How Teamsters and trucking giant Yellow ended up in a bitter battle

Abdul Jaludi knows his job as a driver at Yellow Corporation, one of the largest trucking fleets in the United States, is better than most trucking gigs. He’s home most nights, gets paid vacation and sick leave, and “doesn’t pay a penny” for his medical benefits. 

Still, Jaludi is concerned that his job may soon get worse. Yellow is chasing an initiative called “One Yellow,” which will integrate Yelllow’s disparate regional networks into a super-regional one. 

It may sound like a humdrum change in operations, but merging networks has proved controversial. Yellow seeks to close 24 of its 300-plus facilities and join them with nearby, existing terminals. It’s already completed much of this work in the Western U.S. But, before it can move ahead with consolidating networks in the rest of the company, Yellow has a massive hurdle: the International Brotherhood of Teamsters. The union, which represents around 22,000 Yellow truck drivers, has repeatedly rejected proposals for additional consolidation. 

Under One Yellow, nearly 1,000 truck drivers will see their jobs drastically change. Jaludi, who drives for Yellow’s YRC Freight and is based in Maybrook, New York, about 75 miles north of New York City, is paid for each mile he drives. During the May 28 to June 3 pay period, according to a pay stub viewed by FreightWaves, Jaludi earned about $36 an hour before taxes. He usually doesn’t load or unload freight.

Under One Yellow, Jaludi would likely be converted to a new role called “utility driver,” where he would be expected to handle freight and take more local jobs. He would have to take on his hourly rate that he typically only earns when he’s waiting at loading docks – about $27 per hour.

Yellow is seeking to convert about 1,000 out of 6,000 linehaul truck drivers to this role. A Yellow spokesperson said about 400 of those roles have already been converted. The spokesperson confirmed that utility drivers are paid hourly, but declined to comment what that hourly wage would be in Maybrook, New York. The spokesperson added that employees would receive a $1.77 per hour wage increase if Teamsters were to approve One Yellow changes. 

“Yellow and its representatives have made countless attempts to meet with IBT leadership to discuss the future of Yellow’s 22,000 union employees,” a Yellow spokesperson told FreightWaves on Wednesday. “Those meeting requests have been largely ignored. It’s incumbent upon responsible leaders to sit down to talk about the livelihoods of Yellow’s union employees. Yellow is ready to meet anytime and anyplace.”

Sean O’Brien, Teamsters general president, said in a Facebook video on Monday that the union will not approve the proposed changes. O’Brien said Yellow claims the company will run out of money by August if the consolidation doesn’t happen. 

Teamsters declined to comment or make a representative available for this article. 

A Yellow spokesperson declined to comment on O’Brien’s statement that Yellow will run out of money by August. Still, the trucking giant is hardly thriving. The 94-year-old company said on May 3, when it released its first-quarter 2023 financial results, that it was in $1.5 billion of debt. The trucking company’s operations roughly broke even that quarter, according to its operating ratio.  

Three trucking experts told FreightWaves that the consolidation will be necessary for Yellow to continue on – even though it doesn’t appear that Teamsters is keen to make that happen. Here’s how Yellow got into such a fracas, and what it says about unionization in the U.S. 

Yellow wants to integrate networks to stay afloat 

Yellow is a major player in a segment of the trucking industry called less-than-truckload. Less-than-truckload (LTL) carriers haul multiple customers’ freight in one trailer. Yellow claims some 10% of LTL market share, according to Logistics Management, and is the third-largest LTL carrier overall. 

Despite this scale, LTL insiders haven’t been keen on Yellow for decades. “People have been talking about Yellow going under for as long as I’ve been in the industry,” said Gabe Pankonin, CEO of Rocket Shipping, a brokerage in the LTL space. 

Yellow had a close brush with bankruptcy in 2009 and in the early months of the pandemic. In the latter situation, Yellow received a controversial $700 million loan from the federal government within the CARES Act program, giving the U.S. Treasury a hefty stake in Yellow. Yellow has paid back around $56.8 million of that loan, according to a company spokesperson.

Yellow has a nationwide LTL carrier called YRC Freight. The company is also something of an amalgamation of several regional LTL carriers that it’s acquired over the years: 

• New Penn, servicing the Northeast, acquired in 2003
• Reddaway, servicing the West, acquired in 2005 as part of the Roadway acquisition
• Holland, servicing the Midwest and parts of the Southeast, acquired in 2005 as part of the Roadway acquisition

Those regional brands maintain strong brand loyalty. That’s been good for Yellow’s ability to attract and retain customers and expand its market share. However, these acquisitions left a massive hangover for Yellow in the form of redundant terminals. 

“The downside … was a redundancy in facilities, a redundancy in systems, and, in some cases, even a redundancy in personnel,” said Kevin Moore, who has worked in LTL and other sectors of trucking for three decades. “They believed that if they could amass enough size and scale that they would be able to eke out additional efficiencies and eliminate a competitor in the marketplace.”

Today, according to the company spokesperson, this redundancy often means two Yellow facilities of different legacy brands might be next to each other – and functioning as if they’re not part of the same firm. A driver from YRC Freight and a driver from Holland, for example, might independently show up at one customer’s loading dock. 

Yellow says consolidating these networks is crucial for the company’s survival. In a suburb of Cincinnati, Ohio, Yellow is seeking to combine a Holland facility and a YRC facility that are next to each other yet with separate workforces. In Milwaukee, Yellow plans to shutter one Holland facility that is less than a mile from a YRC terminal, potentially affecting some 189 employees.

