Yellow sues the Teamsters

Yellow Corp. on Tuesday filed a $137 million lawsuit against the International Brotherhood of Teamsters for blocking the integration of regional carriers New Penn and Holland into Yellow’s national network. It is a restructuring that Yellow describes as “essential to the company’s survival.”

According to a Yellow news release, the plan called One Yellow is necessary “to modernize its business, which is necessary to compete against nonunion carriers that dominate the LTL business today.”

Citing its need to refinance $1.3 billion debt, the company says it “is entitled to $137.3 million (and counting) for the injury the union has caused Yellow and continues to cause Yellow.”

In its release, the company takes aim at Teamster General President Sean O’Brien, who it says “has taken up the role of public agitator for the company’s demise, recently tweeting an image of a headstone in a cemetery with ‘Yellow’ on it.”

Yellow Corp. stock on the Nasdaq exchange dipped below $1 a share Tuesday morning.

In a news release of their own, the Teamsters describe Yellow’s lawsuit as “baseless, frivolous, and meritless.”

Ugly, but not the first

This may be the ugliest spectacle of a big, unionized less-than-truckload carrier poised anxiously on the brink of bankruptcy, but not first.

What does the end of a major, national carrier look like?

On Labor Day of 2002, the 15,000 employees of Consolidated Freightways, most of them Teamsters, were told to call a toll-free number to hear a message from the company’s CEO, John Brincko. Consolidated, also known as CF, was the country’s biggest LTL carrier at the time.

“Thank you for dialing in on this holiday weekend. I hope you and your family are enjoying the time together. I have some extremely urgent and sad news to share with you today,” Brincko told the callers. Then after a brief account of the company’s failed effort to get more money from lenders, he said “Your employment ends immediately.”

It was finally over. CF was dead. And 15,000 people were suddenly out of work. Yellow says bankruptcy would put 30,000 people out of work, 22,000 of them Teamsters.

Like Yellow, CF was a legacy carrier from the days of regulated trucking and had been struggling for years. Like all less-than-truckload carriers, CF’s truckload and large LTL shipments had been siphoned off by the bustling, nonunion truckload sector. The LTLs lost small shipments, too. Called minis for the minimum shipment charge that applied, most were retail deliveries often to individual shops. UPS had taken most of that business after raising its maximum weight limit.

CF was worse off than the others. With maintenance deferred and no money for equipment, CF’s ragtag trucks had become an embarrassment. The vast, crumbling fleet was a rolling advertisement of the company’s crumbling finances. CF stock that sold for $38 a share a year or so earlier was worth 70 cents a share the Friday before that weekend. On Labor Day, Sept. 2, it was worth nothing. CF was reportedly the third-largest corporate bankruptcy in U.S. history.

Yellow runs into East Coast trouble

Yellow is trying to consolidate its national operations with those of its regional subsidiaries. In the West, the company says it has absorbed regional Reddaway, while maintaining its regional service levels. But in the East, where Yellow needs to merge regionals New Penn and Holland, they have run into trouble. The Teamsters, who approved consolidation in the West, have balked in the East.

Earlier in June, the union and Yellow argued in public while both investors and shippers watched. Industry sources report an ominous drop in Yellow’s business as wary shippers presumably divert their freight to other carriers. FreightWaves described the volume decline as a “free fall.”

Meanwhile, the Teamsters union has said they will not make any more concessions to Yellow and has refused to negotiate any further. Yellow has said that without additional funding they will run out of money in August.

CF had survived for 20 years after deregulation at least in part by taking over the LTL business of other Teamster carriers that had collapsed. So, just as Yellow’s sales people surely reached out to CF shippers 21 years ago, other LTL reps are probably calling on Yellow’s customers now.

But this time around is different. Now most of those LTLs are nonunion. As a former Teamster member, I’m finding it hard to understand how the end of 22,000 Teamster jobs at Yellow benefits the Teamsters, unions in general, or the 22,000 individual Yellow workers who could find themselves out of work at Yellow.

If they find other trucking jobs at all, it will probably be with nonunion carriers. LL

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