Yellow Shutting Down Despite $700 Million Pandemic Loan, Union Says

The shipping company Yellow is shutting down, leaving around 30,000 workers out of the job, according to the union that represents its drivers.

The move comes despite a controversial $700 million loan the company was awarded at the height of the COVID pandemic.

In a Monday morning news release the International Brotherhood of Teamsters, which represents some of Yellow's employees, said it has been served legal notice that the company, which moves pallet-sized shipments, is ceasing operations and filing for bankruptcy.

The union said it is putting the infrastructure in place to help affected workers find new jobs. 

A representative of Yellow did not immediately respond to a request for comment. Internal documents obtained by the trade publication Freight Waves said the company will make an announcement on Monday regarding layoffs.

In the past, the shipping giant has blamed its financial problems on the union’s refusal to budge on proposals to save the company money. A week ago the two sides narrowly averted a strike over Yellow’s inability to pay employee pensions and benefits.

In a news release early Monday, the Teamsters said Yellow’s problems stemmed from its own bad business decisions.

“Today’s news is unfortunate but not surprising. Yellow has historically proven that it could not manage itself despite billions of dollars in worker concessions and hundreds of millions in bailout funding from the federal government," Teamsters General President Sean O’Brien said in a statement. "This is a sad day for workers and the American freight industry.”

A Teamsters representative did not immediately respond to a request for comment.

A June congressional probe raised concerns about the $700 million loan the shipping giant was awarded during the COVID pandemic.

The Treasury Department deemed Yellow essential to national security, although a series of congressional reports have since exposed doubts raised about awarding the company such a designation.

One of the those reports, authored by U.S. Rep. French Hill of Arkansas, said the shipping giant was in a precarious financial position even before it was awarded a pandemic-era loan. The report noted that Yellow spent $570,000 on lobbying in 2020.

“The Treasury confirmed that several senators and members of Congress sent letters to Treasury urging them to provide Yellow a loan,” Hill wrote. The congressman concluded Yellow “should have never received a $700 million taxpayer bailout from Treasury.”

With the shipping giant’s collapse, it is unclear if that money will ever be repaid.