- Yellow Corp. blamed the International Brotherhood of Teamsters Wednesday evening for the company’s inability to make $50 million in benefits and pension fund payments, arguing the union’s refusal to allow its network overhaul has caused its low liquidity by freezing its business plan for nine months.
- The union has given notice it plans to strike if the benefits and pension payments are not made by Sunday. But the company argued such a strike would be “anything but lawful” and would violate their collective bargaining agreement.
- The third-largest U.S. LTL carrier said the Teamsters had failed its 22,000 members at Yellow, and another 8,000 non-union workers may soon become “collateral damage” of its refusal to allow the One Yellow plan to proceed.
The Teamsters said Yellow CEO Darren Hawkins had tendered “informal offers” to the union last week that included just over $2 per hour in raises in the first year. But the union said it rejected the offers for “attempting to tether wage increases to future commitments from the union in an unnegotiated new deal.”
“It is not left to rank-and-file Teamsters to drag Yellow’s sinking ship to shore,” Teamsters General President Sean O’Brien said in a statement.
The informal offers were in line with contract terms at Yellow’s unionized competitors, the company said, and its request for a short-term deferral of payments to the Central States pension and health and welfare funds was “not without precedent.”
“Regrettably, the Board of Trustees of Central States refused Yellow’s request, despite the funds’ healthy reserves,” the company said.
After Central States received a $36-billion bailout to remain solvent earlier this year, TD Cowen analysts said in a financial note Wednesday night, the fund should be hesitant to allow employers to cut contributions.
The analysts noted that when Yellow came close to delinquency on pension contributions in 2020 and failed to negotiate concessions, the company spent part of its $700 million Treasury loan on outstanding pension contributions.
“A repeat of an eleventh hour government rescue seems unlikely,” the Cowen analysts said.
Yellow said the union’s refusal to return to the bargaining table has cost it more than $137 million, which prompted the company to resort to suing the Teamsters last month.
Business appears to be worsening in an already soft freight environment, Cowen said.
The analysts noted freight diversions from Yellow are picking up their pace this week, with a large national freight brokerage and a few big box retailers pulling their shipments from the company’s network. The company has countered that its shipment counts are holding.
“We see Yellow's insistence (by way of press release this evening) that an IBT strike would violate collective bargaining agreements as too little too late given the acceleration of diversions,” the analysts said.