The End of an Era: 99-year-old Trucking Giant Yellow Closes Its Doors

Yellow Corp., a 99-year-old trucking company, has announced that it will be shutting down its operations, resulting in the layoff of all 30,000 of its workers. The company, which had been in a battle with the Teamsters union over pension and health insurance plans, had recently avoided a strike but failed to reach an agreement on a new contract with the union. It is reported that an unaffordable amount of debt, amounting to $1.5 billion, played a significant role in the company’s downfall. While Yellow Corp. was once a dominant player in the trucking industry, it struggled to compete with its rivals ABF Freight and TForce, both of which were more profitable in recent years.

The closure of Yellow Corp. has not only impacted its employees and customers but also US taxpayers. The company received a $700 million loan from the federal government in 2020, resulting in taxpayers holding 30% of its outstanding stock. The company still owed the Treasury department over $700 million. The closure of the company has also led to a significant decline in its stock value, losing 82% of its value since the loan was received.

The closure of Yellow Corp. may lead to higher rates for shippers who depend on less-than-truckload carriers, as the excess capacity provided by the company helped keep prices lower. However, industry experts believe that the closure of Yellow Corp. will not cause a significant disruption in supply chains, as there is about 8% to 10% excess capacity in the less-than-truckload sector.

The closure of Yellow Corp. marks the end of an era in the trucking industry. When trucking was deregulated nearly 40 years ago, non-union trucking companies dominated the segment of the industry that handled full trailers of cargo. However, the less-than-truckload segment, which required a network of terminals, continued to be dominated by unionized carriers. Over time, non-union carriers also took over the less-than-truckload segment, leading to the downfall of major unionized carriers such as Yellow Corp., Roadway Express, New Penn, and Holland. With the closure of Yellow Corp., the final two parts of the “Big Three” in the trucking industry are now out of business.

The closure of Yellow Corp. raises questions about the future of the trucking industry and the impact of debt and union issues on companies in the sector. The case of Yellow Corp. serves as a cautionary tale for companies in the industry to carefully manage their finances and labor relations in order to survive and thrive.

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