Ex-Yellow Logistics Employees Open New Radiant Office

On August 1, according to FreightWaves publication, Yellow logistics employees terminated their jobs as part of the widespread layoffs at the independent subsidiary of Yellow Corp.

However, on August 17, in the same publication of the FreightWaves, Radiant Logistics announced that a new brokerage office had been opened in  Overland Park, Kansas, whereby the managers of the new operation were formerly with Yellow Logistics until its Aug. 1 closure.

In the meantime, the brokerage arm of Radiant (NYSE: RLGT), Radiant Road and Rail, which was founded 85 years ago and operated as Clipper Exxpress until last year, focuses on truckload, less-than-truckload, intermodal, drayage and trans-loading services.

The report has it that Steve McCleary will head the customer and carrier teams while Ryan Stroup will lead field sales, whereas both helped expand Yellow’s truck brokerage unit, which was launched in 2017.

“With the abrupt closure of Yellow, we were able to move quickly to stand up an operation in Overland Park while attracting quite a few very passionate and talented people looking to minimize service disruption for their customers,” Stroup said. “Radiant offered a robust, technology-enabled operating platform and a solid financial footing from which we can continue to service our customers.”

He said the new office was fully functional within two weeks from first contact.

“We are truly excited to welcome such a great team to our organization,” said Bohn Crain, Radiant founder and CEO. “Over the years, we have looked at various acquisition candidates in the brokerage space to help build our bi-modal brokerage capabilities at Radiant Road and Rail but never found the right fit.”

Furthermore, Crain stated that both McCleary and Stroup would only sell TL brokerage services in the past, given the structure at Yellow Corp. They will now also be marketing LTL and intermodal services.

Giving an account of the shortfall with Yellow Logistics, an employee working with the company said all staff were given short notice to dial into a company-wide conference call; in contrast, on the call, employees got informed that there was no more money to fund the operation and they were being terminated.

In recent days, parent company Yellow (NASDAQ: YELL) had said, “It’s business as usual” at the business formerly known as HNRY Logistics. Yellow announced it was shopping the unit that specializes in truckload shipments, contract logistics and warehousing and distribution services, presumably trying to offload it ahead of a bankruptcy filing.

Another company employee who craves anonymity further elucidates that the entire unit, on the probability of 100 to 150 people, including managers,  was released on Tuesday, August 1.

Meanwhile, Yellow Logistics has not yet released any official statement since leadership at the Teamsters Union said late Sunday night it was notified the company was filing for bankruptcy. 

However, some hours before that announcement, it was gathered that Yellow Logistics closed the gates at its terminals and posted signs saying all company operations had ceased.

Most of its non union workforce had been let go Friday.

Following the plummeting Yellow Logistics, the company had been losing customers for weeks as it was speculated that the potential shutdown had grown. In a public back-and-forth with union leadership over operational changes, the less-than-truckload carrier said it could be out of money as soon as July.

Following drama scenes, Yellow Logistics couldn’t save cash

In an attempt to preserve some money, Yellow Logistics missed required contribution payments to health care and pension funds on July 15, and this prompted its members of operating companies Holland and YRC Freight to issue a strike notice. 

The planned work stoppage would ultimately be called off at the last minute when the fund contributes to extended health insurance for those employees. However, the damage was done as the threat of a shutdown hastened the rate at which intermediaries and customers diverted freight from its network.

In a follow-up report, Yellow was, Tuesday, expected to close t deal to receive debtor-in-possession financing from one of its current lenders, Apollo Global Management (NYSE: APO), whereby the infusion would place the investment firm atop others in a liquidation scenario, a process which would attempt to satisfy the company’s $1.5 billion in outstanding debt.

Meanwhile, Yellow Logistics could not respond to any request for further comment.

Teamsters received Yellow Logistics notification filing  bankruptcy 

While making a further report on Yellow Logistics, the International Brotherhood of Teamsters, late Sunday, said that it had received information that less-than-truckload carrier Yellow Corp. has halted its operations and is ready to file for bankruptcy. 

“Today’s news is unfortunate but not surprising,” stated Sean O’Brien, Teamsters general president. “Yellow has historically proven that it could not manage itself despite billions of dollars in worker concessions and hundreds of millions in bailout funding from the federal government. This is a sad day for workers and the American freight industry.”

The 99-year-old company posted signs on locked gates at its terminals at noon on Sunday, saying it was ceasing all operations. 

After a heated battle with Teamsters over the better part of the past year, Yellow (NASDAQ: YELL) could not push through a proposed change of operations it said was the linchpin to its survival. A breaking point occurred on July 15 when Yellow missed contractually required payments to Central States Funds, a multiemployer fund manager overseeing its health, welfare and pension benefits.

The debt-heavy, cash-strapped company had previously asked to defer the payments with interest, but that request was denied by the central States even though similar requests had been granted in the past. The company’s delinquent status with the group would have left employees at operating companies Holland and YRC Freight without health insurance. However, a last-minute extension provided by the fund allowed Yellow to avert a planned work stoppage. 

Teamsters announced the same day that it had officially reentered negotiations with the company for the first time in weeks. 

However, the damage was done. After weeks of customers and brokers pulling freight from its network over concerns it would ultimately be forced to close, time ran out before it could hatch out a contract with the union, which is expected to produce a lifeline from its lenders.

No change of operations, no more Yellow

The company maintained that the Teamsters’ refusal to approve the change of operations would eventually lead to its closure.

Yellow embarked on a second phase of a multiyear restructuring called “One Yellow” nine months ago. The plan was to follow similar changes the union blessed across its western network (Reddaway) last year. Initiatives included consolidating redundant terminals, increasing the number of utility positions requiring drivers to move freight on the docks and upping the percentage of third-party capacity the carrier could use, among other changes.

The goal was to emerge from the overhaul as a super-regional carrier with a national service platform and a much leaner cost profile. Yellow also hoped to use the omentum from the turnaround to restructure $1.3 billion in debt that matures next year.

However, the second phase would involve consolidating operations at regional carriers New Penn and Holland with its national freight network — roughly 70% of the network. The proposal received pushback initially, was reworked by Yellow and then officially rejected by the union.

Months of bad blood and finger-pointing would ensue.

Some hope for a resolution was seen when both parties agreed to pull forward negotiations on the five-year collective bargaining agreement and negotiate those issues (including wages) in conjunction with the change of operations proposal. That plan would be short-lived, however. The Teamsters decided it would not give any more after years of wages, benefits and work rules concessions it estimates to be in the billions.

Running out of options, Yellow sued the Teamsters for breach of contract. In the $137 million lawsuit filed late last month, the company said the union didn’t have the authority to block the operational changes and that the Teamsters violated the collective bargaining agreement by backing out of a required hearing 

As the months-long back-and-forth continued, Yellow’s financial position weakened, with the carrier losing market share and booking losses. Its credit ratings would take another hit as well.

Calls to senators and the White House and last-minute negotiations with Teamsters would prove fruitless. Yellow’s lenders, which include the U.S. Treasury, didn’t offer much of a lifeline, only agreeing to waive debt covenants temporarily  

The company lost a hearing to block the strike in a federal court earlier month, but it was ultimately spared by the women the Central States provided the extension. Legal counsel for Yellow was hopeful more time could save the carrier. 

“Your Honor, the situation here for Yellow and the stakeholders is binary,” said Yellow attorney Marc Kasowitz in court on July 21. “If there’s a strike, the company is gone. If there is a strike at least, then there’s some possibility for the company to survive.”

The bankruptcy left 30,000 Yellow employees, including 22,000 Teamsters, without jobs.