Yellow Blames Teamsters For Liquidity Crunch, Union Barks Back

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by Tyler Durden
Thursday, Jul 20, 2023 - 09:20 PM

By Todd Maiden of FreightWaves

Yellow Corp. pointed the finger at the International Brotherhood of Teamsters on Wednesday evening, saying the union is responsible for its “inability to make its monthly contribution to Central States Funds.”

The less-than-truckload carrier made a request to Central States in June to defer upcoming benefits payments as it attempts to come to terms with Teamsters on changes to operations and seek additional funding. However, Central States notified plan participants employed by Yellow companies YRC Freight and Holland on Monday that the carrier was delinquent and benefits would be suspended on Sunday without payment.

Yellow’s (NASDAQ: YELL) news release said the request to defer payment with interest was “not without precedent” and that it was “regrettably” refused an extension “despite the funds’ healthy reserves.”

“Even more regrettably, Teamsters General President Sean O’Brien has blamed Yellow for failing its workers, but it is the Teamsters’ leadership who has failed the 22,000 Teamsters employed by Yellow as well as the 8,000 non-union employees who may soon become the Teamsters’ collateral damage.”

The Teamsters issued a strike notice on Tuesday, saying a work stoppage could occur as soon as Monday if the payment isn’t made.

Yellow contends the “union’s breaches of the collective bargaining agreement” have resulted in the missed payment. It recently filed a $137 million lawsuit against the union alleging Teamsters leadership didn’t have the authority to reject the proposed change of operations and it didn’t schedule a required hearing on the matter.

“In short, Teamsters’ leadership’s obstruction of One Yellow directly caused Yellow’s liquidity crisis and Yellow’s need to implement cash-conservation measures, including its benefit funding deferral request,” Yellow said.

Yellow accuses Teamsters of “freezing the company’s business plan for nine months” as it has made attempts to negotiate its proposed changes, which would consolidate terminals, create additional utility positions to maximize labor efficiency and lower its cost structure to allow it to compete with other carriers.

“For many months, Teamsters’ leadership has steadfastly refused to negotiate the company’s long-planned and necessary modernization effort that would enable Yellow, a 100-year-old company, to streamline and strengthen its operations to compete against non-union carriers,” Yellow said.

Yellow also said that it offered the Teamsters “a significant wage increase that aligns with its union competitors” last week. No further details on the offer were provided by Yellow.

However, the Teamsters referred to the offer as “a back-door deal to rescue [CEO Darren Hawkins] humiliatingly mismanaged freight company,” in a statement Wednesday evening.

“From July 12-13, Hawkins made informal offers to the Teamsters begging the union to return to the bargaining table well before the expiration of the current contract, suggesting the beleaguered freight company could offer workers hourly increases of just over $2 in the first year of a hypothetical new contract,” the statement read. “Shockingly, the communications from Yellow were stipulated on the Teamsters agreeing to a new five-year contract as quickly as possible.”

Previously, Yellow offered to pull forward contractual wage increases and implement an additional pay hike to expedite a deal. However, it acknowledged the increases would have to be approved by lenders when it refinanced its $1.5 billion in debt at a later date.  

“It is not left to rank-and-file Teamsters to drag Yellow’s sinking ship to shore,” O’Brien said. “We are not going to agree to informal offers for new wages in the hopes of getting a fair contract next year when YRC Freight and Holland can’t even figure out how to pay their bills right now.”

The union’s statement ended with a reminder of the March 31 expiration date for the collective bargaining agreement.

Yellow said the Teamsters claim it can call a strike due to the missed plan contribution payment due July 15, “would be anything but lawful, as it would violate the parties’ collective bargaining agreement.”

“Commencement of meaningful negotiations with the Teamsters would set the stage for Yellow to reengage in comprehensive refinancing efforts with its lenders while clearing a path to advance One Yellow,” the carrier’s news release said. “All stakeholders — lenders, shareholders, employees and customers — need to see progress.”

Time appears to be running out for Yellow. In addition to facing a potential labor strike the company has been temporarily removed from some third-party freight platforms and shippers have been diverting freight to other carriers.