The trucking giant Yellow Corp. filed for bankruptcy protection in late July, idling at least 77 Maine workers and creating worries that the cost for freight will rise and filter down to consumer goods.
Nashville-based Yellow is known as a low-cost carrier for big box stores, so higher prices caused by its shutdown could show up soon, including in Maine. The closure also will affect product suppliers, truck maintenance companies and insurers in Maine, Brian Parke, CEO of the Maine Motor Transport Association, said.
Yellow’s collapse follows historically busy activity during the height of the COVID-19 pandemic in 2020 and 2021, when people were home and ordering heavily online, Rachel Premack, editorial director of FreightWaves trucking news, said. But consumers shifted to spending money on services rather than goods in the spring of 2022, causing a dip in trucking business.
“At the same time the cost of operating a trucking company became so much more expensive than before the pandemic with higher fuel, labor and insurance costs and scarce and expensive parts,” Premack said. “The inputs that you need to run a trucking company profitably have all become more expensive at the same time that business has decreased quite a bit.”
The failure of Yellow could create some disruption to the supply chain, but nothing as severe as the shortages during the height of the pandemic, Premack said. Many shippers already diverted freight to different companies after the International Brotherhood of Teamsters, the union representing 22,000 of Yellow’s 30,000 employees, threatened to strike last month, she said.
Trucking visits to warehouses of the top 50 US retailers declined 15 percent in the last two weeks of July compared with the same time the previous year, according to the shipping statistics firm Motive, which expects freight market business to lag through the rest of the year.
This is the second time in the past four years that a trucking company with locations in Maine has filed for bankruptcy. New England Motor Freight, a New Jersey-based trucking company that had a terminal in Scarborough, filed for Chapter 11 bankruptcy protection in 2019 for itself and 10 affiliates.
Both it and Yellow combined small loads from different customers on each truck in a market segment known as less-than-truckload freight. Yellow was the third-largest such freight handler nationwide.
Yellow laid off 64 workers at a Yellow terminal in Westbrook and 13 in Fairfield, according to notices filed with the Maine Department of Labor. It is not clear if that includes all of the company’s employees in the state, as it still has about 1,500 people nationwide working in customer service to make sure freight still in the system is delivered. The Teamsters Local 340 and the company did not respond to requests for more information.
It also is not clear how many former employees applied for unemployment insurance in the state because that information is confidential, a Maine Department of Labor spokesperson said. Not all layoffs fall under the notice system, she said.
Yellow, a 99-year-old company, had been struggling for a couple decades before notifying the Teamsters that it would shut down on July 31. It filed for Chapter 11 bankruptcy protection on Sunday, blaming the Teamsters for driving it out of business. The union responded by accusing Yellow of “corporate incompetence,” saying it blew through the $700 million it received in federal pandemic funds through the CARES Act.
Yellow filed a lawsuit against the Teamsters on July 19 asking for a jury trial and claiming the union tried to stall efforts under the “One Yellow” plan to integrate several companies it had acquired but not fully integrated.
That was one of the failings that Premack said hobbled the company, as it was competing with its acquired companies in some markets. Yellow claimed the union’s tactics cost it $137 million, which it is seeking in the ongoing lawsuit.
“The impact on the economy will be to lessen competition and drive up shipping costs throughout the country, including in Maine,” an attorney for the company said.
The company, which has been publicly traded, will be delisted on the NASDAQ exchange next week, Yellow confirmed in an SEC filing on Wednesday. It also reported second quarter financial results that day saying operating revenue was $1.1 billion, down from $1.4 billion the same time the previous year. It received $76.9 million from selling assets and property.
