More Transportation Issues? One of Nation’s Largest Freight Carriers ShuttersAugust 3rd, 2023 by Joshua Huff
The transportation of door and window-related products could face another obstacle following the news that Yellow, the third-largest less-than-truckload carrier by revenue, has ceased operations.
The Teamsters Union announced this week that Yellow plans to file for bankruptcy after reorganization failures and issues refinancing more than a billion dollars in debt. News reports indicate that more than 30,000 jobs are at risk, which would make the company’s closure the largest trucking bankruptcy in U.S. history.
Yellow customers include various businesses nationwide, including manufacturers and Home Depot. The company, formerly called YRC Worldwide, has faced numerous headwinds recently. This includes a close call with bankruptcy. To help it stay afloat, the company received a $700 million pandemic relief loan in 2020, which was unwarranted since its business was not critical to maintaining national security, says a Congressional Oversight Commission.
“Yellow had been rated non-investment grade for over a decade before the COVID-19 pandemic, struggled financially for years before the pandemic, and was at risk of bankruptcy before it obtained a loan from the Treasury,” the report read.
Yellow was also locked in a fight with the Teamsters over new contracts. The company said in June that the Teamsters were blocking restructuring and modernization efforts, known as “One Yellow.” Officials said the restructuring efforts were vital to Yellow’s survival and ability to refinance about $1.3 billion of debt to be repaid by 2024. The Teamsters called a lawsuit filed by Yellow “baseless,” blaming the company for “decades of gross mismanagement.”
The strike was averted in July.
The Wall Street Journal reported this past week that Yellow sent closure notices to customers and employees and has laid off many non-union workers. If Yellow does fold officially, experts state that shipping rates will increase as customers shift their shipments to other carriers. However, experts predict that the other carriers will be able to handle the additional freight.
Jack Atkins, a managing director at the financial services firm Stephens, told NPR that Yellow’s closure will not “create a supply-chain crisis.”