Perpetually financially troubled LTL carrier Yellow Freight (formerly YRC Worldwide) has bought a little more time from creditors in the hope of avoiding bankruptcy.
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Yellow’s current contract with the Teamsters expires at the end of March in 2024. It is pushing for operational changes in advance of a new contract being approved.
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Yellow has some $1.3 billion in debt it is trying to refinance, including a massive $700 million and controversial loan from the federal government that came from COVID stimulus funds. The debt is mostly due in 2024.
In parallel, Yellow is trying to make changes to its contract with the Teamsters union it says is needed to reach a level of financial stability.
Yellow has been warning it is running out of cash and was at risk of bankruptcy, saying that could happen as early as August. It has hired an investment banking firm to help find a way to refinance its debt. The carrier has said getting the debt refinanced is connected to its success in getting the contract changes with the union.
The federal government has waived requirements that the company maintain certain financial targets through this year’s financial quarter that ended June 30. Other lenders, including Apollo Global Management, have similarly waived the financial requirements through Sept. 30 this year, according to Yellow’s SEC filings.
The Teamsters are holding fast about allowing the operational changes Yellow is demanding.
“It is not left for the Teamsters to save this company; we have given enough,” Teamsters General President Sean O’Brien said in a June 12 video statement. “What happens next is out of our control.”
Twelve days later, O’Brien tweeted a picture of a gravestone, marked “Yellow, 1924 to 2023.”
Such showmanship is common in union negotiations. The Teamsters is trying to call what it believes is a bluff by the carrier. It sounds like we’ll know in August which side is right.
Yellow is the third largest US LTL carrier, so a bankruptcy would have a major impact on the market, including likely higher rates from other LTL carriers. Yellow employs some 22,000 Teamsters, mostly as drivers and freight terminal workers.
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 Last week, Jack Atkins a transportation sector analyst from Stephens, said in a note that without an direct intervention from the Biden administration to “both force the Teamsters to the bargaining table and facilitate an injection of liquidity, we believe that Yellow could go bankrupt and shut down in the next 30-90 days."
Yellow’s current contract with the Teamsters expires at the end of March in 2024. It is pushing for operational changes in advance of a new contract being approved.
The heart of the issue is Yellow’s desire to fully integrate various LTL carriers it has acquired over the years as a single network, which would drive efficiencies.
Only three unionized LTL carriers operate in the US today: Yellow; ABF Freight; and TForce Freight.
The share of unionized LTL carriers by revenue has dropped from 42% in 2002 to just 22% in 2022, according to data from SJ Consulting Group.
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