6 ms·

"The closing is bad news not only for its employees and its customers, who generally used Yellow because it offered some of the cheapest rates in the trucking s

"The closing is bad news not only for its employees and its customers, who generally used Yellow because it offered some of the cheapest rates in the trucking sector." Perhaps they shouldn't have offered the cheapest rates in the trucking sector while failing their obligations. Taxpayers ended up holding 30% of this company's stock and they still couldn't figure out how to become profitable after a $700 million infusion? This race-to-the-bottom stuff is not the answer. The answer is to charge what it costs you to deliver plus a profit. If you can't compete directly on price make up for it in service and reputation. People will blame unions because the company had to fund pensions and health insurance. It likely will come back as a private company with lower pay, worse benefits, and maybe if people are lucky a 401k.

ajsnigrutin 3y ago
This works in a vacuum, but in many industries you get undercharging and living off investments, be it Uber or a gajillion startups, many of them mentioned here on HN.
- rob74 3y ago
  Ok, in the case of Uber it's undercharging and living off investments (from investors who hopefully know what they're doing), in the case of this 99-year old company it's undercharging and living off federal bailout packages (paid by the taxpayer). I would say that's a bit different...
- davidw 3y ago
  Fair enough, but...trucking? Isn't that kind of an established market?
  - candiodari 3y ago
    That's why we have "financial innovation". Which in this case boiled down to using investment money to buy up competitors, with the benefit of scale (and monopoly pricing) to come later. And then the benefit doesn't come ...
- Buttons840 3y ago
  Why are industries dominated by large unprofitable companies? I was told the way to succeed was to offer goods and services that people want, make a profit and grow the company; this was a key benefit of the free market and ensured consumers had access to many good choices and it was all stable and sustainable. Instead unprofitable companies dominate, not because they succeeded in the market, but because they received favor from the wealthy. I'd like an economic system where the companies that offer the best goods and service at the right price grow and succeed. I've heard this is how capitalism is supposed to work, but more and more it seems the key to success is currying favor with the wealthy and capturing a market through external means.
  - Silverback_VII 3y ago
    >Why are industries dominated by large unprofitable companies? The logic is quite simple: by undercutting your competition, you aim to quickly drive others out of business and secure a monopoly. Once in such a position, making a profit becomes much easier.
    - Buttons840 3y ago
      Every time I think about this I keep coming back to anti-trust enforcement, we need more of it. And perhaps a single entity having enough money to essentially buy an entire industry isn't a good thing.
      - ajsnigrutin 3y ago
        The problem is, that the thing that's happening is shirt-term good for the users, and people don't want any government action until it's too late. If i start offering $5 oil changes (oil included, price difference covered by VC money), that's good for the consumer... then all the other shops close down, but consumers still get the $5 oil changes... then I hike the price, and only then people start to complain. And if you close me then, who will change your oil? Imagine government banning google for offering free email and killing most of the competition back then... people would complain, a gigabyte was a HUGE amount of space for then, and all that for free!
gottorf 3y ago
Pensions seem like an outdated concept, when 401Ks and IRAs are options. Pensions are essentially a tradeoff of lower pay now in exchange for benefits in the future, with a sprinkle of an incentive for increased retention added in, but with the critical downside (to the employer) of it basically being an unbounded, undefined financial downside for them at the tail end. Employers should pay people, contribute to their retirement funds if further tax-advantaged incentives are needed (and society can and should have further discussions on how complicated these tax laws are), but people should own and be in charge of their own retirement funds.
- didgetmaster 3y ago
  Exactly. Pensions might have been practical back in the day when people worked for "the company" for their whole career. But when so many change jobs every 5 years or less, they make no sense.
  - cguess 3y ago
    Not every company is a tech company and not every worker is in their 20's. If you're a truck driver there's a good chance you do work for the same company for your entire career.
    - nradov 3y ago
      You've got to be kidding. Trucking has very high employee turnover. Drivers will jump quickly to a competitor that offers slightly higher wages or better scheduling.
  - toomuchtodo 3y ago
    Union pensions are typically paid into by companies, but the pension is maintained by the union. Teamsters, IBEWs, etc pensions operate in this manner. You won't work for the same company your entire career, but you're likely to remain in the same field for it. Pensions work just the same as 401ks, but better when properly funded and governed, because your average worker is unsophisticated as it relates to investing. 401ks were a scam foisted on the public as pension replacements, with corporations instead juicing shareholder returns with what was previously pension contributions. If you're a high earner without any life events that would cause you to liquidate your 401k (extended job loss, medical event), congrats! You have won the lottery. You can require pension operators to be fiduciaries and act in the best interest of their members, with penalties if they don't (this exists today, current state). If individuals fuck up their retirement (or could not save enough because of their lifetime wage trajectory), oh well, you're going to die in poverty because the socioeconomic system pulled a fast one on you. https://www.nbcnews.com/business/retirement/great-401-k-experiment-has-failed-many-americans-n327321 https://www.nbcnews.com/business/retirement/great-401-k-expe... https://www.economicpolicyresearch.org/images/docs/research/retirement_security/401k_Plans_A_Failed_Experiment.pdf https://www.economicpolicyresearch.org/images/docs/research/... https://www.gao.gov/financial-security-older-americans https://www.gao.gov/financial-security-older-americans https://web.archive.org/web/20201026175751/https://www.gao.gov/assets/320/317143.html https://web.archive.org/web/20201026175751/https://www.gao.g... https://www.empower.com/the-currency/life/average-401k-balance-age https://www.empower.com/the-currency/life/average-401k-balan... (direct your attention to median balances; assuming 4% withdrawal rate, the high water median 401k balance translates to $185/month in retirement income) https://corpgov.law.harvard.edu/2023/03/01/fiduciary-duties-of-public-pension-systems-and-registered-investment-advisors/ https://corpgov.law.harvard.edu/2023/03/01/fiduciary-duties-...
