One of the largest trucking companies in the country shut down over the weekend, leaving tens of thousands of people without jobs at the start of the work week.
The Teamsters Union said Monday that Yellow Corp. informed them the 99-year-old company was shuttering operations and filing for bankruptcy, despite receiving a $700 million pandemic loan just three years ago.
Scripps News reached out to Yellow to confirm but did not hear back. No bankruptcy filings have gone live yet.
Yellow employs 30,000 people nationwide including 22,000 union workers. But one worker in Nashville says he arrived at work without hearing anything about the status of his job.
"They haven't told us they're out of business yet, they haven't told us what they're doing, filing bankruptcy or whatever," said Danny Smallridge. "I'm in pretty good shape myself and I know I'll be taken care of but a lot of my union brothers and sisters — they're not in the same boat as I am and that's heartbreaking. Shame on the company."
Another worker went viral over the weekend after a video showed his emotional reaction to learning he'd leave Yellow with no pension despite spending 30 years on the job.
In a statement, Teamsters president Sean O'Brien called the news "unfortunate but not surprising." He added Yellow "has historically proven that it could not manage itself despite billions of dollars in worker concessions and hundreds of millions in bailout funding from the federal government. This is a sad day for workers and the American freight industry,”
SEE MORE: Lumber prices could surge again due to too few lumber workers
Yellow is the nation's third largest carrier of small freight, earning $5 billion in revenue a year, according to its website, serving major customers like Walmart and Home Depot.
But after a series of failed cost-cutting measures to stay afloat, Yellow saw customers leave in droves. According to the Associated Press, the company is now $1.5 billion in debt with $729.2 million owed to the federal government.
This, despite the government handing Yellow a $700 million pandemic loan just three years ago.
Mike Regan, the co-founder of TranzAct technologies, which helps companies manage their supply chains, says Yellow used most of that money to round out pension plans and extend the life of its equipment.
But in June, a congressional investigation found the Treasury and Defense departments "made missteps" in giving Yellow the loan, with auditors calling the handout "reactive at best" and saying it "may not be the best course of action to protect taxpayer funds."
Regan says Yellow's problems arose decades ago after the company acquired rival companies and put them under one roof.
"When they bought Roadway, it was like having the Green Bay Packers and the Chicago Bears come together to form a football team. You had basically people that competed against each other, were enemies, then you brought them together and said 'we're going to play nice,'" he said. "If you don't have your culture synchronized, I don't care what your strategy is, it's not going to work because you have disparate parties."
SEE MORE: Wage and salary increases in the US slowed down
He added that problems worsened when Yellow tried to reduce its debt and eliminate financial redundancies by shutttering 24 of its 300 truck terminals.
Regan says that considering some of the locations were as valuable as $80 million, it could've helped the company with some of its money troubles. But Teamsters, which was angered by the course of action, said the move would lead to unnecessary job cuts.
Regan says Yellow's latest setback came from the threat of a union strike over health care benefits when the company missed a $50 million welfare and pension fund payment. Teamsters said they'd strike if Yellow didn't make the payment.
"That basically was the death knell for Yellow because if you're a shipper, one of the things that you don't want to do is have freight trapped in a system when the carrier's not operating," said Regan.
The shutdown could mean shipping delays for consumer because many shippers relied solely on Yellow's vast terminal network to move is products.
"In the LTL (Less-than-truckload) industry, your capacity is driven by your terminal network, the amount of doors that you have available to clear freight," said Regan. "The reason this is a big deal for shippers is because some shippers had Yellow [as their] one carrier. Well, they may take three or four carriers now to replace that Yellow volume because of the network."
Regan says more carriers sharing doors could mean greater delays, leading to price increases to make up for the gap.
Trending stories at Scrippsnews.com
