Trucking firm Yellow shuts down, leaving 480 Minnesota union workers hanging

Workers at Minnesota's six Yellow Corp. terminals are in flux as the trucking company completes a plan to cease operations.

The International Brotherhood of Teamsters leaders said the trucking giant will file for bankruptcy any day now and start liquidating assets and laying off workers.

The Teamsters represent 480 workers in Burnsville, Coon Rapids, Duluth, St. Cloud, Owatonna and Jackson. It is unknown how many non-union workers will be affected. About 30,000 people risk losing their jobs nationwide.

The expected bankruptcy follows years of financial struggles and growing debt. Its expected liquidation would mark a significant shift for the U.S. transportation industry and shippers nationwide.

"They were a competitive player in this market," said John Hausladen, president of the Minnesota Trucking Association, of Yellow. "The market is going to shift. We're losing some capacity in the short run."

Hausladen said that the Yellow shutdown would have minimal effect on home package delivery.

Yellow is one of the nation's largest less-than-truckload (LTL) carriers. Company officials did not comment when reached by the Associated Press on Monday. As of Monday afternoon, no bankruptcy filings from the company could be found on the Securities and Exchange Commission's website, but the union confirmed that it had been served legal notice.

"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," said Teamsters General President Sean M. O'Brien. "This is a sad day for workers and the American freight industry."

The 99-year-old Nashville-based company's collapse arrives just three years after Yellow, formerly known as YRC Worldwide Inc., received $700 million in pandemic-era loans from the federal government.

Former Yellow customers and shippers will face higher prices as they take their business to competitors, including FedEx or ABF Freight, experts say — noting that Yellow historically offered the cheapest price points in the industry.

"If you have freight on a Yellow/YRC/Holland truck or in a terminal waiting to be delivered once they file, it's likely going to be very messy to try to get it back. So shippers should plan contingency inventory and be prepared for a long road to try to rescue their inventory," said Emily LeVasseur, a supply-chain expert and managing director at Waypost Advisors in Eden Prairie.

Eden Prairie-based C.H. Robinson Worldwide Inc., the largest transportation and logistics company in the U.S., has been offering shipping options for customers who need LTL services.

"As events have unfolded, we've been in close contact with Yellow leadership in order to keep our customers informed. And we've been successfully executing the contingency plans we developed for customers, based on our analytics on alternate carrier routing and cost implications," said Greg West, C.H. Robinson's vice president of LTL, in a statement.

Reports of Yellow preparing for bankruptcy emerged last week. Customers started to leave in large numbers, and the company stopped freight pickups, according to accounts in the Wall Street Journal and FreightWaves. Hundreds of nonunion workers were laid off Friday.

Operations shut down Sunday, according to the Teamsters.

The bankruptcy preparation reports arrived just days after Yellow averted a strike from the Teamsters, which represents Yellow's 22,000 unionized workers, amid heated contract negotiations. On July 23, a pension fund agreed to extend health benefits for workers at two Yellow Corp. operating companies, avoiding a planned walkout. The fund gave Yellow "30 days to pay its bills," notably $50 million that Yellow failed to pay the Central States Health and Welfare Fund earlier in the month.

Yellow has racked up hefty bills over the years. As of late March, Yellow had an outstanding debt of about $1.5 billion. Of that, $729.2 million was owed to the federal government.

In 2020, under the Trump administration, the Treasury Department granted the company a $700 million pandemic-era loan on national security grounds. Last month, a congressional probe concluded that the Treasury and Defense departments "made missteps" in this decision — and noted that Yellow's "precarious financial position at the time of the loan, and continued struggles, expose taxpayers to a significant risk of loss."

The government loan is due in September 2024. As of March, Yellow had made $54.8 million in interest payments and repaid just $230 million of the principal owed, according to government documents.

Yellow handled an average of 49,000 shipments per day in 2022, according to Satish Jindel, president of transportation and logistics firm SJ Consulting. On Friday, he estimated that number was down to between 10,000 and 15,000 daily shipments.

Yellow operated under many brands. Subsidiaries included USF Holland, New Penn Motor Express, USF Reddaway Inc., YRC Inc. and YRC Freight Canada Co.

The New Brighton-based LME trucking firm abruptly shut down in 2019, another disruption for workers and freight.

Includes reporting from the Associated Press and staff writer Brooks Johnson.