An age-old trucking company in the United States has filed for bankruptcy and will shut down.
News broke last week that Yellow Corp., a company that has been in business for more than 100 years, would be shutting down. On Sunday, official word came out that the company filed for Chapter 11 bankruptcy.
The move to file bankruptcy comes only three years after the company received a whopping $700 million from the federal government in bail-out funds. That money came in the form of loans the federal government gave out during the height of the COVID-19 pandemic to help businesses and industries that were struggling to survive.
Apparently, that money wasn’t enough to save Yellow Corp., and now the federal government is out $700 million as a result.
A lot of times, companies use Chapter 11 bankruptcy as a way to restructure their debt so that they can continue to operate. However, Yellow’s plan is to liquidate its assets and shut down.
All of the company’s creditors – which includes the federal government – will now have a tough time recovering any funds that are owed to them.
Industry experts have said that poor management as well as poor strategic decisions that date back decades led Yellow Corp. to experience financial stress that they ultimately couldn’t overcome.
The shutdown of a major trucking company follows two others that did the same back in 2019 – New England Motor Freight and Celadon.
The fact that the federal government is out all that money they’re owed isn’t the only fallout from Yellow’s shutdown. Industry experts say that shippers and customers who used Yellow’s services will likely now be forced to pay higher prices for shipping at competitors such as ABF Freight and FedEx. That’s because Yellow historically was known as one of the cheaper trucking companies around.
In a statement released on Sunday, Yellow’s CEO Darren Hawkins said:
“It is with profound disappointment that Yellow announces that it is closing after nearly 100 years in business. For generations, Yellow provided hundreds of thousands of Americans with solid, good-paying jobs and fulfilling careers.”
The company, which was based in Nashville, Tennessee, employed about 30,000 people in locations across the U.S. It was, in fact, one of the largest “less-than-truckload” carriers in America.
Yellow had 22,000 workers who were unionized, and the Teamsters union that represented them that the company gave them legal notice for their upcoming bankruptcy and ultimate shut down in operations. That happened after Yellow laid off hundreds of employees who weren’t a part of the union.
In a statement released at the end of JUly, Sean O’Brien, the general president of the Teamsters, said the news was “unfortunate but not surprising.” He added:
“This is a sad day for workers and the American freight industry.”
The writing was on the wall a few weeks ago for Yellow, with multiple media outlets reporting that customers already started to find other options for their shipping, with Yellow also putting a halt to new freight pickups.