The major American trucking company, Yellow, is about to go bankrupt thanks to a lack of cash and a failure to reach a deal on a new contract with its union. The Wall Street Journal’s Soma Biswas, Paul Page, and Alexander Gladstone report:
Trucking company Yellow is preparing to file for bankruptcy, according to people familiar with the matter, heightening the threat that one of the nation’s largest freight carriers will shut down as customers abandon it amid a cash crunch and union negotiations.
A bankruptcy filing by Yellow would put it at high risk of a liquidation since its customers already have started to abandon the trucker in large numbers, some of the people said. The company could seek bankruptcy court protection as soon as this week, though no decision has been made and Yellow continues to explore other options, they said.
A Yellow representative said Wednesday that “in keeping with the fiduciary responsibility of the company’s executives, the company continues to prepare for a range of contingencies.”
Yellow has been losing thousands of shipments to other operators because of the risk that a labor dispute will disrupt its operations, according to equity analysts and industry executives. The company averted a planned strike this week by the Teamsters union that represents most of its workforce, but the customer exodus has continued. Yellow has seen freight volumes fall 80% in recent days, according to a research report Tuesday by TD Cowen.
“The Teamsters introduced variability and uncertainty into a market that can’t stand variability and uncertainty,” said Mike Regan, chief of relationship management at TranzAct Technologies, which manages transportation services for retailers and manufacturers.
The company is continuing to negotiate with the Teamsters about a new contract that would give Yellow the ability to restructure its operations to make them more efficient, Yellow’s representative said.
A bankruptcy filing would again spotlight the $700 million Covid-19 rescue loan that Yellow received from U.S. taxpayers in 2020. A congressional probe later concluded that the Treasury Department erred in giving the loan on national-security grounds when Yellow didn’t meet the standards for that designation.
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