Yellow Corp., a once-dominant US trucking company operating under the name Yellow Freight for almost a century, has filed for bankruptcy and is ceasing its operations.
Yellow’s Grief
In a statement, Yellow’s CEO, Darren Hawkins, expressed deep disappointment as the company’s closure marks the end of nearly a century of business. Over the years, it had provided stable and well-paying jobs for countless Americans, with many employees dedicating decades of service to the company.
It expects to reach an agreement with its creditors, subject to court approval, to settle certain wages, benefits, and obligations to vendors and suppliers. The company listed Amazon, Home Depot, and Goodyear Tire & Rubber Company among its top 30 creditors with unsecured claims.
The bankruptcy filing came after it halted operations, leaving around 30,000 people unemployed. Earlier, the company had warned of potential financial troubles and the risk of running out of funds to sustain its operations.
Yellow Corp.’s success peaked in the past when it was a major player in the “less-than-truckload” (LTL) segment, moving pallet-sized freight shipments. Together with Roadway and Consolidated Freight, It constituted the “Big Three” unionized LTL carriers. However, the deregulation of the trucking industry in 1984 brought in more competition, challenging the dominance of the Big Three and other unionized LTL carriers.
As a response to the increased competition, Yellow began acquiring its unionized rivals, accumulating significant long-term debt. The company also received a pandemic relief loan in 2020, but mounting financial troubles and a decline in demand for trucking services posed significant challenges.
Changing consumer spending habits, favoring services over goods, contributed to the decline in LTL shipments. Between 2021 and 2022, LTL shipments fell by 17%, and another 5% decrease occurred in the first quarter of 2023 compared to the same period the previous year.
It faced difficulties paying union pension and health insurance funds, leading to the threat of a strike by the Teamsters. Despite efforts to keep the company afloat, customers began shifting to other carriers, resulting in a sharp drop in shipments. In the end, it attributed its closure to the failure to reach a new contract with the Teamsters, while the union blamed Yellow’s mismanagement.
The closure of Yellow Corp. marks a significant event in the American freight industry, with both the company and the Teamsters expressing regret over its demise.
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