HDThoreaun 3y ago
You know this is market right? They can't just charge whatever they want. If their service is worse than competitors and they are unable to make it better they need to undercut the competition. Sometimes businesses fail, that doesn't necessarily mean the strategy was bad, could've just been bad execution.
mmcdermott 3y ago
> Taxpayers ended up holding 30% of this company's stock Is that really surprising though? Getting a government buy-in like this generally happens after private sector investment falls through. If large swathes of the private sector didn't believe that the company would become profitable after infusion (they would have bought low and sold high if they did), why would public sector capital have any different outcome?
bko 3y ago
> People will blame unions because the company had to fund pensions and health insurance. It likely will come back as a private company with lower pay, worse benefits, and maybe if people are lucky a 401k. You can never compete if you have a pension liability from workers no longer there. A competitor can always come in without that liability and out compete you. It's not good for the business or the employees who will get screwed 30 years later. Why is this such a hard lesson to learn?
- darig 3y ago
  [dead]
- blitzar 3y ago
  You can easily compete if you have a pension liability from workers no longer there by making provision for it at the time that the liability is created.
  - hibikir 3y ago
    Can you? A defined benefit plan is ultimately involving someone taking a risk. One either makes the risk very small, and therefore being a very expensive benefit from the very beginning, or be aggressive, and risk being an underfunded benefit. Either way you slice it, someone providing defined contributions instead is far safer, and can safely outcompete the defined benefit company, as they aren't taking on either side of the risk: The employee is. Note that the costs of trucking are the same either way: Paying for the contribution later is precisely a way to be very competitive now, as the idea of a safe, defined pension that you self fund is much nicer until you see what it takes out of your paycheck.
    - WkndTriathlete 3y ago
      > Can you? A defined benefit plan is ultimately involving someone taking a risk. Yup. No less than Warren Buffett, who spent literally his entire career performing risk analyses, could figure out a way to manage defined benefit plan risk, and stated as such in a (now famous) memo in the late 60s or early 70s. Couple that with the number of pension defaults and pension haircuts that have occurred and are likely to continue to occur and 401(k) plans look a lot more attractive, both to the employer and to the employee.
bastardoperator 3y ago
"Lo barato sale caro" which translates to the "the cheap becomes expensive". If you see something that is cheaper then everything else, just assume they're cutting corners in places that matter. It will be interesting to see how many millions of dollars they use to keep the executive team in place during the bankruptcy despite the fact it's their decisions that lead to failure. I also wonder how much student debt we could have cancelled for 700M, it would have been a better investment.
- HenryBemis 3y ago
  > "Lo barato sale caro" which translates to the "the cheap becomes expensive" 99% true with some very few exceptions. I remember Evan Davis' on a BBC podcast called "The Bottom Line". In said podcast he was interviewing various business people. One of them was the CEO of Primark. Over 'here' (in Europe - in multiple countries) you can see MASSIVE stores (I haven't yet been on a Primark store that was smaller than a football pit (per floor - typically two floors - lower for women, upper for men and kids), and they have shockingly low prices. I haven't visited a Primark outside Europe yet, so I have no opinion about other regions. So.. back to the CEO.. he was responding that their low prices is not because of low quality, but because they never spend a dime on marketing, and thus they can use these savings to improve quality and lower prices, and then went on to challenge the journalist to remember/find one (paid) advertisement. At that point (5? 6? 7? years ago) I also tried and for the life of me I could not remember ever seeing ads on the Tube (London underground), newspapers, bus stops, internet (but I block 99.9% of them).. anywhere. So yes, 99% true but then I have a black long-sleeve t-shirt Cedarwood (Primark product) that 5 years on is still in great shape and I do wear it a lot, while the respective H&M don't go past the 2 year mark.
  - bastardoperator 3y ago
    Sounds like Walmart in the US. They're able to achieve their prices by robbing the employees of a livable wage. If you look online, Primark continues to engage in this illegal behavior after getting caught on numerous occasions, just like Walmart. https://www.business-humanrights.org/en/latest-news/minimum-pay-shame-for-primark-billionaires/#:~:text=Yesterday%2C%20Primark%20was%20among%20260,salaries%20to%20pay%20for%20uniforms https://www.business-humanrights.org/en/latest-news/minimum-.... https://www.theguardian.com/global-development/2021/jul/02/wage-theft-in-primark-nike-and-hm-supply-chain-report https://www.theguardian.com/global-development/2021/jul/02/w...
karaterobot 3y ago
> The answer is to charge what it costs you to deliver plus a profit. If you can't compete directly on price make up for it in service and reputation. I'm guessing the cause is more complicated than them just not knowing they should make a profit. If I'm wrong, write them a letter with this advice, there may still be time to save the company.
exabrial 3y ago
> people will blame unions I think if you join a Union and demand unreasonable benefits for the skill required for a profession, then you’re responsible for the company’s collapse too. I don’t think I could drive a big rig, it is a skilled labor profession; so what I’m not saying is ‘anyone could do that job’, but it is a job that can be trained for in a shorter amount of time than say an xray tech in a hospital. What blows my mind is Unions in the USA often bite hard on the hand that feeds them, when it doesn’t need to be this way. The Union should work with the board to improve profits. Why there isn’ta symbiotic relationship is so strange.

