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Why Yellow Went Bankrupt

August 17, 2023

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Why Yellow Went Bankrupt

Three years after they received $700 million in federal loans to help whether the pandemic, Yellow is filing for Chapter 11 bankruptcy. Despite the fall of a 100-year-old trucking giant, many other companies are doing fine. Why did Yellow fail? What will happen to the industry and the nearly 30,000 employees searching for a new gig? 

What Happened to Yellow?

When any company with the reputation of Yellow filed for bankruptcy, fingers are pointed. Some analysts have also blamed the large population of unionized workers for the shutdown. Most analysts agree, however, the debt accumulating through various mergers over the past few years and pandemic aid was the real reason behind the fall. This, combined with its history of low shipping rates compared to the rest of the industry, leads experts to believe the company could not pay back its debts and decided to close its doors. This claim is backed up when looking at the rest of the industry. Over the same five-year period where trucking boomed, Yellow racked up over $200 million in losses. Meanwhile Old Dominion Freight Line, a company with similar operation models and revenues, reported more than $4 billion in profit.

How the Industry Will Be Affected

Despite the closure of a massive player, the rest of the trucking industry seems unaffected. In fact, many investors are betting on the industry’s success after Yellow’s closure. The less-than-truckload sector, which operates by filling a truck with more than one company’s goods and uses a hub-and-spoke to move the goods, is benefiting the most from the collapse. Companies that were once Yellow’s main competitors are now getting a surge in business. Clients are also finding new companies to ship with. It’s also expected that many companies with this shipment model will raise their rates. This is because the company with the lowest rates historically is now not affecting the market norms. 

Where Will the Employees Go?

In this closure, the employees will be the ones losing the most. The 30,000 workers laid off in this closing is the most since Boeing announced similar layoffs at the end of 2020. It’s still early to tell how exactly drivers will be affected. As competitors pick up where Yellow is leaving off, there will be an increase in demand for drivers across the country. Still, it’s expensive for companies to hire, and drivers aren’t willing to be out of work for months on end. We may see a surge in small trucking businesses like we did after the pandemic layoffs. 

What is certain is that the 30,000 workers, from drivers to dispatchers to cargo handlers, will need to find new work quickly. Many companies will need to fill new positions to meet new demand. 

For both of these scenarios, Spectra360 can help. We are experts in the hiring process, connecting employees and employers. We take into account not just qualifications but soft skills and company culture. 

For employers, we have your ideal employee quickly and efficiently based on all the standards you specify, and it’s risk-free until you hire. To get the process started, visit www.spectra360.com/quote

For employees, we will find you a job and workplace that you will love and works with your life. You can browse jobs and upload your resume to get started. 

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