Yellow shops 3PL unit; negotiations with Teamsters yield nothing

“Yellow Logistics is one of the fastest growing 3PLs in the industry and has been since its inception,” said Jason Bergman, president of Yellow Logistics and Yellow’s chief commercial officer. “Our deep knowledge of moving freight in multiple modes and knowing how to execute on these solutions reliably and within customers’ budgets adds value and strengthens their supply chains.”

In recent days, promotions for the business on social media show “it’s business as usual,” as it has a nonunion workforce that isn’t party to the current troubles facing its much larger LTL unit.  

A Thursday letter from the Teamsters negotiating committee to local unions at all four of Yellow’s LTL operating companies said recent negotiations have failed to yield a deal.

The letter rehashed a back-and-forth exchange the two parties had earlier in the week. The union said the company can’t make good on the $11-per-hour wages and benefits increase it previously offered. The two parties began negotiations late Sunday.

Yellow missed required contribution payments due July 15, which would have left employees at operating companies Holland and YRC Freight without health insurance. Teamsters planned to strike on Monday but Central States Funds agreed to extend coverage for affected employees, giving the company 30 days to cure the delinquency.

Yellow has been trying to ink a deal covering proposed work rules changes and wages “to use the agreement to shop for financing,” the letter said. Yellow has maintained a second phase of operational changes is required to streamline its business and cost structure.

It has also been a requirement of its lending group, which the company said would be willing to help restructure its $1.3 billion in debt coming due next year if it came to terms with labor.  

Sticking points, according to the letter, continue to center on wages — Yellow wants contractual increases for August and October to be “baked into” a new five-year deal, meaning the comp package wouldn’t equate to $11 per hour, the letter said.

The parties also remain at odds over flexibility in work rules.

A source familiar with the negotiations said, “The final contract that the IBT insisted on was, in fact, higher than Yellow’s best offer two weeks ago.” The source also said the union was seeking a bonus.

The letter said the company rejected its “bottom-line term sheet.”

The negotiating committee also said it sought intervention from the White House and the Department of Labor to intervene in the negotiations.

Representatives from Yellow were not available for comment.

The company has blamed the union for stall tactics and said it intentionally blocked the change of operations for nine months knowing the carrier would run out of money.

Yellow has said the Teamsters decision to strike over missed benefits payments is what caused freight to leave its network. However, the Teamsters say the company had the money to make required contributions to six health and pension funds but chose not to.

A filing with the Securities and Exchange Commission showed the carrier had in excess of $100 million as of June 30 and the union says Yellow made the decision to defer the payments on July 7.

“Yellow’s Board of Directors deliberately chose not to make contribution payments for the benefit of its employees so that it could ‘conserve’ Yellow’s cash and assets for its shareholders and stakeholders other than its employees and their benefit funds.”

It said the company could have made the payments and avoided the strike notice, which sent customers fleeing.

The letter said the company has stopped picking up freight. It also said Yellow’s internal employees have provided conflicting reports about whether it will or won’t file for bankruptcy.

“TNFINC [Teamsters National Freight Industry Negotiating Committee] has NOT been advised by Yellow that it is filing for bankruptcy at this time,” the letter read. “However, it does appear that time is close to expiring for Yellow to obtain financing, and it is becoming increasingly likely that Yellow either will shut down or file bankruptcy.”

Yellow did set aside cash to fund payroll “for this week and for all days worked,” the letter said. It’s unclear if that includes contributions to health and welfare funds.

The negotiating committee and Teamsters will “continue to try to work with the Government to determine whether there is a way to protect the Teamster families at Yellow.” Both are also willing to work with the company’s lenders or potential lenders.

“Hope, however, is fading,” the letter said.

Shares of YELL were down 44.1% on the bankruptcy reports Thursday compared to the S&P 500, which was down 0.6%.

More FreightWaves articles by Todd Maiden

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• Teamsters demand Yellow’s previous $11-per-hour offer