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Do Teamsters have leverage against weakened Yellow’s operational changes?

Negotiations coincide with Q4 net loss, tough Q1 outlook

The union may risk pushing Yellow further into the red if the latest changes aren't approved. (Photo: Jim Allen/FreightWaves)

The Teamsters union said it wants more details regarding less-than-truckload carrier Yellow’s revised change-of-operations (COO) notifications filed last week and that it does not approve the updated plan in its current form.

“The Teamsters oppose any change of operations written in vague language or drafted to erode contractual standards and practices,” said John Murphy, Teamsters national freight director, in a Tuesday news release. “Yellow will not be allowed to disrupt and upend our members’ lives.”

Yellow (NASDAQ: YELL) is seeking to consolidate operations at regional carriers New Penn and Holland with its national YRC Freight network. Planned changes in the East, Central and South regions are expected to remove redundancy and improve efficiency by combining or closing terminals. 

It executed a similar reorganization in the West, which involved changing operations at 89 Reddaway and YRC Freight terminals.

This phase is the last piece of the operational overhaul and would realign ZIP codes covered by 204 terminals.

The updated COOs lower the number of utility positions, requiring drivers to handle work at different terminals and freight on the docks, from 998 in the original plan filed in October to 121.

The revised proposal would also add more turns, including “designated terminal turns,” where a driver would haul freight to a terminal, work on the dock there and return to the driver’s origin facility at the end of a shift. Designated terminal turns would impact 20% to 25% of linehaul operations at 36 facilities.

“The Teamsters demand that established work standards and contractual protections be maintained, that primary lanes be preserved, and traditional road driver classifications and dock workers be protected,” the news release stated.

A separate letter from Murphy called on local unions to demand specific details on how the changes would impact “freight flows, volumes, zip code alignments, manning, and applicable work rules” at their terminals.

“The revised proposed change of operations continues to be massive in scope and TNFINC [Teamsters National Freight Industry Negotiating Committee] does NOT endorse or approve the revised change as it is drafted,” the letter said.

Yellow has requested a hearing during the week of March 10 with implementation no later than April 30.

“The process continues,” a spokesperson with Yellow told FreightWaves. “In the meantime, we’re focused on the work at hand: moving freight for our customers.”

How hard can the union push back on Yellow?

Teamsters may have their hands somewhat tied negotiating with Yellow as the company once again finds itself in a precarious financial position. In the past, workers have voted to accept cuts to wages and benefits to keep the carrier in business, and Yellow recently indicated the restructuring is integral to its survival.

Yellow has recorded tonnage declines far higher than those of peers.

During the fourth quarter, the carrier reported a 25% year-over-year (y/y) drop in tonnage, down 35% compared to two years ago. Reports from other carriers showed that while tonnage was down by mid- to high-single-digits y/y in the fourth quarter, it was still up by single-digit percentages when compared to the 2020 fourth quarter.

While the falloff in volumes has been strategic and done in efforts to find freight with better pricing and margins, Yellow continues to be in and out of profitability.

Yellow booked a net loss of $15.5 million in the fourth quarter even with the benefit of a $28.2 million gain from the sale of a terminal. It recorded a 99% operating ratio (inverse of operating margin), excluding the gain, meaning it was barely profitable before other items, including interest and taxes, are considered.

It also guided to 200 basis points of sequential OR degradation in the seasonally slow first quarter, implying a 101% OR. 

The company has a debt covenant requiring it to maintain adjusted earnings before interest, taxes, depreciation and amortization of at least $200 million for the prior 12 months. The calculation excludes gains from property dispositions. It generated $343 million in adjusted EBITDA in 2022 but only $55 million during the fourth quarter. The number appears likely to move lower in the first quarter.

With debt at 4.4x trailing 12 months’ adjusted EBITDA (3.7x net of cash) the company is again in a predicament as roughly $1.3 billion in maturities, including a $700 million loan from the U.S. Treasury, come due next year.

Yellow and the Teamsters will likely be back at the table later this year to negotiate wages and benefits as the labor contract between the two parties expires March 31, 2024.

“The Teamsters are done making concessions and we will not be pushed around,” said Sean O’Brien, Teamsters general president. “Our focus rests solely on protecting our members. If Yellow management gets in the way of that, we will go after this company with everything we’ve got.”

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  1. Trevor Murray

    Yellow obviously bought Hoffa in the last contract. Yellow has robbed its employees and the taxpayers for way to long. All the other freight companies pay $5 to$10 more per hour and haven’t been bailed out by the government. This a management problem they created, if I ran my finances like they do I would be in jail or homeless. Pay your employees or shut the doors, I’ll have a job that day. The management crooks at yellow will be homeless in no time.

  2. Billy bad

    They already said the same when they merged the two company’s. Yellow and roadway. It did not help them then and this merger will not help them now. It destroyed both company’s and we lost freight and drivers. What is that saying? History is important so you won’t repeat the same mistakes. Well this company went through the management and the new management is about to do the same. Merge companies for all the right reasons and destroy them all.

  3. Von Nebenfuhr

    Sam’s comment back in February make no sense. Those figures he lists are ridiculous 4 hours to fuel a tractor? What has this dude been smoking. Return to school to learn how to post a legitimate comment!!!!

  4. David

    Consolidation deletes my redundancy and this is what Yellow is trying to see achieve.
    Spurn Yellow’s attempt and what transpires??
    Out of business and x # of employees are on the bread line !!!!
    Retired Yellow P&D driver.

  5. Kc Dave.

    Sad for all the Roadway employees. The yellow guys Know yellow Sucks. They where just Brain washed !!! Strike those Bastards Yellow is going right up your Ass. !!! Retired Roadway. Dockworker.

  6. The professor

    Look what happened to Consolidated Freightways on Labor Day 2002 it will happen again because of greedy CEOs managers and dispatchers…. A road driver or dock worker just wants to feed his family that’s why he hired on with you idiots and you’re ruining their lives

Comments are closed.

Todd Maiden

Based in Richmond, VA, Todd is the finance editor at FreightWaves. Prior to joining FreightWaves, he covered the TLs, LTLs, railroads and brokers for RBC Capital Markets and BB&T Capital Markets. Todd began his career in banking and finance before moving over to transportation equity research where he provided stock recommendations for publicly traded transportation companies.