Yellow Corp. has failed to make its required pension contributions for June and is planning to withhold payments for July, FreightWaves reported. The pension funds, pension accruals and health care coverage for workers will suspend on Sunday, according to a statement by the Teamsters. The Teamsters union has threatened to strike by Monday if this is not resolved and the pension contributions remain in default. The company owes $50 million and currently has in excess of $100 million in cash reserves. If a strike comes to pass, this would likely be the end for the storied less-than-truckload carrier. While there is a lot of noise around the Yellow story, one thing is clear: Management is aware of the risks of not paying into the pension fund. They would have only missed a pension payment out of dire necessity, not convenience. After all, this is not an Elon Musk-style default — “I am not going to pay this because I don’t want to” — but rather a decision that is borne out of a lack of sufficient funds to cover the payments. Yellow’s management likely knew that not paying the funds would force the Teamsters’ hands. Perhaps they were hoping for a last-minute government bailout and decided that not paying the pension payment would allow for a few more weeks of liquidity until that bailout came. On at 2 p.m. EDT Thursday, FreightWaves will be hosting a special webinar to discuss what a Yellow shutdown likely means for the freight market and how shippers and carriers should prepare.
