Economy Yellow Freight Trucking Company Goes Bankrupt After Receiving 700 Million in 2020

[mkess101]

Freight rates have been depressed for going on 2 years. It's always cyclical but this is a longer time than normal to have such low rates. When all of their other expenditures stayed the same or increased (including those massive pension payments) but revenue per trip was slashed for an extended period, the writing was on the wall unless they'd been very shrewd. Which it doesn't sound like they were.

 

[panamaican]

So did they lose their pension or not? or are they expecting them to pay it moving forward when the company is dead?

To my understanding, the union employees have their pensions safeguarded through the union but the non-union employees are the ones at risk.

 

[emefer]

Indeed, and the results are always the same when the rug gets pulled and it turns out they promised more than exists. As the kids say, the problem with socialism is you eventually run out of other people's money.






Yes, there is, so they have to sell their assets to repay their debts. $70 million/month is a ludicrous amount to be on the hook for. It would be nice if they could take the $750 million they're repaying the government and instead use that for almost a year of pension payments to the employees, or the teamsters could chip in with their pile of money, but doesn't look like that's going to happen. The government want their money back, the teamsters aren't giving up their half a billion in assets or massive salaries because they only negotiate with other people's money and a "fuck you, pay me policy".

The good news for the truckers is that it really isn't too old to start over like it would be in some industries.

Teamsters Local Salary for President
Avg. Base Salary (USD)
$722,446 /year
What is the average salary for a President at Teamsters Local in the United States?
Based on our data, it appears that the optimal compensation range for a President at Teamsters Local is between $549,646 and $921,280, with an average salary of $722,446. Salaries can vary widely depending on the region, the department and many other important factors such as the employee’s level of education, certifications and additional skills.

Who is running out of money here? It’s not the wealthy. What happens when the corporations and their executives have all the money and own everything?

 

[tastaylvr]

To my understanding, the union employees have their pensions safeguarded through the union but the non-union employees are the ones at risk.

Why would they be at risk though? Wouldn't the pension funds be locked up in an investment? or can the companies use it in certain circumstances? It makes no sense from my standpoint

 

[CatchnShoot]

Precisely. If they sell all their shit and pay back the loan, what's the issue?

You're allowed to shut your business down if you want.

You think they will pay off that loan???

Hard nope.

 

[CatchnShoot]

Here's the thing.... there is a trucking shortage atm, if these folks had any management skills at all they should be raking it in, it's a boom time in the industry.

That said, I suspect that all the actual drivers will be able to get another gig with the quickness, all the support staff, not so much, and, honestly it could boil down to a few at the top being absolutely inept.
It's sad, but these folks shouldn't have been bailed out in the first place.

 

[nostradumbass]

Who is running out of money here? It’s not the wealthy. What happens when the corporations and their executives have all the money and own everything?

Um, the company is, that's what bankruptcy is. They have debts higher than what they have coming in, so they sell the assets they already bought to pay back loans and recover a portion of what they invested.

 

[mkess101]

Here's the thing.... there is a trucking shortage atm, if these folks had any management skills at all they should be raking it in, it's a boom time in the industry.

That said, I suspect that all the actual drivers will be able to get another gig with the quickness, all the support staff, not so much, and, honestly it could boil down to a few at the top being absolutely inept.
It's sad, but these folks shouldn't have been bailed out in the first place.

There's a shortage of drivers (big picture, long term) but freight rates are still extremely low and have been for 2 years. For most lanes, there's more trucks than freight. I'm in logistics, I know what we're paying trucking companies.

It will shift at some point, always does. The issue is that both drivers and in this case execs can be short sighted. They were getting record rates during Covid and just assumed they'd all make that $ going forward. The market flipped and has stayed low and they're hauling the same lanes for 70%, 60% etc of what they were getting. Their insurance, fuel, etc hasn't dropped so they're not making any $.

 

[panamaican]

Why would they be at risk though? Wouldn't the pension funds be locked up in an investment? or can the companies use it in certain circumstances? It makes no sense from my standpoint

Again, to the best of my understanding, the problem is that the company was missing pension payments. So even though the employees thought they were getting pension contributions from the company, the company wasn't making them. This means that if they thought they had $XXX in their pensions based on years of service and their own contributions, the actual number was lower. This will affect their retirement because the pension isn't funded sufficiently to last as long as needed. The long term risk is that instead of getting 20 years of pension they get 15 and that's going to suck for some guy in his 80s who avoided other retirement options because he thought his pension was going to cover him.

 

[Sean_wongster_wongmastter]

When you get a bail out loan, does it not come with oversight from the Govt or do they just giving u money and let you keep running your company into the ground?

Or… you listen to the government on how you run your company and they run it into the ground?

 

[Sinister]

Its interesting to keep seeing the thought that the Government will run your business into the ground...about businesses that have been run into the ground.

 

[CatchnShoot]

There's a shortage of drivers (big picture, long term) but freight rates are still extremely low and have been for 2 years. For most lanes, there's more trucks than freight. I'm in logistics, I know what we're paying trucking companies.

It will shift at some point, always does. The issue is that both drivers and in this case execs can be short sighted. They were getting record rates during Covid and just assumed they'd all make that $ going forward. The market flipped and has stayed low and they're hauling the same lanes for 70%, 60% etc of what they were getting. Their insurance, fuel, etc hasn't dropped so they're not making any $.

I agree with you, but from an industry standpoint, are there competitors that navigated the Covid transition succcessfully? Then why not Yellow?
Transport is not the only sector in this particular love boat either, and with ANY business if your income doesn’t cover cost of operations, sooner or later it’s game over.

 

[mkess101]

I agree with you, but from an industry standpoint, are there competitors that navigated the Covid transition succcessfully? Then why not Yellow?
Transport is not the only sector in this particular love boat either, and with ANY business if your income doesn’t cover cost of operations, sooner or later it’s game over.

Oh for sure. Smart companies understood those record high rates weren't permanent. They stashed cash for when things changed. Same as an owner-op with his own truck doing his own thing. In 2021 those dudes were pulling in $200k+ and running 4 days/week in some cases. The smart ones realized it couldn't last.

Honestly, I think even companies like Yellow knew it wouldn't last. But a combination of greed and banking on the drop in rates not lasting this long is what doomed them.

 

[ColemanwastheGOAT]

Here's the thing.... there is a trucking shortage atm, if these folks had any management skills at all they should be raking it in, it's a boom time in the industry.

That said, I suspect that all the actual drivers will be able to get another gig with the quickness, all the support staff, not so much, and, honestly it could boil down to a few at the top being absolutely inept.
It's sad, but these folks shouldn't have been bailed out in the first place.

It looks like their union made them non competitive. 70M in pension payments per month is nearly a billin a year. What kind of pension do Amazon drivers get?