ajsnigrutin 3y ago

This works in a vacuum, but in many industries you get undercharging and living off investments, be it Uber or a gajillion startups, many of them mentioned here on HN.

rob74 3y ago
Ok, in the case of Uber it's undercharging and living off investments (from investors who hopefully know what they're doing), in the case of this 99-year old company it's undercharging and living off federal bailout packages (paid by the taxpayer). I would say that's a bit different...
davidw 3y ago
Fair enough, but...trucking? Isn't that kind of an established market?
- candiodari 3y ago
  That's why we have "financial innovation". Which in this case boiled down to using investment money to buy up competitors, with the benefit of scale (and monopoly pricing) to come later. And then the benefit doesn't come ...
Buttons840 3y ago
Why are industries dominated by large unprofitable companies? I was told the way to succeed was to offer goods and services that people want, make a profit and grow the company; this was a key benefit of the free market and ensured consumers had access to many good choices and it was all stable and sustainable. Instead unprofitable companies dominate, not because they succeeded in the market, but because they received favor from the wealthy. I'd like an economic system where the companies that offer the best goods and service at the right price grow and succeed. I've heard this is how capitalism is supposed to work, but more and more it seems the key to success is currying favor with the wealthy and capturing a market through external means.
- Silverback_VII 3y ago
  >Why are industries dominated by large unprofitable companies? The logic is quite simple: by undercutting your competition, you aim to quickly drive others out of business and secure a monopoly. Once in such a position, making a profit becomes much easier.
  - Buttons840 3y ago
    Every time I think about this I keep coming back to anti-trust enforcement, we need more of it. And perhaps a single entity having enough money to essentially buy an entire industry isn't a good thing.
    - ajsnigrutin 3y ago
      The problem is, that the thing that's happening is shirt-term good for the users, and people don't want any government action until it's too late. If i start offering $5 oil changes (oil included, price difference covered by VC money), that's good for the consumer... then all the other shops close down, but consumers still get the $5 oil changes... then I hike the price, and only then people start to complain. And if you close me then, who will change your oil? Imagine government banning google for offering free email and killing most of the competition back then... people would complain, a gigabyte was a HUGE amount of space for then, and all that for free!

