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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Tim Tonnage
Yellow is no longer matching 401k contributions again…service down, tonnage down, morale down
No name
Interesting predicament for Yellow
Trucker chuck
Everything company that yellow has acquired they have driven into the ground. Now they want to do the same with new penn and holland. Pension give backs, stagnant wages, work rule changes. The union members have given them enough. Yellow in return under staffed areas and the old dominion, Estes and fedex freight now have the freight.
Carl martinez
Business down everywhere yellow trying to take advantage why’ll they have they open window
sam
“Yellow will not be allowed to disrupt and upend our members lives” He,s talking about freaking 15 percent union members it take them 2 hours to fuel a tractor OOH no he is talking about the hookers they spend 3 to 4 hours to hook a set of double empty trailers OOH no no he is talking about the dock workers with 4 hours break from 8 hours of work maybe i,m making mistake he is talking about line haul drivers it take them 13 hours to drive 420 miles maybe i,m confused he is talking about city drivers 8 hours work for 4 pick up.
15 percent of this company employees union and nonunion is the PROBLEM they have dispatchers they can,t type it takes them 1/2 hour to dispatch just typing name of trailers and destination , dispatchers they don,t have a clue how long a through load trailers parked in the yard. These kind of management and labor you can not find in a non profit organization they are destroying this company 30.000 family depends on this company someone should ask Murphy why we did not hear from you when the company layoff 50 percent union jobs past 3 years.
mike macallister
STAND YOUR GROUND…. Retired International Brotherhood of Teamsters. Chauffers,Warehousemen and Helpers….Past Political Action Chair…Local#20..Toledo Ohio U S A
john loughlin
roadway newpenn great companys til yellow got them anything yellow touched went belly up even jevic non union poor high priced hirerup management ruined these companys
Dick Bischoff
“Yellow will not be allowed to disrupt and upend our members lives” says teamster leader John Murphy. Hey knucklehead, all their lives will be impacted when they close their doors. Work with them on cost savings or you will see yourselves working for non union carriers. YRC is in the early stages of a death spiral, weighed down by a 700 million dollar loan they will never be able to repay.