Trucking company Yellow Corp., formerly known as YRC Worldwide Inc., has filed for Chapter 11 bankruptcy protection, marking a significant shift in the U.S. transportation industry. The bankruptcy comes just three years after Yellow received $700 million in pandemic-era loans from the federal government. Unlike a typical Chapter 11 filing used for debt restructuring, Yellow will liquidate its assets and join other creditors who are unlikely to recover funds. The company's financial struggles can be attributed to poor management and strategic decisions dating back decades. The bankruptcy will have far-reaching effects, with former Yellow customers and shippers potentially facing higher prices as they turn to competitors such as FedEx or ABF Freight.

Yellow's closure after nearly 100 years in business will result in the loss of 30,000 jobs, affecting its 22,000 unionized workers represented by the Teamsters. The breakdown in negotiations between Yellow and the union was a contributing factor to the bankruptcy filing. The Teamsters' General President, Sean O'Brien, called the news "unfortunate but not surprising," highlighting the financial chaos at Yellow.

Reports of the bankruptcy emerged in late July, with customers already shifting away from the carrier, and the company ceasing freight pickups. Prior to the bankruptcy filing, Yellow had faced financial challenges, with an outstanding debt of about $1.5 billion, including $729.2 million owed to the federal government. The Treasury Department had granted Yellow a $700 million pandemic-era loan in 2020, citing national security grounds due to its role in shipping supplies to military bases. The loan is due in 2024, and as of June 30, Yellow had paid $67 million in cash interest.

Yellow's troubles can be traced back to poor management decisions and a spree of failed acquisitions following the 2008 financial crisis. The company struggled to repay its debt, making it difficult to reinvest in the business and remain profitable. The bankruptcy filing has raised concerns about the risks associated with government bailouts awarded during economic crises. Congressional oversight committees have previously scrutinized Yellow's relationships with the Trump administration, as the company received financial backing from Apollo Global Management, a private equity firm with close ties to Trump officials.

The bankruptcy of Yellow could lead to temporary disruptions in supply chains and prompt further consolidation within the industry. Businesses that relied on Yellow may face temporarily higher prices as they seek alternative carriers for their freight. However, industry experts predict that prices will normalize within a few months. The downfall of Yellow serves as a cautionary tale and highlights the need for sound financial management in the transportation industry.