Yellow Corp.

This past weekend, Yellow Corp. notified is customers that they were officially closing their doors. While this was no surprise to food shippers, given the magnitude of this development to the industry shippers still are scrambling to ensure they have adequate capacity as less-than-truckload company ceased its operations – terminating nearly 100 years of history and operations as one of the country’s largest motor carriers. Yellow’s closing of its operations will directly impact food shippers using their services as well as indirectly as this development will significantly reduce trucking capacity.

Yellow has maintained subsidiaries that included LTL carrier YRC Freight; regional LTL carriers New Penn, Holland and Reddaway; and freight brokerage HNRY Logistics. Yellow has maintained headquarters in Overland Park, Kansas.

Yellow Ceasing Operations

The company has begun posting notices at its terminals nationwide. These notices read: “Dear Valued Customers and Employees, All company operations have ceased as of Sunday July 30, 2023 at 12:00 pm EDT.” The statement instructed union employees to contact their representative with the Teamsters union.

Professional drivers are reporting that terminals and other properties owned by Yellow are being padlocked and closed.

Just last week a Yellow executive told sales staff that the company will file bankruptcy today (July 31), according to an article by Freightwaves.

Internal documents showed the procedures for closing facilities as well as “talking points” to be used when informing union employees not to show up for their shifts. The documents indicated the company plans to issue a public statement today updating “the state of the company and the operation,” according to Freightwaves.

For the past several weeks, Yellow has been in an extraordinary distressed financial condition, with the likelihood the motor carrier will be forced to file for federal bankruptcy protection and the possible liquidation of the company.

Yellow has about a 10% market share of the LTL marketplace, and it carries a substantial amount of freight for the Department of Defense and the government’s General Services Administration.

Yellow has had a catastrophic loss of volume over the past few weeks as shippers, concerned about a possible Teamsters strike and whether or not the company was going to be able to make its financial obligations began diverting their freight to other providers, say some industry observers.

The company said last week it was shopping its logistics operation to raise cash.

On July 28, Yellow began notifying its approximately 22,000 Teamsters employees and 8,000 management and non-represented employees that they are losing their jobs immediately. The union informed workers at several terminals they need to remove personal items immediately from work facilities because those sites soon could be padlocked.

In a July 10 liquidity disclosure to the Securities and Exchange Commission, Yellow said it had about $100 million in cash as of the end of June.

Yellow’s financial situation worsened, in part because the company had taken on at least U.S. $1.5 billion in debt, including $730 million owed to the U.S. federal government, according to industry observers. A Treasury Department report indicates that Yellow has paid approximately $66 million in interest but just $230 of the principal owed on the loan, which comes due in 2024.

The company received a controversial federal loan package granted by the Trump administration during the COVID pandemic, when the White House declared the company an essential business and Yellow spent the cash to buy hundreds of new tractors and trailers to upgrade its fleet. The Teamsters, at the time, claimed this move as a job-saving measure. As part of this loan deal, the federal government assumed a 30% equity stake in the company.

It remains to be seen what impact that this developing situation will have on food chains nationwide.

Additional Reports and Insights on Yellow Shutting Down

Food Shippers of America (FSA) continues to monitor the situation and has gathered these recent reports and articles to understand what’s happening this week:

• Yellow ceases operations (Freightwaves) 
• US trucking giant Yellow shutting down operations amide standoff with Teamsters union (Fox Business)
• Yellow is reportedly preparing for bankruptcy. Here’s what you need to know (Fox Business)
• Teamsters Notified that Yellow Corp. Operating Companies Have Closed (Teamsters)
• Yellow tries to raise cash by selling off its 3PL division (DC Velocity)
• Yellow Ceases Operations  (Transport Topics)
• The Yellow trucking company meltdown, explained (NPR News)

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