Yellow execs have informed its 30,000 employees that they need to be ready to begin sending resumes as the carrier is preparing to file for bankruptcy, among other contingencies.
At the end of Q1, 2023, Yellow reported about $1.48 billion in total debt against $806 million in assets. In addition to this report, Yellow also has $1.3 billion in loans coming due next year, $729 million of those loans are from the government.
The LTL carrier’s liquidity problem was a growing concern as shipping demand continued to decline.
As the carrier struggled to deal with its liquidity problem, its Teamster employees threatened to strike if their demands were not met.
The looming threat of a strike triggered Yellow customers to begin scrambling for other carriers to work with, causing Yellow to lose thousands of shipments.
Yellow freight volumes have fallen 80% in recent days, according to TD Cowen.
The combination of a struggling freight market, a near Teamster strike, piling debt, and the loss of business appears to be too much for the company to overcome.
In a meeting viewed by FreightWaves, Yellow’s senior vice president told Yellow employees,
“Yellow’s talks with the IBT are ongoing. As previously stated, and in keeping with fiduciary responsibility of the company’s executives, the company continues to prepare for a range of contingencies.”
What Does a Yellow Bankruptcy Mean?
If Yellow does file bankruptcy next week, its remaining shipments will go to a range of other carriers. This will likely increase shipping demand, lower shipping supply, and increase pricing momentarily.
In addition to increasing shipping prices, Yellow will have to liquidate its assets. They would be selling off their 8,400 tractors and 36,300 trailers.
Finally, all 30,000 of their employees will be looking for a new place to work. If your company is currently hiring, your candidate pool will become a little bit larger.
If you can, help these people find their next place of work!