End of an era: Yellow Corp., once trucking titans, shuts down, 30,000 jobs lost

Yellow Corp., a 99-year-old trucking company, shuts down, laying off 30,000 workers after a battle with the Teamsters union.

Yellow Corp., a 99-year-old trucking company that once reigned supreme in its industry, has ceased all operations, resulting in the layoff of its entire workforce comprising 30,000 employees.

A Yellow box trailer blocks the entrance to the shuttered YRC Freight terminal in St. Louis, on Monday, July 31, 2023. Troubled trucking company Yellow Corp. is shutting down and filing for bankruptcy, the Teamsters said Monday. An official backruptcy filing is expected any day for Yellow, after years of financial struggles and growing debt. (AP)

The battle with the Teamsters union

Yellow Corp., a unionized company, found itself locked in a tense battle with the Teamsters union, representing around 22,000 drivers and dock workers within the company. The standoff escalated when the union threatened a strike due to the company's failure to contribute to its pension and health insurance plans. To buy time, the union granted the company an additional month to fulfill its obligations.

However, by the middle of last week, Yellow Corp. had stopped picking up freight from its customers and was solely making deliveries of the existing freight within its system. Both the union and Satish Jindel, a trucking industry consultant, confirmed this.

The unreasonable decision and bankruptcy filing

Although the union had agreed not to strike, an agreement on a new contract could not be reached, leading to a memo sent to local unions stating the shutdown notification. The court later deemed the officer's decision as unreasonable, but the damage was already done.

There were speculations of a potential bankruptcy filing by July 31, and on Monday, the Teamsters confirmed that the company would be filing for bankruptcy. This comes as a significant blow not just to the company's employees and customers, but also to US taxpayers. Yellow Corp. received a massive $700 million loan from the federal government in 2020, leading to taxpayers holding 30% of its outstanding stock. Furthermore, the company still owed over $700 million to the Treasury Department.

End of an era in trucking

Yellow Corp. handled pallet-sized shipments of freight, operating in the less-than-truckload (LTL) segment of the trucking industry. Although the company claimed to be the nation's third-largest LTL carrier, it only managed approximately 7% of the nation's daily LTL shipments last year.

Jindel explained that the LTL sector currently has about 8% to 10% excess capacity, so the closure of Yellow Corp. may not significantly disrupt supply chains. However, it will lead to higher rates for shippers relying on LTL carriers, as the excess capacity had previously kept prices low.

In the 1980s, the trucking industry underwent deregulation, leading non-union trucking companies to dominate the truckload segment. However, the LTL segment required a network of terminals, allowing unionized carriers like Yellow Corp. to maintain their presence. Over time, non-union competitors gained ground in the LTL segment as well.

With Yellow Corp.'s closure, the last remnants of the once-mighty "Big Three" of the trucking industry, which included Roadway Express and Consolidated Freightways, have now vanished.