Home Truck News Yellow Corp. informs Teamsters it is shutting down operations - Truck News

Yellow Corp. informs Teamsters it is shutting down operations – Truck News

Yellow Corp., one of the largest and longest running LTL carriers in the U.S., has served the Teamsters union with notice it is ceasing operations and filing for bankruptcy.

“Today’s news is unfortunate but not surprising,” Teamsters general president Sean M. O’Brien said in a release Sunday. “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.”

(Photo: Yellow Corp.)

The union said it is working to ensure its members are “protected and notified with all the latest information.”

“The International is putting infrastructure in place to help affected members get the assistance they need to find good union jobs throughout freight and other industries,” the union said.

The Associated Press reported Yellow carried outstanding debt of about US$1.5 billion, including nearly $730 million owed to the U.S. federal government due to a 2020 bailout. The company employed about 22,000 unionized workers.

On July 27, Yellow announced it was exploring opportunities to sell its third-party logistics business.

“Yellow Logistics is one of the fastest growing 3PLs in the industry and has been since its inception,” Jason Bergman, president of Yellow Logistics and chief commercial officer at Yellow Corporation said in a release at the time. “Yellow Logistics has proven to be a strategic and reliable partner to its customers and providers. Our deep knowledge of moving freight in multiple modes and knowing how to execute on these solutions reliably and within customers’ budgets adds value and strengthens their supply chains. We are enthusiastic about our team’s ability to help customers accelerate growth for their portfolios.”

As of July 31, a buyer for the 3PL business had not emerged.

Little impact in Canada

With Yellow Corp. shuttering operations, there will be few implications in the Canadian market, according to Murray Mullen, chairman and senior executive officer of Mullen Group. Speaking to analysts on a recent Q2 earnings call for his own company, Mullen said there’s enough capacity in the market to soak up Yellow’s freight.

“What we are seeing right now is, customers are shifting [freight to other carriers],” Mullen said on the July 20 call. “That’s not new demand, that’s just a shift in demand. There will be some winners and losers.”

He said Mullen had already noticed an uptick in freight demand from its U.S. LTL partner, Estes Express. “Their load count is going up even though the market is not going up; that’s most likely a shift of freight from Yellow,” Mullen reasoned.

He said remaining Yellow freight “will be gobbled up in a heartbeat. It won’t be as disruptive as what people think.”

Terminal interest

As Yellow files for Chapter 7 bankruptcy, there will be interest in the company’s terminal network, according to Ted Morandin, managing member of commercial real estate firm Morporp Advisors. The company says Yellow operates about 300 crossdock truck terminals and owns about half of them.

“In the past, when a large LTL carrier closed, competing LTL trucking companies would bid against each other for their terminals,” Morandin said in a client update. “But the LTL industry is a much smaller, more consolidated club today than it was two decades ago and Yellow has already sold dozens of terminals in the last decade. Many of those sales were to its LTL competitors, so a chunk of the user demand has already been satisfied.”

About 60% of the terminals the company sold and leased back were in more desirable locations, Morandin noted.  

“About half of the existing crossdocks in the Yellow portfolio are older, and on 10 acres of land or less, which is on the small side for most LTL carriers. Many have been soft- and hard-marketed by the company over the last decade without success,” the update read.

“To their benefit, unlike two decades ago, there is now a much more robust investor market for truck terminals. Those buyers have been more elusive in 2023 than in 2022, but a bankruptcy auction of this magnitude will be hard for them to ignore.”

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