gottorf 3y ago

Pensions seem like an outdated concept, when 401Ks and IRAs are options. Pensions are essentially a tradeoff of lower pay now in exchange for benefits in the future, with a sprinkle of an incentive for increased retention added in, but with the critical downside (to the employer) of it basically being an unbounded, undefined financial downside for them at the tail end. Employers should pay people, contribute to their retirement funds if further tax-advantaged incentives are needed (and society can and should have further discussions on how complicated these tax laws are), but people should own and be in charge of their own retirement funds.

didgetmaster 3y ago
Exactly. Pensions might have been practical back in the day when people worked for "the company" for their whole career. But when so many change jobs every 5 years or less, they make no sense.
- cguess 3y ago
  Not every company is a tech company and not every worker is in their 20's. If you're a truck driver there's a good chance you do work for the same company for your entire career.
  - nradov 3y ago
    You've got to be kidding. Trucking has very high employee turnover. Drivers will jump quickly to a competitor that offers slightly higher wages or better scheduling.
- toomuchtodo 3y ago
  Union pensions are typically paid into by companies, but the pension is maintained by the union. Teamsters, IBEWs, etc pensions operate in this manner. You won't work for the same company your entire career, but you're likely to remain in the same field for it. Pensions work just the same as 401ks, but better when properly funded and governed, because your average worker is unsophisticated as it relates to investing. 401ks were a scam foisted on the public as pension replacements, with corporations instead juicing shareholder returns with what was previously pension contributions. If you're a high earner without any life events that would cause you to liquidate your 401k (extended job loss, medical event), congrats! You have won the lottery. You can require pension operators to be fiduciaries and act in the best interest of their members, with penalties if they don't (this exists today, current state). If individuals fuck up their retirement (or could not save enough because of their lifetime wage trajectory), oh well, you're going to die in poverty because the socioeconomic system pulled a fast one on you. https://www.nbcnews.com/business/retirement/great-401-k-experiment-has-failed-many-americans-n327321 https://www.nbcnews.com/business/retirement/great-401-k-expe... https://www.economicpolicyresearch.org/images/docs/research/retirement_security/401k_Plans_A_Failed_Experiment.pdf https://www.economicpolicyresearch.org/images/docs/research/... https://www.gao.gov/financial-security-older-americans https://www.gao.gov/financial-security-older-americans https://web.archive.org/web/20201026175751/https://www.gao.gov/assets/320/317143.html https://web.archive.org/web/20201026175751/https://www.gao.g... https://www.empower.com/the-currency/life/average-401k-balance-age https://www.empower.com/the-currency/life/average-401k-balan... (direct your attention to median balances; assuming 4% withdrawal rate, the high water median 401k balance translates to $185/month in retirement income) https://corpgov.law.harvard.edu/2023/03/01/fiduciary-duties-of-public-pension-systems-and-registered-investment-advisors/ https://corpgov.law.harvard.edu/2023/03/01/fiduciary-duties-...

HDThoreaun 3y ago

You know this is market right? They can't just charge whatever they want. If their service is worse than competitors and they are unable to make it better they need to undercut the competition. Sometimes businesses fail, that doesn't necessarily mean the strategy was bad, could've just been bad execution.

mmcdermott 3y ago

> Taxpayers ended up holding 30% of this company's stock Is that really surprising though? Getting a government buy-in like this generally happens after private sector investment falls through. If large swathes of the private sector didn't believe that the company would become profitable after infusion (they would have bought low and sold high if they did), why would public sector capital have any different outcome?

bko 3y ago

> People will blame unions because the company had to fund pensions and health insurance. It likely will come back as a private company with lower pay, worse benefits, and maybe if people are lucky a 401k. You can never compete if you have a pension liability from workers no longer there. A competitor can always come in without that liability and out compete you. It's not good for the business or the employees who will get screwed 30 years later. Why is this such a hard lesson to learn?

