Economy , Newsline

Bidenomics Runs Trucking Giant off a Cliff

Posted on Tuesday, August 8, 2023
by Outside Contributor
yellow trucking company

As of noon on Sunday, the 99-year-old trucking giant Yellow, America’s third largest trucking company, officially suspended operations. Over 30,000 people, including over 20,000 Teamsters, will be looking for new jobs as the company files for bankruptcy.

But why did Yellow fail? In a word, Bidenomics.

A detailed postmortem will show management mistakes and union stubbornness both going back decades, but recent public policy mistakes effectively doomed Yellow. Here are the three ways Bidenomics pushed Yellow off the financial cliff.

First, President Joe Biden promised during his campaign to wage war on fossil fuels, and he kept that promise. Literally on day one of his administration, Mr. Biden began throttling oil and natural gas infrastructure and domestic energy production. It didn’t take a Ph.D. in economics to correctly predict these policies would raise energy prices. 

A year and a half after he became president, the price of wholesale diesel—the lifeblood of trucking companies—soared 166 percent and, despite falling over the last year, is still up 35 percent since his inauguration. Meanwhile, the cost of delivery services paid by consumers is up 22 percent today compared to when Biden took office—a horrific rate of increase for consumers, but not as bad as what Yellow has faced.

This means trucking companies like Yellow have been eating a lot of cost increases to try and maintain market share, and not just passing the higher costs on to customers. Biden’s war on energy is crushing businesses’ bottom lines.

While energy prices have soared under Biden, prices in general are up 16 percent, and that has led to labor unrest, as I predicted in October 2021. With the dramatic fall in the dollar’s purchasing power, the Teamsters demanded higher wages, a second key factor in Yellow’s demise.

The historical record is very clear: inflationary periods significantly increase the number of strikes, and the demands for wage increases. Annual inflation spiked to 7.9% for 1951, and a record 470 strikes occurred the next year. In the late 1960s, inflation rose to 5.4%, and the number of strikes rose above 400 in a single year.

From 1947 to 1982, a period with lots of strikes, inflation rose and fell wildly, with the annual rate changing as much as 8.7 percentage points in a single year and having a 14.5 percentage point range during that period. Once President Reagan and Federal Reserve Chairman Paul Volcker ended inflation, labor strikes died down, until Mr. Biden brought both back with reckless spending.

But the spending and inflation led to the third cause of Yellow’s demise: higher interest rates.

Mr. Biden’s big-government agenda has been largely financed by borrowing and printing money, which ignited an inflationary fire. Forty-year-high inflation was then unsurprisingly followed by the fastest rise in interest rates in 40 years. The latest increase in the Federal Reserve’s benchmark interest rate marks the highest level for rates in over 20 years.

When rates are low, it encourages borrowing, which fuels merger and acquisition activity. Yellow was heavily laden with over a billion dollars of debt, which became impossible to rollover or restructure in a high interest rate environment.

Yellow’s predicament is like what many consumers are facing today with credit cards. When interest rates were low, large balances had low finance charges and minimum monthly payments. Additionally, there were plenty of opportunities to transfer balances to new cards instead of having to pay off the old card. Today, interest rates on credit cards are at record highs and refinancing offers are gone. 

For Yellow, this left no wiggle room in the bottom line and no way out of its massive debt. It also meant additional borrowing to get the company through hard times would be prohibitively expensive.

It’s often hard to see the impact of economic policy—good or bad—but Yellow’s implosion offers a tangible lesson in how government mismanagement can have disastrous effects. The people promoting Bidenomics should be taking notes.

Republished with permission from The Heritage Foundation by EJ Antoni.

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Pauly Mack
Pauly Mack
8 months ago

This is all good info for conservatives, but union truckers (of those who are liberals/progressives) will only see the company as greedy and bad management so they will still vote for Biden and every other Democrat.

Elena Tellez
Elena Tellez
8 months ago

This is sad. Would like to see some major investors resurrect this once great company, which we NEED in our economy, and give these drivers back their jobs.

Patrick Switzer
Patrick Switzer
8 months ago

Biden needs to be impeached

8 months ago

While I agree with the author, it’s worth noting that all trucking companies (including mine) are faced with these same pressures. It’s management’s responsibility to adjust for these threats. Yellow has been struggling for years. This was the straw that broke the camel’s back. It was inevitable, unfortunately.

8 months ago

I think there’s more to the picture… The psycho global predators/parasites very likely pressured Yellow in some way that they possibly just refused to do. Such as via their insurance company(ies) to go “woke” – like so many other iconic American companies have been given an ultimatum to do – by threatening to lower their ESG score… Or, perhaps some other threat, or blackmail. I think there’s more going on here than just what’s on the surface. And, as Yellow was the #3 trucking company, that leaves the big 2 to pick up their share of business, and their assets for a song. This is the same old story that’s been played out since the CONvid “pandemic” was declared based on some 40-odd “cases”, not deaths, but “cases”… The destruction of the middle class is the goal – because we must be crushed in order to bring in the desired New World Order / One World Government dystopia the psycho global predators/parasites so desire.

8 months ago

The morons in charge of the company and the idiots that struck in light of the economy AND the companies need for holding together on their new plan killed another company..
Would not surprise me if another company is already being put together i.e. NON UNION much like the thieves at Consolidated Freightways did in the 90s and those teamsters watched as the management built Conway with promises of NOT stealing business from CF.. come on folks get real, some of the oversized companies (not just trucking) are full of morons that really do not know what they are doing. Many people hired from the 90s on were hired not for their transportation knowledge specific to the company, but their computer literacy .. duh

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