Home » US Business & Employment News • US business news » Trucking giant Yellow’s closure puts 30,000 jobs at risk

Trucking giant Yellow’s closure puts 30,000 jobs at risk

By Nithya Bose in US Business & Employment News, posted July 31, 2023

Trucking company Yellow, which received a $700 million pandemic loan from the US government, is set to wind down all its locations and lay off 30,000 employees.

The closure comes ahead of an anticipated bankruptcy filing, spelling the end for a trucker once deemed crucial to the nation's supply chains.

Yellow notified its staff on Friday, July 28, of the shutdown.

It said: “The company is shutting down its regular operations on July 28, 2023, closing and/or laying off employees at all of its locations, including yours.”

The move was due to the protracted labor negotiations with the International Brotherhood of Teamsters over a new contract.

These negotiations were seen as vital to Yellow's restructuring plan.

With an outstanding debt of $1.5 billion, including about $730 million owed to the federal government, Yellow's financial situation has been deteriorating.

Despite paying $66 million in interest on the loan, the company has only managed to repay $230 of the principal due next year.

Yellow, one of the largest freight trucking companies in the US, was pivotal in the nation's supply chain, and its impending bankruptcy could have ripple effects across the industry.

The situation arose after United Parcel Service agreed with the union representing its US workers, preventing a strike.

The future of Yellow's assets remains unclear.

In 2020, the Trump administration provided the company with a pandemic relief loan, and the federal government acquired a 30 percent equity stake in the firm in return.

Despite seeking the Biden administration's assistance negotiating with the union, Yellow's fate seemed bleak.

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As talks with the union proved unsuccessful, the company's stock price plummeted, and shippers diverted freight away from its network.

Financial analysts estimated that Yellow may be burning through as much as $10 million in cash daily, and the strike threat left the company severely wounded.

Its financial struggles have been building over the years, leading to the government's intervention with the bailout loan of $700 million in 2020.

However, this move faced scrutiny due to the company's ongoing financial difficulties and legal issues, including a lawsuit from the Justice Department over alleged defrauding of the federal government.

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