Dive Brief:
- Yellow Corp. is looking to divest its brokerage business, Yellow Logistics, and is in “active and ongoing” discussions with multiple interested parties, the company said in a news release Thursday.
- The business is an independent, non-union subsidiary that specializes in truckload, residential, contract logistics, engineered solutions, distribution and warehousing, according to the company.
- A sale would provide the cash-strapped LTL carrier with much needed liquidity as it works to negotiate a deal with the International Brotherhood of Teamsters that would allow it to refinance its debt in the hopes of avoiding a looming bankruptcy.
Dive Insight:
Another way to look at it — particularly considering the lack of bargaining progress the Teamsters reported this week — is that the LTL carrier is selling off a business as it prepares to file for bankruptcy.
Teamsters leadership told members in a memo Thursday the company would not agree to its previously offered $11-per-hour raise without upcoming, contractual increases “baked in” to the wage bump.
Yellow has halted pickups of customers’ freight, the Teamsters said. The union has informed the White House it supports any government action that would save company employees’ jobs. But another bailout appears unlikely just three years after the carrier received a $700 million loan from the treasury department.
A Yellow official said in a statement Wednesday that the union talks are ongoing and the company “continues to prepare for a range of contingencies.”
A message on the Yellow Logistics website acknowledges customers’ concerns about shipments being stuck in the larger LTL unit’s network if operations shut down.
“It’s Business as Usual at Yellow Logistics,” the welcome page says. “Service for our Yellow Logistics customers will not be disrupted in any manner. ... Yellow Logistics continues to operate and has the full support of the Yellow organization. We will continue to service our customers, protect our vendors and Yellow Logistics employees.”
The brokerage is one of the fastest growing 3PLs in the industry, according to Jason Bergman, Yellow Logistics president and chief commercial officer at Yellow.
“Yellow Logistics has proven to be a strategic and reliable partner to its customers and providers,” Bergman said. “Our deep knowledge of moving freight in multiple modes and knowing how to execute on these solutions reliably and within customers’ budgets adds value and strengthens their supply chains.”
A successful sale would be a bright spot for the third-largest U.S. LTL carrier, as reports have projected it could declare bankruptcy as soon as Monday. The Teamsters narrowly averted a strike this week at Yellow, which sued the union last month for its refusal to negotiate a deal on its One Yellow network overhaul.
But the strike threat over Yellow’s nonpayment of pension and benefit plan obligations — and the company’s warning that a strike would put it out of business — sent customers running. Yellow’s shipment counts have dropped by as much as 80%, T.D. Cowen analysts said in a financial note Tuesday.
A. Duie Pyle is among the Yellow competitors who have seen a surge in demand as shippers began diverting freight in the past week and a half, CEO Pete Latta told Transport Dive in a phone interview Thursday.
“We've seen the migration,” Latta said.
A longtime New Penn customer made a request of A. Duie Pyle as it shifted its business from the Yellow subsidiary on Wednesday, he said.
“Can you spot a trailer for us?” the customer said, according to Latta. “New Penn came and took the empty trailer, so we can’t load it.”
