Just in the nick of time, UPS has struck a deal with Teamsters, averting a much-feared strike. The tentative deal raises wages for all workers, “creates more full-time jobs, and includes dozens of workplace protection and improvements,” the Teamsters stated in a release.
Last Monday, the Central States Board of Trustees voted to suspend health care benefits and end pension accrual for the Kansas-based ‘Yellow’ Corp. workforce. This news comes after the less-than-truckload operating company failed to pay the Central Board their payments.
The healthcare suspensions are set to go into effect July 23 if the corporation can’t comply and pay off its debt. The suspensions and end-of-pension accrual will leave 22,000 Teamsters without their benefits. If this comes to happen, it will lead to a large strike set for July 24 if the company can’t pay its debt and get the workforce benefits taken away.
Teamsters General President Sean M O’Brien stated, “Following years of worker givebacks, federal loans, and other bailouts, this deadbeat company has only itself to blame for being in this embarrassing position.”
Court Complaints
Due to the proposed strikes, the company has filed a federal court complaint against its employees. Claiming the employees have breached a contract that could result in a $157 million loss for the company. By the end of 2022, it was estimated around 82% of the corporation’s workforce was subject to bargaining agreements.
The Yellow Corporation owes the Central States more than $50 million. Due to failing to pay their July 15 debt and the admission, they will withhold their August 15 payments. The company made a statement that they are upset the Central States rejected the company’s request for deferred payments. This request was based on the company’s necessity to keep its assets liquid. Planning to pay back its loans in interest when it can secure additional funding.
What Caused the Financial Dip
Yellow is the third largest operator in the less-than-truckload business. Less than truckload is a niche transportation type used mainly for industrial and retail shipments. A teamsters strike would be damaging to the corporation that’s already in threat of bankruptcy. Especially while the company is in the process of refinancing $1.2 billion in loan debt that is to be paid next year.
A strike analyst says it would cause shippers to go to their competitors. On Tuesday analyst TD Cowen said, “We believe it would be extremely difficult for Yellow to recover from a full-blown strike given its precarious financial status.”
Yellow reported $100 million in cash holdings at the end of June. However, it’s been losing millions every few months.
The corporation was given a 700 million COVID relief loan that aided in the investment of new equipment. Only generated about 5.6% growth since the arrival of COVID in 2019.
Compared to competitor company Fort Smith whose revenue grew roughly 40% since then. As well as an outstanding balance of $500 million to Apollo Global Management lenders.
What This Means for Yellow
Most other trucking companies tend to collapse due to financial bankruptcy. If that ends up being the fate of Yellow, it is predicted that it would cause a big rift in US trucking shipments.
Predicted to be the biggest trucking shipment shutdown since Consolidated Freightways closed in 2002. Boosting rival trucking companies’ business, but also raising prices for their current customers.
The corporation plans to modernize its transportation by combining regional and national operations into one large network. They also state this decision will help their waste management and make booking easier for their customers. Also helping the company to compete with its non-unionized trucking contenders.
By AriAnna Rathers
Sources:
Axios: UPS reaches deal with Teamsters, likely averting strike
The Wall Street Journal: Teamsters Threaten Strike at Yellow as Trucker Misses Pension Payment
Teamsters Organization: TEAMSTERS ISSUE STRIKE NOTICE AFTER YELLOW CORP. FAILS TO MAKE $50 MILLION IN BENEFITS CONTRIBUTIONS
The Wall Street Journal: Trucker Yellow Is Losing Customers as Teamsters Strike Looms
The Wall Street Journal: Trucker Yellow Seeks to Steady Finances by Streamlining Operations
Featured Image- Courtesy of Mark Collin’s Flickr Page – Creative Commons License
Inset image Courtesy of Lav Ulv’s Flickr Page – Creative Commons License
