Yellow Shuts Down After Nearly a Century, Putting 30,000 Out of Work

On Sunday, July 30, 2023, Yellow Corp. shut down operations, ending a history of nearly 100 years as one of the largest less-than-truckload carriers in the United States. Notices posted at its terminals read: "All company operations have ceased as of Sunday July 30, 2023 at 12:00 pm EDT."

The collapse

Yellow employed about 30,000 people, including some 22,000 Teamsters, Transport Topics and CNN reported. The Teamsters said they had received legal notice that the company was ceasing operations and filing for bankruptcy.

The shutdown followed weeks of turmoil. The union had threatened to strike over missed contributions to pension and health plans, then called off the strike after Yellow got extra time to pay, CNN reported. By the middle of the preceding week, the company had stopped picking up new freight and was only delivering shipments already in its network.

"Yellow ended up shutting down ultimately, because they have had a catastrophic loss of volume over the past few weeks as shippers, concerned about a possible Teamsters strike and whether or not the company was going to be able to make its financial obligations, began diverting their freight to other LTL carriers," Michigan State University professor Jason Miller told Transport Topics.

Debt and the federal loan

Yellow carried at least $1.5 billion in debt, Transport Topics reported. In 2020 it received a $700 million pandemic-era loan from the federal government, which gave taxpayers a 30% stake in the company, and it still owed the Treasury more than $700 million, according to CNN.

Tom Nightingale, CEO of AFS Logistics, told CNN the company's debt service was "just enormous," and said industrywide LTL shipments fell 17% from 2021 to 2022.

Effect on the LTL market

Estimates of Yellow's share varied. Transport Topics put it at about 10% of the LTL market. Consultant Satish Jindel told CNN Yellow handled about 7% of the nation's 720,000 daily LTL shipments the previous year. Jindel said the sector had about 8% to 10% excess capacity, so the closure should not cause significant supply chain disruption, but he expected higher rates for shippers.

"The reason they were using Yellow was because they were cheap," Jindel said.

Competitors were already absorbing freight. ArcBest, parent of ABF Freight, had reported an increase of more than 10% in freight as shippers moved business, Transport Topics reported.

Yellow ranked No. 13 on the Transport Topics Top 100 list of for-hire carriers.

What it means for drivers and fleets

The July 2023 shutdown put thousands of experienced LTL drivers and dock workers on the job market at once. For other LTL carriers, Yellow's exit meant a sudden influx of freight from shippers looking for new partners and, according to Jindel, the prospect of firmer pricing. Shippers that had relied on Yellow's low rates had to find capacity elsewhere.