Analysts say the collapse of trucking giant Yellow will saddle American taxpayers with financial losses and threaten the nation’s freight transportation system. The bankruptcy filing by Yellow Corp on Sunday, after years of declining profits, is a blow to the industry and shippers nationwide. The company has racked up hefty bills, including paying wages and benefits to employees and taxes. It also owes money to vendors essential to its businesses, such as gas providers and shipping services.
A month after a pension fund agreed to extend health benefits for workers at two Yellow Corp operating companies, averting a strike, the company faces a wave of customers and lenders pulling its freight. Experts say this could force it into liquidation unless it can find another buyer or get the federal government to help.
Congressional pressure is mounting on the U.S. Treasury to help salvage the trucking giant from Republicans and Democrats alike, letters viewed by Reuters show. Republican Senator Josh Hawley is the latest lawmaker to ask the Treasury in a Thursday letter to extend the terms of a controversial $700 billion pandemic loan granted by the Trump administration to Yellow. It follows separate letters from Republican Senator Roger Marshall and Democrats Sherrod Brown and Bob Casey last month.
According to documents, Yellow has repaid only $230 million of the principal on its government loan in the past three years. It owed $1.5 billion as of March and is in danger of running out of cash by September. The company has been in trouble for a long time, with analysts pointing to poor management and strategic decisions that stretch back decades.
Yellow’s troubles are a reminder of the risks that can arise in fast-moving industries when a company gets too far into debt and the challenges of negotiating with large labor unions. Its bankruptcy lays bare the difficulty of competing in the freight shipping market, rapidly consolidating as customers move to rivals like FedEx and ABF Freight after Yellow’s collapse. That shift could drive up prices for consumers, analysts say.
