By The International Brotherhood of Teamsters has called off a strike at Yellow after the trucking company agreed to make payments to a fund providing healthcare benefits to the union’s members.
Yellow (ticker: YELL) had originally skipped contractually obligated payments in order to preserve liquidity. However, the Central States Health and Welfare Fund threatened to end health benefits if the payments were not made by Sunday. In response, the Teamsters had planned to initiate a strike on Monday.
Fortunately, Central States granted Yellow an extension to make the contributions, averting an immediate strike.
“Our members at Yellow subsidiaries cannot work without healthcare, and the Teamsters worked tirelessly to ensure that a strike could be avoided,” said Teamsters General President Sean O’Brien in a news release. “Although the discussions were challenging, Central States has shown progress under pressure from the union.”
Yellow, a less-than-truckload service, focuses on serving industrial customers with shorter haul distances compared to truckload providers. Unfortunately, the company did not provide a comment on the situation.
Despite this development, Yellow’s stock saw a significant increase of 12% during midday trading on Monday. In comparison, the S&P 500 and Dow Jones Industrial Average experienced more modest gains of 0.4% and 0.6% respectively.
Labor negotiations have become a prominent issue for both employees and stock markets this summer, with the recent events at Yellow serving as the latest example. These labor-related disruptions continue to introduce volatility into various stocks.
The Impact of Labor Strikes on Package Delivery Stocks
Old Dominion Freight Line (ODFL) and XPO (XPO) stocks initially benefited from the labor strife, with Old Dominion’s stock rising by about 16% and XPO’s shares gaining about 23% over the past month. However, on Monday, both Old Dominion and XPO saw a slight decline of 2.1% and 1% respectively, indicating that any boost from a Yellow labor strike has vanished.
Old Dominion and XPO Stocks
Old Dominion Freight Line (ODFL) and XPO (XPO) initially experienced positive effects from the recent labor disputes in the package delivery industry. Old Dominion’s stock surged by approximately 16% over the past month, while XPO saw a significant gain of about 23%. However, these gains were short-lived as both companies witnessed a decline on Monday, with Old Dominion’s shares dropping by 2.1% and XPO’s by 1%. This indicates that any advantage they had gained from the Yellow labor strike has disappeared.
United Parcel Service (UPS)
FedEx (FDX) and the UPS Strike
FedEx (FDX) also stands to benefit from the potential UPS strike. In the past month, FedEx shares have outperformed UPS by a few percentage points. However, on Monday, FedEx shares experienced a slight decline of 0.1% in midday trading following the news of the Yellow labor dispute.
It is important to remember that negotiations at UPS are still ongoing, and there may be further volatility in the coming weeks. Investors should be aware that the short-term gains for certain stocks due to one group’s labor issues often reverse once everything settles down.
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