News trickled out of trucking company Yellow on July 26, first reported by FreightWavs — a price reporting and data firm focused on the global freight market — which doesn’t bode well for the nation’s third-largest ‘less-than-load,’ or LTL shipping company, as rumors of bankruptcy began leaking out. 

According to the reporting agency, Yellow’s senior vice president of sales informed her staff on Wednesday, July 25, that their last day would be this Friday, and the carrier would file for bankruptcy the following Monday, according to three employees who attended the video call.

Yellow employs approximately 30,000 workers, 22,000 of whom are members of the Teamsters union, which has been involved in extensive talks with company management over contract negotiations. The trucking company had reported operating revenue of $5.245 billion in 2022 but has been rocked by a wave of customer abandonment in the last few days. According to a report by TD Cowen and published in the Wall Street Journal, Yellow has seen freight volumes fall 80% recently.

The sales employees at that meeting on July 25 were approved to tell customers of the bankruptcy plans and to take paid time off for the rest of the week. However, in a meeting later that day, captured on video and viewed by FreightWavs, the same senior vice president told employees to roll back on the bankruptcy news. Roofing Supply Pro has not independently confirmed the contents of the video.

It was reported that the executive told employees to “correct” any customers who had been alerted to a possible bankruptcy and to share a prepared statement the company has since released to the media:

“…in keeping with the fiduciary responsibility of the company’s executives, the company continues to prepare for a range of contingencies.” 

A Yellow representative shared the same statement with FreightWaves and the WSJ when reached for comment. An email sent by RSP seeking comment from Yellow had not received a reply at press time. 

According to one Yellow employee, another company executive, reportedly the Vice President of Technology Services, told her team the above statement Wednesday afternoon. That employee said, previously in the day, their boss”… advised [them] that bankruptcy could happen at any time and to send out resumes.”

Yellow has been battered since 2020 when pandemic restrictions hamstrung global shipping. The company received a $700 million Covid-19 rescue loan that a congressional probe later concluded was given by the Treasure Department in error as the company did not meet the loan’s “national security” standard for the loan type it received.

The concern’s balance sheet gives it little ballast to withstand an action by the Teamsters. According to Yellow's latest quarterly report, the company has $1.3 billion in debt maturities coming due in 2024, $729 million of which is owed to the U.S. government. Yellow reported approximately $1.48 billion in debt at the end of the first quarter against $806 million in assets.

Should talks with the Teamsters go south, combined with the recent precipitous drop in business, Yellow may be forced into Chapter 11 liquidation versus a reorganization, according to analysts that track the industry.

The Journal reported that on July 23, the Teamsters withdrew plans for a walkout after a pension fund agreed to continue extending health benefits to unionized Yellow workers and a sister company; the fund said it would give Yellow an additional 30 days to make some deferred payments.

Industry experts said that if Yellow continues to bleed customers, the remaining clients would likely fan out to other carriers in the sector, including FedEx Freight, ABF Freight, XPO and Old Dominion Freight Line. The result would probably drive up prices in a sector that has seen a decline in demand.