload organizations. Reports indicate that Yellow’s primary competitor, Old Dominion Freight Line, has enjoyed a surge in business. Old Dominion, ABF Freight, and TForce Freight rank among the large carriers scooping up 2,000 to 3,000 shipments per day. A wide variety of small trucking companies are also benefiting. Unemployed Yellow truckers may see quick employment opportunities because those loads still need to be moved.
3: Will Taxpayers Foot Yellow Debt?
Yellow managed to secure a $729 million pandemic loan many feared would go unpaid after it filed Chapter 11 bankruptcy. The bailout had two prongs, with $300 million being used for operational expenses and more than $400 going toward new tractors and trailers. Recent reports show that the company has repaid upwards of $230 million through a one-time disbursement in 2021 to lower the principal. It also sent a $68 interest-related payment to the U.S. Treasury. A Yellow spokesperson recently stated the organization would make its final pandemic loan installment of $450 million, due in September. Although Yellow appears to have enough tangible assets to pay its debts, financial experts appear skeptical.
Sources:
https://kfor.com/news/local/former-yellow-employees-family-looking-for-answers-after-company-closes/
https://www.nytimes.com/2023/08/11/business/yellow-trucking-loan-bankruptcy.html
https://www.wsj.com/articles/yellow-bankruptcy-us-economy-e2761b0b?page=1
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