How Potential Strike at Yellow Could Snag the Supply Chain

Date: Friday, July 21, 2023
Source: Sourcing Journal

As concerns of a labor strike near closer at UPS, the financial troubles at U.S. trucking giant Yellow could spell even more trouble in the supply chain—and the same union is smack in the middle of all the calamity.

Not only is Yellow seeing more clients divert freight to other carriers, but two of its subsidiaries missed a combined $50 million payment to the health care and pension fund that provides benefits to the International Brotherhood of Teamsters—thus putting their benefits on hold as of July 23.

The Teamsters retaliated by threatening a Yellow walkout as early as July 24.

With a Teamster strike, another 22,000 drivers would be off the roads, throwing a new wrench into the shipping market. Yellow accounts for about 10 percent of total less-than-truckload (LTL) volume in the U.S., which would force many retail shippers to consider last-minute trucking alternatives in the span of just a few days.

Similar to how he has waged a war of wars with UPS, Teamsters general president Sean O’Brien attacked Yellow on Twitter.

Yellow has $100 million in cash reserves, according to an 8-K filed on July 7. The company recently had to secure a waiver from lenders that allows its finances to drop below predetermined levels tied to its loans.

The Teamsters, which have been busy looking to garner a new deal for more than 340,000 UPS workers before the current contract expires on July 31, have also had a rocky relationship with Yellow, especially with the clock counting down to March 31, 2024 when its contract runs out.

Yellow blames the union for preventing the company for making the updates necessary to modernize its operation compared to other unionized carriers like ArcBest and TForce Freight.

Last month, the trucking firm sued the Teamsters for $137.3 million for allegedly getting in the way of implementing phase two of its One Yellow restructuring plan, which would include consolidating its four LTL operating companies and closing terminals it no longer needs. The Teamsters have rejected the proposed changes.

Amazon workers strike again in U.K.

Across the pond, Amazon workers went on strike at a second U.K. warehouse in as many weeks on Monday, just one week after 900 employees walked off the job during Prime Day.

More than 100 workers at a fulfillment center in Rugeley, England engineered the walkout after 86 percent of employees voted in support of a strike.

The labor disruptions come as warehouse staff in Coventry, England already voted for six more months of strike action in June. The Coventry fulfillment center was where the Prime Day strike took place, and has been a hotbed for work stoppages since employees first walked out in January—the first-ever strike by Amazon employees in the U.K.

The Rugeley workers’ strike plans come less than a month after Amazon confirmed that the fulfillment center is set to close later this year, on top of three previously announced U.K. warehouse closures. All staff will be offered jobs at the company’s new 547,000-square-foot facility in Sutton Coldfield, England, due to open in October with 1,400 employees.

In total, there have been 22 days of strike action at the Coventry warehouse. After the three-day walkout during Prime Day, the distribution center’s total union membership surpassed 1,000, according to the GMB trade union that represents the warehouse workers.

The 500,000-member U.K.-based GMB has repeatedly called on Amazon to raise starting pay to at least 15 pounds ($19.64) an hour. Starting pay for Amazon employees is between 11 pounds ($14.40) and 12 pounds ($15.71) per hour, depending on the location.

“This is a game changing moment in the campaign to force Amazon to treat [its] workers like human beings. They’ve thrown everything at stopping this, but workers at Amazon Rugeley have organized and delivered a clear message that they demand fair pay and union rights,” said Stuart Richards, senior organizer, GMB.

According to the union, members will plan more strike dates at what will be only the second Amazon site in the U.K. where workers have taken industrial action.

“We’ve seen one of the world wealthiest companies, offering U.K. workers a pay rise of pennies and work conditions fit only for the history books,” Richards said. “It’s staggering that Amazon are still trousering millions from the British taxpayer whilst treating U.K. workers with disdain. As GMB members in Rugeley plan for the picket line, it’s time for politicians and decision makers to finally confront the facts. If Amazon workers are being forced to the breadline by low pay, then why should the public purse be open to the Amazon.”


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