Yellow Puts Logistics Division Up for Sale
[Stay on top of transportation news: Get TTNews in your inbox.]
“Yellow Logistics is one of the fastest-growing 3PLs in the industry and has been since its inception,” Jason Bergman, Yellow Logistics president and chief commercial officer, said in a statement. “Yellow Logistics has proven to be a strategic and reliable partner to its customers and providers.
“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. We are enthusiastic about our team’s ability to help customers accelerate growth for their portfolios.”
The Nashville, Tenn.-based company, according to Yellow, is currently engaged with multiple interested parties regarding the purchase of the logistics division and said that talks are “active and ongoing.”
Yellow Logistics is a nonunion, independent subsidiary of Yellow that is formerly known as HNRY Logistics, which launched in 2018.
It specializes in truckload, contract logistics, and warehousing and distribution services, and manages operations out of six warehouses.
In 2010, when facing a similar financial crisis, Yellow’s parent company sold its subsidiary YRC Logistics to private equity firm Austin Ventures for $37 million.
“If Yellow is shopping Yellow Logistics, it has some value,” Michigan State University business professor Jason Miller told Transport Topics. “But the fact that Yellow is selling it off in a freight recession certainly makes it less attractive than had they sold it two years ago. I’m sure somebody will pick it up, for the right price. Someone will buy it. Everyone knows Yellow is struggling financially. It’s a difficult position.”
Yellow’s asking price for its logistics division has not been disclosed.
Meanwhile, tenuous negotiations with the International Brotherhood of Teamsters to keep the nearly 100-year-old company in business appear to be continuing. The union represents 22,000 of the company’s 30,000 employees.
Miller said Yellow’s viability ultimately will come down to whether it reaches a deal with the Teamsters to finalize its reorganization, can obtain additional financing immediately and can hold on to its customers.
How effective have third-party services proved to be for fleets? Let's find out with Michael Precia of Fleetworthy Solutions and Dan Rutherford with Summit Virtual CFO by Anders. Tune in above or by going to RoadSigns.ttnews.com.
“I think right now, the real question is how much freight got pulled?” Miller asked. “That is the real wild card. ArcBest just said on their earnings call that they saw a little bit of a bump that they were saying was caused by a diversion from YRC to them. ArcBest is only half the size of YRC, and now it’s difficult to say how much freight Yellow has lost.”
The Teamsters on July 27 sent a three-page memo to local union offices with contract relationships with all four of its operating companies with a status report on the talks.
“The TNFINC [Teamsters National Freight Industry Negotiating Committee] has NOT been advised by Yellow that it is filing for bankruptcy at this time,” union leadership said in the letter. “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.”
The union said that it has been informed that Yellow has set aside an adequate amount of cash to fund payroll “for this week and for all days worked,” but it is unclear if there is money to include the company’s contributions to its third-party health and welfare funds, managed by the Central States Pension Fund.
Representatives from Yellow have not commented on the status of the talks, when contacted by Transport Topics.
In its letter to its Yellow locals, the Teamsters acknowledged for the first time that they have asked the Biden administration to get involved in the negotiations.
“The IBT contacted the White House and the U.S. Department of Labor, informing them of the status of the last two days’ negotiations between TNFINC and Yellow,” the union said. “Even though Yellow had not reached an agreement with TNFINC, the IBT also informed the White House and the Department of Labor that it would support any steps taken by the government that would save the Yellow employees’ jobs.”
The union also said it is willing to work with any new financial groups that come to the table to assist the company.
Want more news? Listen to today's daily briefing below or go here for more info: