Imagine a century-old freight giant, standing tall like an oak tree in the American logistics landscape, collapsing overnight. This isn't just the tragedy of one company, but a wake-up call for the entire industry. The bankruptcy of Yellow Corp. presents precisely this sobering scenario.
The company, which once held a significant position in the US less-than-truckload (LTL) transportation market with annual revenues reaching $5.24 billion, has finally succumbed to bankruptcy. Yellow Corp. officially declared bankruptcy, ending its century-long operation and writing a sorrowful final chapter for American freight transportation.
Union Leader's Bitter Condemnation
Teamsters General President Sean M. O'Brien issued a scathing statement regarding Yellow's bankruptcy: "Today's news is unfortunate but not surprising. Yellow's history proves it couldn't manage itself despite billions in worker concessions and hundreds of millions in federal government bailouts. This is a sad day for workers and the American freight industry."
Mounting Debt and Government Bailout
Yellow Corp. was burdened with substantial debt, including a $730 million federal loan obtained during the Trump administration. The fate of this loan now remains uncertain. American taxpayers hold 30% equity in Yellow Corp., but these shares will be wiped out in the bankruptcy proceedings, resulting in significant losses for taxpayers.
A Two-Decade Decline
Yellow's downfall wasn't sudden but rather the culmination of twenty years of struggle. The company teetered on the brink of bankruptcy at least four times this century. Its collapse reduces unionized carriers' share of the LTL market to about 22%, concentrated mainly with competitors ABF Freight System and TForce Freight. In the broader trucking market, unionized carriers now represent just 4%.
Who Stands to Benefit?
TD Cowen analyst Jason Seidl identifies ABF as the "natural choice" for shippers replacing Yellow. "Phasing out transactional freight should allow (ABF) to gain share at more favorable prices," Seidl wrote in an investor note.
Massive Workforce and Operations
Yellow Corp. employed approximately 30,000 workers (including 24,000 Teamsters members), operating 13,800 trucks and 43,400 trailers. As a national carrier, its business spanned 48 states, with particular strength in the Northeast and Midwest.
The Final Days
Photos taken last week at Yellow's large freight stations in Akron and Cleveland showed numerous empty trailers with no workers present. News of its impending bankruptcy leaked midweek, prompting shippers to abandon the company.
A potentially company-ending strike was narrowly avoided last Sunday when the union announced that its Central States Health and Welfare Fund agreed to extend healthcare benefits for workers at Yellow subsidiaries YRC Freight and Holland. This ultimately became a pyrrhic victory for Yellow employees.
Market Impact and Rising Prices
SJ Consulting freight analyst Satish Jindel estimates Yellow handled only about 7% of the 720,000 daily LTL shipments in the US last year. With current LTL industry overcapacity at 8-10% due to recession concerns, Jindel believes Yellow's collapse shouldn't cause major supply chain disruptions.
However, Jindel predicts higher freight rates for shippers relying on LTL carriers, as excess capacity had previously kept prices low. "They used Yellow because it was cheap," he noted.
Competitors' Response
Major LTL competitors like Old Dominion Freight Line (ODFL), FedEx Freight, XPO Logistics, Estes Express, and ABF Freight System stand to benefit significantly. ABF remains the last major Teamsters-represented carrier in the LTL sector.
An internal ODFL memo obtained by LM stated the company would "selectively add" Yellow's freight volume but wouldn't handle abandoned shipments: "If the freight is profitable, OD will consider handling it."
A Century of History
Founded in 1924 as a subsidiary of Yellow Cab Co., the trucking company was established by brothers Cleve and A.J. Harrell in Oklahoma City. Thriving for decades in a regulated environment, Yellow methodically built its 48-state network by acquiring the operating rights of failed companies.
The Downward Spiral
Yellow's troubles began in the late 1990s under CEO Bill Zollars, nicknamed "Dollar Bill" for his grandiose visions. His most consequential move was the $966 million acquisition of long-haul competitor Roadway Express in 2007, which loaded Yellow with debt just before the Great Recession.
The promised "synergies" never materialized, beginning Yellow's survival struggle. Regional carriers like former USF companies had to be sold for cash. Even reliable trucking acquisitions like Jevic Transportation deteriorated under Yellow's ownership.
The Final Blow
Two weeks before its collapse, Yellow Corp. announced it would withhold about $50 million in pension payments to the Teamsters' Central States Pension Fund, claiming the union leadership was "blocking" major operational changes. This created what Yellow called a "liquidity crisis."
The company sued the Teamsters in Kansas district court seeking a temporary restraining order but lost. Judge Julie Robinson, while sympathetic to workers, questioned whether aggressive actions like strikes meant the union won a battle but lost the war.
The dispute centered on Yellow's "One Yellow" modernization plan to integrate regional operations into a national system. Teamsters' O'Brien maintained: "After years of worker concessions, federal loans and other bailouts, this deadbeat company has only itself to blame for this embarrassing outcome."
Ultimately, lenders said enough was enough. After fifteen years resembling Monty Python's Black Knight—continuing to fight despite losing limbs—Yellow Corp. finally had no fight left.