The trucking company Yellow Corp. is preparing to file for bankruptcy.

A bankruptcy filing would put Yellow at great risk of liquidation since the organization’s customers have begun abandoning the trucker in droves, according to people familiar with the matter that spoke with The Wall Street Journal. Though the company could seek bankruptcy court protections, Yellow has not yet made a decision on the issue as the organization evaluates all of its options.

“As a large transportation holding company in the United States, if Yellow Corp, files for bankruptcy or further limits operations, businesses will need to source alternate shipping options for their cargo," said Richard Graham, Third Party Risk Management KYC lead at Moody’s Analytics. "We urge firms not to rush this process, but rather to thoroughly vet any candidates with due diligence checks such as third party risk management screening, which can take time.” 

Yellow has lost many of its shipments to other companies due to the threat posed to the organization’s operations by a potential labor dispute. Even though Yellow was able to avoid a Teamsters strike planned for July 24, the business is still dealing with a drop in customers after freight volumes fell by 80% in recent days, according to a July 25 report by TD Cowen.

“In keeping with the fiduciary responsibility of the company’s executives, the company continues to prepare for a range of contingencies,” a Yellow representative said July 26.

If customers continue to pull back from Yellow, the organization’s shipments could be sent out to other carriers, such as FedEx Freight, ABF Freight, XPO and Old Dominion Freight Line, which would likely drive up prices in the trucking sector.

“Customers will be paying a higher price because Yellow had the cheapest rates,” said Satish Jindel, president of SJ Consulting.