Yellow insists that its restructuring plan “is necessary to compete against nonunion carriers that dominate the LTL business today.” (Yellow Corp.)
Less-than-truckload carrier Yellow Corp. filed suit June 27 against the International Brotherhood of Teamsters and certain affiliates in a Kansas court, alleging breach of contract and accusing the union of causing more than $137 million in damages.
Yellow ranks No. 13 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
The suit in the U.S. District Court for the District of Kansas alleges breach of a binding contract, arguing the union caused the damages by “unjustifiably blocking” Yellow’s plan to modernize its operations for more than eight months. Yellow argues the restructuring plan “is necessary to compete against nonunion carriers that dominate the LTL business today.”
Known as “One Yellow,” the company believes the reorganization to be essential to its survival, arguing in a statement announcing the suit that failure to implement the plan would lead to 30,000 job losses, including 22,000 unionized positions. Yellow also argues the changes would see the company institute standard industry practices.
Yellow said June 27 it did not take the decision to go to court lightly, but “the union’s leadership has left us with no choice.” The company said the union would not meet with it, despite good faith efforts to do so on Overland Park, Kan.-based Yellow’s part.
The Teamsters said in response June 27 it “categorically denies the baseless allegations” in what the union termed a “frivolous lawsuit.” The breach of contract allegations are “unfounded and without merit,” said Teamsters General President Sean O’Brien.
Yellow’s complaint alleges O’Brien orchestrated the breaches of contract and prevented Yellow from meeting with Teamsters leadership, arguing that the union endorsed the company’s modernization efforts “for several years” before reversing its stance.
In response, the union argues it has a collective bargaining agreement with Yellow that runs through March 2024 that has been adhered to and intends to defend itself. The union has expressed concerns about the reorganization, fearing it would lead to job losses for its members.
Yellow’s share price tumbled as details as of the suit became public, reaching an intraday low of 91 cents. The stock closed at 99 cents, down 21.75% on the day compared with the previous day’s $1.27 close.
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Since February, the stock has shed nearly 75% of its value compared with its 2023 high as the fight between the carrier and the union dragged on and the decline is even steeper versus Yellow’s pandemic-induced peak above $12 a share.
As recently as early May, Yellow executives seemed confident a deal could be struck, noting during the company’s first-quarter 2023 earnings call they expected talks to conclude successfully. The company posted a loss of $54.6 million in the first quarter, or $1.06 a share, compared with a loss of $27.5 million or 54 cents in the same period a year ago.
Under One Yellow, the company expects to be more efficient and easier for shippers to use. Company leadership says it foresees a super-regional company with a countrywide footprint, focusing on next- and second-day service.
Phase one of the plan in 2022 saw Yellow integrate the linehaul networks of YRC Freight and Reddaway in the West to support regional and longhaul services. Yellow eliminated nine West Coast terminals, consolidated several others and created about 360 “utility driver” positions. Similar changes are taking place in the Midwest and on the East Coast in 2023.