Yellow completed integrating its network in the Western U.S. in September 2022, according to a Tuesday statement from the company. 

“Already, on the West Coast, where One Yellow was implemented in September 2022, Yellow has seen the significant economic benefits to be derived from operating within a single, fully-integrated super regional network,” reads the Tuesday statement from Yellow. “That is why completing One Yellow now, for the remaining 80% of its network, remains so critical. One Yellow will enable Yellow meaningfully to compete in the future with the non-union carriers who dominate the less-than-truckload market.”

Consolidating additional terminals would, of course, save money. What’s more, as FreightWaves’ Todd Maiden has previously reported, the real estate gains from selling those terminals would help the carrier with its massive debt.

Teamsters is pushing against Yellow

O’Brien, who became the president of Teamsters in 2022, has made clear he will be tough on employers. That’s an aboutface from previous Teamsters leaders – particularly when it comes to Yellow. 

“Historically, Teamsters has taken a soft stance on Yellow,” Pankonin said. “They’ve bailed them out a few times.”

Union bosses were previously keen to help Yellow. In 2009, Teamsters leaders threatened to expose hedge funds who held credit default swaps, which would bring bucks to financiers in the case of a Yellow bankruptcy, and ensured that enough bondholders participated in a debt-for-equity program that kept it afloat. By year-end, Yellow employed around 30,000 Teamsters drivers and had $1.1 billion in debt. 

In 2019, Teamsters allowed concessions in its labor contract that made it possible for Yellow to begin consolidating networks. 

A congressional watchdog report revealed that Trump White House officials were communicating in 2020 with then-Teamsters president James Hoffa about a $700 million federal loan to keep Yellow from bankruptcy. 

Under O’Brien, who became Teamsters president in 2022, such cushy concessions and cooperation are no longer on the table. He promised a “militant approach” ahead of the union’s looming contract dispute with UPS. Teamsters is also nearing negotiations with TForce and ABF, two other unionized LTL carriers.

“Yellow has been unable to effectively manage itself for a long time,” O’Brien said in the Monday video. “Now, the company says it’ll be out of money by August. Do not forget: Teamsters have already given back everything they possibly could to keep Yellow afloat.”

Consolidating terminals may threaten Teamsters jobs, though it’s unclear how many. Yellow has issued notices in states including Ohio, New York, and Wisconsin that layoffs may occur in those states’ Yellow locations, FreightWaves reported in March. 

Jaludi said he can accept the potential for eliminated jobs, but not the conversion of linehaul driving roles to utility driver roles, where handling freight would be more common and pay type may change.

“They’re saying that it would only affect a few hundred drivers,” Jaludi said. “If it’s only a few hundred drivers, why push the issue? Why not leave it alone and go ahead with the other changes?”

Meanwhile, in Pankonin’s viewpoint, Teamsters may be playing especially hard against Yellow to ensure the union is well-positioned to take on other freight companies. 

“If they just cave to their demand for purchased transportation and pay raises and things like that, then they don’t have as much leverage with ABF, TForce and UPS,” Pankonin said. “Unfortunately for Yellow, if it was any other year, it would just be a cycle. But considering they’re trying to consolidate, it puts their back against the wall.”

Yellow’s shuttering would be a massive blow to unionized trucking 

American approval of labor unions reached its highest point since 1965, according to a 2022 Gallup poll. Meanwhile, national media has closely followed unionization efforts in digital newsrooms and tech companies, Starbucks and indie bookstores. 

While it may seem like unionization is increasingly common, the percent of employed Americans in a labor union reached its lowest level on record in 2022, according to the Bureau of Labor Statistics. 

Jaludi, the New York truck driver, said he decided to work at Yellow because it’s unionized. However, if Yellow were to shut down, he said he’d likely work at Walmart or try to get a UPS driver job. 

The lack of unionized long-haul trucking jobs is a point that Yellow management has highlighted, particularly around concerns that One Yellow would lead to some drivers handling freight in addition to driving. A recent internal memo reported by FreightWaves’ Maiden told employees: “Let’s be clear: If you were at a non-union company — a very realistic possibility for MOST of you if Yellow does not survive — ALL of you would be subject to potential dock work regardless of your time in the industry.”

Unionization in the trucking industry was once commonplace. However, following the deregulation of the industry in 1980, most unionized trucking companies went bankrupt as they were unable to compete with non-union shops, which were more likely to offer lower freight prices to customers.

The full-truckload sector has practically no unions. LTL still has some; unionized carriers claimed about 22% of total LTL revenue in 2022, according to freight consultancy firm SJ Consulting Group. In 2010, unionized firms claimed 35% of LTL revenue. The collapse of Yellow would mean only two unionized carriers would exist – down from six in 2010. 

However, O’Brien seems to believe that a shutdown of Yellow is worth it. “Our members have proven time and again that Yellow cannot be trusted,” the Teamsters president said in the Monday video. “These executives have no idea what they are doing. They’ve driven this company into the ground. Our members have sacrificed much already. They have sacrificed enough. Sometimes, a bad job isn’t worth it anymore.”

Email the reporter at rpremack@freightwaves.com. And be sure to subscribe to MODES for your weekly transportation news.

The post How Teamsters and trucking giant Yellow ended up in a bitter battle appeared first on FreightWaves.

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Editor: Rachel Premack