30,000 jobs are lost as Yellow dies from a spiral of debt and lost customers

Yellow, the third largest LTL carrier in the United States, has ceased operations and is preparing for bankruptcy.

After 99 years in business, Yellow Corp is at the end of the road, with a $1.5 billion debt load and rapidly eroding as clients turn to other LTL providers.

On Sunday, a notice at the company’s stations read: “Dear Customers and Employees, All Company operations have ceased.”

The Teamsters union, which represents the majority of Yellow employees, reported that it received legal notice from the company Sunday that it has ceased operations and will file for bankruptcy.

According to one report, this was confirmed by two Yellow company executives who terminated last Friday. Notices were sent to non-unionized employees to terminate their jobs with immediate effect.

Yellow is trying to sell its logistics unit to raise money as it was quickly running out of money, sparking speculation that it will have to file for bankruptcy. The erosion of business in recent weeks, due to predictions of an imminent demise, has accelerated a cash burn that was eating away at its last reserves. By one estimate, her cash burn increased to between $9 million and $10 million per day.

While this death spiral led to the end of operations, Yellow’s decline was a long time in the future. Its stock is down 72% this year and is down 94% from its level at the start of 2022. But the company has lost market share over the past 10 years, and observers traced the decline to a number of disjointed acquisitions in the early 2000s, including That’s several trucking companies as well as the even more unusual acquisition of Shanghai Jiayu Logistics in 2007.

Failure to consolidate its truck acquisitions and a growing debt burden led to a tussle with bankruptcy in 2009, but Yellow managed to flounder—although debt problems and a resulting lack of investment in modern equipment forced it to focus on low-cost services. .

Over the past year, management has blamed Teamsters’ opposition to its plans to restructure the network in the US East as a major cause of Yellow’s predicament. But most observers agree that bad management decisions exacerbated the situation. For its part, the federation blamed management for the problems.

“Today’s news is unfortunate, but not surprising,” Teamsters president Sean O’Brien said Sunday. “Yellow has historically demonstrated that it cannot manage itself, despite billions of dollars in worker benefits and hundreds of millions in bailout funding from the federal government. This is a sad day for workers and the American shipping industry.”

Yellow’s bankruptcy is said to be the largest to date in the US trucking scene, and its market share was about 10%. Its closure eliminated 22,000 union jobs and about 8,000 non-union positions.

Given the slowdown in the LTL market in recent months, analysts believe there is enough capacity available to accommodate Yellow’s remaining customers and businesses. Apparently, the outlook is already driving up prices in the market, Shipper reports.

For Yellow customers, any increase in shipping costs is bound to be even more severe. Given its difficult financial situation, Yellow failed to invest in improvements and fell behind its competitors in performance metrics, making it a low-cost player in the market.