In the latest blow to the US economy, the once-dominant shipping company Yellow has ceased its operations and laid off all 30,000 of its workers. The Teamsters union that represents Yellow employees said that the troubled shipping company is expected to file for bankruptcy after it failed to refinance its massive one billion dollars debt. Yellow has been struggling financially for years, and even receiving a $700 million pandemic relief loan from the federal government in 2020, has not been enough to keep the company afloat.
Yellow, which was once a prominent shipping company, has been experiencing financial difficulties for years. The company’s customers included big names such as Walmart and Home Depot. It’s no surprise that Yellow’s struggle is another side effect of the pandemic. The shipping industry was hit hard, and Yellow was burdened with debts that it could not overcome.
Even with a $700 million pandemic relief loan from the federal government, Yellow’s financial troubles continued to mount, with debt that exceeded one billion dollars. Consequently, it became highly likely for the company to file for bankruptcy. With its announcement to lay off 30,000 US workers, it seems like the company’s bankruptcy filing is not too far away. The Teamsters union reported that these workers had not been given any prior notice of the layoffs, forcing them to scramble for alternative employment options.
Yellow averted a strike by 22,000 Teamster-represented workers earlier this month. It may seem surprising that a company that cannot pay its enormous debt managed to avert a strike. However, many of the drivers were loyal to the company, and they did not want to risk losing their jobs. Yellow’s operations were also seen as vital to the supply chain that was already weakened by the pandemic.
The company’s decision to explore opportunities to divest its third-party logistics company was seen as a last-ditch effort to avoid bankruptcy. Still, it did not come to fruition. Now the entire shipping industry is left to grapple with the impact of Yellow’s loss. With Amazon already stepping into the logistics space, the domino effect that the collapse of Yellow could have, especially on small businesses without many alternate supply chain options, is concerning.
While Yellow’s collapse was imminent, it is heartbreaking to hear that all 30,000 workers were laid off with no prior notice. Many of these workers may be left without income to take care of their families. For some, it may be hard to find another job due to the current economic crisis.
It’s essential to increase policies that help struggling businesses during difficult financial times like these. Companies like Yellow should have been provided with more support. It’s also essential to think about the ripple effect that the loss of a company like Yellow could have on the economy. The hope now is that there is someone to step up and fill the gap left by Yellow, and soon.