darig 3y ago
[dead]
blitzar 3y ago
You can easily compete if you have a pension liability from workers no longer there by making provision for it at the time that the liability is created.
- hibikir 3y ago
  Can you? A defined benefit plan is ultimately involving someone taking a risk. One either makes the risk very small, and therefore being a very expensive benefit from the very beginning, or be aggressive, and risk being an underfunded benefit. Either way you slice it, someone providing defined contributions instead is far safer, and can safely outcompete the defined benefit company, as they aren't taking on either side of the risk: The employee is. Note that the costs of trucking are the same either way: Paying for the contribution later is precisely a way to be very competitive now, as the idea of a safe, defined pension that you self fund is much nicer until you see what it takes out of your paycheck.
  - WkndTriathlete 3y ago
    > Can you? A defined benefit plan is ultimately involving someone taking a risk. Yup. No less than Warren Buffett, who spent literally his entire career performing risk analyses, could figure out a way to manage defined benefit plan risk, and stated as such in a (now famous) memo in the late 60s or early 70s. Couple that with the number of pension defaults and pension haircuts that have occurred and are likely to continue to occur and 401(k) plans look a lot more attractive, both to the employer and to the employee.

bastardoperator 3y ago

"Lo barato sale caro" which translates to the "the cheap becomes expensive". If you see something that is cheaper then everything else, just assume they're cutting corners in places that matter. It will be interesting to see how many millions of dollars they use to keep the executive team in place during the bankruptcy despite the fact it's their decisions that lead to failure. I also wonder how much student debt we could have cancelled for 700M, it would have been a better investment.

HenryBemis 3y ago
> "Lo barato sale caro" which translates to the "the cheap becomes expensive" 99% true with some very few exceptions. I remember Evan Davis' on a BBC podcast called "The Bottom Line". In said podcast he was interviewing various business people. One of them was the CEO of Primark. Over 'here' (in Europe - in multiple countries) you can see MASSIVE stores (I haven't yet been on a Primark store that was smaller than a football pit (per floor - typically two floors - lower for women, upper for men and kids), and they have shockingly low prices. I haven't visited a Primark outside Europe yet, so I have no opinion about other regions. So.. back to the CEO.. he was responding that their low prices is not because of low quality, but because they never spend a dime on marketing, and thus they can use these savings to improve quality and lower prices, and then went on to challenge the journalist to remember/find one (paid) advertisement. At that point (5? 6? 7? years ago) I also tried and for the life of me I could not remember ever seeing ads on the Tube (London underground), newspapers, bus stops, internet (but I block 99.9% of them).. anywhere. So yes, 99% true but then I have a black long-sleeve t-shirt Cedarwood (Primark product) that 5 years on is still in great shape and I do wear it a lot, while the respective H&M don't go past the 2 year mark.
- bastardoperator 3y ago
  Sounds like Walmart in the US. They're able to achieve their prices by robbing the employees of a livable wage. If you look online, Primark continues to engage in this illegal behavior after getting caught on numerous occasions, just like Walmart. https://www.business-humanrights.org/en/latest-news/minimum-pay-shame-for-primark-billionaires/#:~:text=Yesterday%2C%20Primark%20was%20among%20260,salaries%20to%20pay%20for%20uniforms https://www.business-humanrights.org/en/latest-news/minimum-.... https://www.theguardian.com/global-development/2021/jul/02/wage-theft-in-primark-nike-and-hm-supply-chain-report https://www.theguardian.com/global-development/2021/jul/02/w...

karaterobot 3y ago

> The answer is to charge what it costs you to deliver plus a profit. If you can't compete directly on price make up for it in service and reputation. I'm guessing the cause is more complicated than them just not knowing they should make a profit. If I'm wrong, write them a letter with this advice, there may still be time to save the company.

exabrial 3y ago

> people will blame unions I think if you join a Union and demand unreasonable benefits for the skill required for a profession, then you’re responsible for the company’s collapse too. I don’t think I could drive a big rig, it is a skilled labor profession; so what I’m not saying is ‘anyone could do that job’, but it is a job that can be trained for in a shorter amount of time than say an xray tech in a hospital. What blows my mind is Unions in the USA often bite hard on the hand that feeds them, when it doesn’t need to be this way. The Union should work with the board to improve profits. Why there isn’ta symbiotic relationship is so strange.