2023-07-27 04:39:17 ET
Yellow Corporation ( NASDAQ: YELL ) dropped 25.5% before the bell on Thursday as the beleaguered trucker could file for bankruptcy protection this week, the Wall Street Journal reported citing unnamed sources, following a cash crunch that forced it to miss union payments.
A bankruptcy filing may put Yellow ( YELL ) at high risk of liquidation as customers have increasingly been abandoning the company.
Yellow ( YELL ) is still exploring other options as it has not decided on filing for bankruptcy, the report said . "The company continues to prepare for a range of contingencies," a Yellow ( YELL ) spokesperson said.
Yellow ( YELL ) has been hemorrhaging customers as its operations were hit by the union dispute, with Teamsters Union threatening to go on strike. As a result, Yellow ( YELL ) has been limiting pick-up operations in all terminals.
"Given its weakened state, we believe it would be extremely difficult for Yellow ( YELL ) to make it through a work action," said TD Cowen, warning that shipment volumes may have dropped 80%. "A strike would significantly accelerate freight diversions to other LTL players."
Talks are ongoing with Teamsters for a new contract that would allow Yellow ( YELL ) to continue with its restructuring plan, which it said was "necessary to compete against non-union carriers."
Yellow's ( YELL ) customer exodus could drive up pricing in the trucking sector, which is already facing low freight rates and weak demand. "Customers will be paying a higher price because Yellow ( YELL ) had the cheapest rates," said Satish Jindel, president, SJ Consulting.
More on Yellow Corp's woes
- Trucking stocks rally after strong Old Dominion earnings, more Yellow drama
- Yellow Corporation: Cheap Price, But Escaping The Pothole Remains Hard
- Yellow Corporation: Knives Out For Potential Bankrupt Trucking Firm
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Yellow Corp may file for bankruptcy this week as customers cut and run - report