The ruthless, cold-blooded grasp of capitalism strikes again, shuttering another American behemoth. Yellow Corp., once a titanic figure in the trucking industry, a glimmering beacon of the American dream, brought to its knees after a grueling 99-year run. This Sunday, the old-giant hit the brakes on operations, issuing pink slips to its colossal workforce of 30,000 souls.
The battlefield? A fiery duel with the Teamsters union, the representative body of approximately 22,000 dedicated drivers and dock workers that were the heartbeat of Yellow Corp. An impending strike, sparked by the company’s negligence towards its workers’ pension and health insurance plans, was narrowly averted only a week ago. The gallant union conceded an extra month to the corporate giant, a last chance to uphold its financial obligations.
Yet, midway through the week, a dramatic twist took place. The veteran company abruptly ceased freight collection from its clientele, delivering only the goods already within its system, verified by both the union and an industry insider, Satish Jindel.
The Teamsters might have refrained from striking against Yellow, but they couldn’t broker a fresh contract. The inability to find common ground with the beleaguered company was publicly acknowledged in a memo dispatched to local unions last Thursday. Early on Monday, the union announced they were notified of Yellow’s complete shutdown.
Teamsters President Sean O’Brien expressed his sorrow, “Today’s news is unfortunate but not surprising. Yellow has historically proven that it could not manage itself despite billions of dollars in worker concessions and hundreds of millions in bailout funding from the federal government. This is a sad day for workers and the American freight industry.“
Yellow’s high officials maintained radio silence, not responding to numerous pleas for comment over Sunday and Monday. Unsettling reports hinted at a bankruptcy filing by July 31, while the company merely affirmed that it was exploring all its options while engaging in discussions with the Teamsters. Come Monday, the Teamsters confirmed that bankruptcy was indeed looming for Yellow.
The unsightly closure of Yellow Corp. is a painful blow not just to its workforce and customers but also to the American taxpayer. An unfortunate recipient of a whopping $700 million federal loan in 2020, Yellow’s downfall meant that taxpayers, who held 30% of its outstanding stock, were now left high and dry. Furthermore, Yellow still had a staggering debt of over $700 million, as per their recent quarterly report. This accounted for almost half of the long-term debt in its books.
The once coveted Yellow Corp. stocks experienced a devastating plunge of 82%, going from mighty corporate titans to mere penny stocks, with a closing price of 57 cents per share. Ironically, a minor rise of 14 cents was observed on Friday, but it was a mere blip in a tragic downfall.
This federal loan, ironically, was granted amidst allegations of Yellow defrauding the government by overcharging the US military’s shipping costs. While Yellow Corp. managed to escape these charges without admitting fault, it was slapped with a $6.85 million fine.
Yellow Corp. prided itself in its mastery of the less-than-truckload (LTL) sector of the trucking industry, combining shipments from various customers into a single truck. Despite only accounting for about 7% of the nation’s 720,000 daily LTL shipments, they boldly claimed to be the nation’s third largest LTL carrier as recently as June.
Jindel predicts that Yellow’s fall might not disrupt supply chains due to a surplus of 8% to 10% capacity in the LTL sector. However, the former Yellow clients will experience a rude shock of price surges, as it was Yellow’s aggressive pricing that had been keeping the rates low.
“The reason they were using Yellow was because they were cheap,” Jindel commented. “They’re finding out that price was below the cost of supporting a good operation.”
A deep dive into the unraveled history of Yellow Corp. reveals a lesson for all – a story of corporate greed, mismanagement, and disregard for workers’ rights.
The repercussions of its downfall will resonate far and wide, from the company’s dedicated workforce to the average US taxpayer.
The fading yellow, it seems, is but another tombstone in the graveyard of the American dream.
