Yellow is calling from beyond the grave

On Halloween, we got the news that Yellow, the recently deceased LTL carrier, might just rise from the dead. By all accounts, though, it’s a long shot.

Oh boy, is it ever.

Car carrier Jack Cooper Transport, the nation’s 75th largest for-hire carrier according to Transport Topics, is telling D.C. lawmakers it wants to buy Yellow’s assets for about $2 billion and restore at least some of the estimated 30,000 jobs lost when Yellow went bankrupt in July. In 2022, the last year it operated for all 12 months, Yellow was the nation’s third-largest LTL behind FedEx Freight and Old Dominion.

As a key element in its plan, Jack Cooper wants the Biden administration to extend the term of a $700 million loan for COVID relief that the outgoing Trump administration granted Yellow in 2020. The loan was scheduled to be repaid on Sept. 30.

Whether Yellow was prepared to repay it or not doesn’t matter now.

Bankruptcy put everything on hold. An extension of that loan would in effect provide $700 million toward the $2 billion Jack Cooper proposes to pay for Yellow.

Besides a number of U.S. senators from both sides of the aisle, the International Brotherhood of Teamsters also likes the idea. A Teamster carrier itself, Jack Cooper apparently plans to resurrect Yellow as a union carrier.

That’s just a wee bit ironic, since the Teamsters helped put Yellow into its financial grave by scuttling the company’s attempt to consolidate its regional and national operations into a more viable whole. It feels like the union’s top brass just realized that with Yellow gone, there are now 22,000 fewer dues-paying Teamsters in the world.

How does a car carrier doing about $500 million in annual revenue come up with the other $1.3 billion to buy a defunct mega carrier? Does Jack Cooper have a billion stashed under a big, lumpy mattress somewhere? Since it flirted with bankruptcy itself not too long ago, I doubt it.

Even if money were available, we would still have a car carrier that operates 1,286 tractors and 1,284 metal-frame trailers that look like rolling playground jungle gyms attempting to buy – and presumably run – what had been the third-largest LTL carrier doing more than $5 billion annually with 12,700 tractors and 42,000 trailers, each of which has a roof, a floor, four sides and a door.

(To all you talented vehicle haulers: just kidding. It’s worth noting that Land Line’s own Dave Sweetman once delivered fine cars from a trailer that did, in fact, have four sides and a door.)

If Yellow were a truckload carrier, revival would be possible.

You could go back into business literally one truck at a time. But Yellow was a national LTL carrier with terminals, dock operations, local pickup and delivery, and line haul. It’s impossible to simply rehire people and start the whole thing up again, or even a part of it, for that matter. Yellow’s customers have scattered, like dogs from an open gate at doggy daycare.

According to the Wall Street Journal, many former Yellow shippers are now working with XPO, Old Dominion and ABF Freight. FreightWaves said that Saia snagged some Yellow customers and that Estes probably did, as well. In fact, Old Dominion and Estes have bid more than $1.5 billion for Yellow’s 169 terminals.

It all reminds me of a time, long, long ago when a big carrier named Associated Transport began to founder.

Associated was a major LTL in the 1950s and 1960s. AT, as it was known, once described itself as the biggest carrier in the world. And to show the world just how big, the company ran its operations up and down the eastern seaboard from headquarters at 380 Madison Ave. in New York, a prestigious, high-rent district for sure. Ridiculously high rent.

AT was created in the 1950s when seven substantial LTL carriers were cobbled together. But during the 1960s, AT competitors were buying each other out and building more efficient networks. AT’s ungainly network of small terminals made shippers happy – until it didn’t. By 1974, the world’s biggest carrier was in big trouble. Bankruptcy seemed inevitable.

Then, like the Lone Ranger, a much smaller carrier named Eastern Freightways rode into town. The gutsy, North Jersey-based LTL (that delivered all its freight from 40-ft trailers instead of jitter bugs or straight trucks) proposed to take over the staggering giant. Eastern Freightways sold the audacious idea to AT, the banks and the Interstate Commerce Commission. A Chihuahua had swallowed the St. Bernard.

But after the Arab oil embargo of October 1973, the precipitous rise in diesel prices and the memorable trucker blockades, the U.S. had fallen into a deep recession. A small company like Eastern rescuing a sprawling outfit like AT would have been difficult in the best of times. In the economic doldrums of 1974 and 1975, it was impossible. As the combined companies faltered, the banks cut their losses, and in April 1976, the companies collapsed in spectacular fashion. It had been a long shot, all right. Too long.

Jack Cooper somehow reviving Yellow is an even more audacious idea. Yellow isn’t coming back looking anything like it did in July.

Since then, Yellow not only died, it began to decompose. So, I have to assume Jack Cooper has another plan, though I can’t begin to imagine what it might be.

Whatever the plan, though, it will absolutely not bring back even a respectable portion of Yellow jobs that were lost. Sure, LTLs can grow quickly when one established carrier absorbs another, but organically they grow slowly, adding terminals and building networks over years. Serious money lenders won’t want to wait that long.

Let’s face it: Yellow is dead, and it isn’t coming back. LL

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