Walmart has reportedly stopped using Yellow as the shipping company stares down bankruptcy and a major strike by the International Brotherhood of Teamsters. Craig Fuller of FreightWaves tweeted that Walmart was one of Yellow’s largest customers, meaning their exit will cost the company dearly. The implosion of Yellow could magnify the impact of any potential IBT strike against UPS, which alone could have ground the US economy to a halt.
Yellow had received a $700 million federal loan during the Covid pandemic, but has run into challenges paying it back, and the New York Times reports that the company had $1.5 billion in debt in March 2023. As their liquidity struggles have magnified, Yellow recently announced that it would delay payment for employees’ June and July health and pension benefits, which will cause the benefits’ managing fund to cancel benefits starting Sunday if the roughly $50 million bill is not paid, FreightWaves reports. The IBT’s looming strike, which will likely start next Monday unless something changes, is a result of the potential loss in benefits.
If Yellow is taken offline either by the IBT or the company’s financial quagmire, the union’s potential strike at UPS will take on heightened significance. It will also give the IBT more leverage over UPS. Without either company functioning, the economy will be in for a bumpy period, with a supply shock just as inflation had begun to revert to more normal levels.
Luckily, FreightWaves reports that UPS and IBT are reentering discussions that had fallen apart a few weeks ago. UPS said that “we are prepared to increase our industry-leading pay and benefits, but need to work quickly to finalize a fair deal that provides certainty for our customers, our employees and businesses across the country.”
