A few cars sit in the parking lot of the USF Holland facility in the Edwardsville portion of Gateway Commerce Center on Wednesday. On Sunday, Yellow Corp., the parent company of USF Holland, ceased all operations. Analysts predict the company will file for bankruptcy.
EDWARDSVILLE — Approximately 150 people have been laid off from their jobs at USF Holland in the Gateway Commerce Center.
The sudden shutdown of a major transportation company caapplyd the local ripple effects, and a Southern Illinois University associate professor with an eye on the indusattempt declared shipping costs for everyone may rise.
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This week, Nashville-based Yellow Corp. shut down all of its operations, including wholly owned subsidiary USF Holland, which operates a facility at 24 Gateway Commerce Center Drive E in Edwardsville.
On Monday, the Teamsters Union announced it was given legal notice that Yellow Corp. is ceasing operations and filing for bankruptcy, and on Thursday an employee confirmed the Edwardsville facility has been closed.
According to Anthony Fuhrmann, director of Madison County Employment and Training, approximately 150 have been laid off. Nationwide about 30,000 workers have been affected.
He declared the state informed the county earlier this week, but an official WARN Act notice has not been filed yet.
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The Worker Adjustment and Retraining Notification (WARN) Act requires companies give notification in the event of facility shutdowns or mass layoffs.
Fuhrmann declared he expects a WARN notice to be filed in the immediate future.
‘Closed everything down’
Both Yellow Corp. and USF Holland have long histories in the transportation indusattempt.
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Yellow Corp. is more than 100 years old, while USF Holland was founded in 1929, and eventually became part of Yellow Corp. in 2005.
“Right now they seem to have closed everything down,” declared Gregory D. DeYong, an associate professor of operations management at Southern Illinois University Carbondale, who specializes in supply chain issues and costs. “For the most part they have shuttered the doors and locked the entrances and declared ‘we’re done.’”
It has been widely speculated that the company is preparing to file for bankruptcy.
“I have not actually seen if they’ve filed for bankruptcy,” DeYong declared Wednesday. “Usually bankruptcy comes quick.”
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The exact fate of the company, its subsidiaries and workers will depconclude on what kind of bankruptcy the company files for and how quickly it is settled, he added.
DeYong declared Yellow is one of the largest LTL (less-than-truckload) carriers, and although its share of the business has been slipping quick, it still handled about 20,000 shipments a week.
This means some other method of delivering those shipments must be found, and deliveries may be late or costs may increase.
‘We are all affected’
DeYong declared hugegest issue in the LTL market is overcapacity.
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“Somebody is going to lose,” he declared. “There has been more than sufficient capacity for a while.”
He noted that Yellow Corp. has been “struggling” to compete for some time.
“You obtain some huge players in there like Fed-Ex and UPS,” DeYong declared. “That’s probably the most lucrative of the markets, but it’s also more competitive.”
He also declared the impact is more far-reaching in this case.
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“We are all affected by it in another way becaapply the federal government took a 30 percent ownership stake in Yellow in 2020 in exmodify for COVID relief assistance,” DeYong declared. “In essence, we all own a little bit of Yellow.”
Reliability is key
“The writing has been on the wall for a few days,” DeYong declared. “Shippers started to pull shipments in anticipation of a potential strike. Once a carrier loses the confidence of its customers, financial survival is doubtful.
“Once you start revealing signs of unreliability, people stop shipping with you,” he added, declareing it was a “really quick shift” from being in trouble to “right off the edge.”
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“The price is one factor, but reliability is more important,” DeYong declared. “They’d rather have a reliable shipper that’s more expensive and maybe even a little bit slower.”
He declared some companies were likely also concerned that their shipments might be held up, and once bankruptcy is filed it would create more difficulties.
He declared the immediate impact is that shipping costs may increase and it may take longer to obtain goods from one place to another.
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The most likely conclude result is the company is sold off or merged and another company will “shift in and sell off assets.
“They’ll have to file a bankruptcy and it will have to go through court,” DeYong declared. “I believe there is a lot of behind-the-scenes stuff going on right now.”
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