Yellow trucking company closes, leaving St. Louis workers in limbo

ST. LOUIS — The Teamsters Union made an abrupt announcement Monday morning: It had received notice that the Nashville, Tennessee-based trucking giant Yellow Corp. was closing operations and planned to file for bankruptcy.

The expected closure leaves tens of thousands of jobs in the balance, and the impact on already delicate supply chains won’t be known for weeks to come. At the company’s sprawling truck yard in the Kosciusko neighborhood of St. Louis on Monday, signs were posted noting that “all company operations have ceased” as of Sunday. Tractor trailers were positioned to block the entrances to the yard.

“Today’s news is unfortunate but not surprising,” Teamsters General President Sean M. O’Brien said in a statement. “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. This is a sad day for workers and the American freight industry.”

At the end of 2022 the company had nearly 30,000 employees, 24,000 of them represented by unions, according to regulatory filings. The union said it was working on next steps to help members find other jobs in the freight industry.

It’s unclear how many workers the company has in the St. Louis area. A local union representative referred questions to the national Teamsters Union, which did not respond in time for publication.

For the network of people who manage logistics at retailers and manufacturers throughout the region, the company’s building financial pains have been top-of-mind for weeks.

“The retailers were following the story,” said Panos Kouvelis, director of the Boeing Center for Supply Chain Innovation at Washington University’s Olin Business School.

Yellow Corp. made a name for itself as a “less-than-truckload” or LTL carrier, a category of shipment or transport where, usually for a higher price, trucks aren’t filled to the brim.

Supply chain experts said it’s used by large companies when items have to be shipped right away and there isn’t time to amass a full container worth of goods. It’s also used often by retailers and small manufacturers, for “ad hoc, one-time delivery type of things,” said Gregory DeYong, associate professor of operations management at Southern Illinois University Carbondale.

Yellow Corp. has struggled for years. 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.

Earlier this month, the company averted a strike amid heated contract negotiations with the Teamsters Union. 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.

Last week, media outlets began reporting that the company was facing a potential bankruptcy.

Experts said that as Yellow Corp.’s customers watched the headlines about its financial woes, the company may have experienced somewhat of a self-fulfilling prophecy. Clients, seeing the looming issues, likely made arrangements to shift their shipments to other carriers, adding further pressure.

DeYong added that once a logistics company loses that confidence from its customers, “it’s just really hard to get it back.”

The next three to four weeks will tell to what extent Yellow’s troubles will ripple out to other businesses, Kouvelis said, and whether it will raise shipping costs or snarl supply chains.

“But right now,” he said, “we haven’t seen desperation on the part of retailers.”

DeYong predicted there will be “a bit of an increase” in rates for LTL shipping, but that it won’t be dramatic.

It will probably be too small to make any noticeable difference for consumers, DeYong said. But, he added, “With the upward swing of prices we’ve been experiencing for the past couple of years… the bad news is that we’re kind of used to seeing that.”

“So it won’t surprise any of us.”

The Associated Press contributed to this report.