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Trucking Companies Blame Rocky Economic Conditions For 2019 Shutdowns

After last year's red-hot freight market and record profits, many trucking companies blame rocky economic conditions, a weak freight market and soaring insurance and equipment costs as the main reasons some fleets did not survive the economic downturn in 2

Benzinga · 12/30/2019 14:23

After last year's red-hot freight market and record profits, many trucking companies blame rocky economic conditions, a weak freight market and soaring insurance and equipment costs as the main reasons some fleets did not survive the economic downturn in 2019.

Hundreds of motor carriers, both large and small, fell victim to this year's freight recession after adding more trucks and drivers to keep up with shippers' capacity demands in 2018.

Some carriers relied on the spot market for freight, which tanked in 2019, causing some owner-operators to shutter operations and go to work as company drivers until economic conditions improved. 

Celadon Group Inc.

The abrupt closure and bankruptcy filing of Celadon Group Inc. was by far the largest trucking failure of the year.

While it was no secret that Celadon Group Inc. was struggling to recover from a financial scandal that rocked the carrier after former executives were indicted in an alleged securities and accounting fraud scheme in 2017, few expected the carrier to file for Chapter 11 bankruptcy protection in early December.

Former drivers were stranded thousands of miles from home when their fuel cards were deactivated and there was little communication among company executives and employees about what to do with their trucks and loads just days prior to the company's Dec. 9 bankruptcy filing.

Celadon and its subsidiaries had more than 2,500 drivers and nearly 1,300 office employees at the time it ceased operations.

"Thousands of people didn't get a severance package and that adds an extra sting," Ernesto Gonzales, a former corporate recruiter for Celadon, told FreightWaves. "The actions of a selfish few screwed over thousands." 

NEMF

The trucking industry was stunned when unionized less-than-truckload (LTL) carrier New England Motor Freight Inc. (NEMF) filed for bankruptcy protection and announced it would wind down operations in February. 

The Elizabeth, New Jersey-based carrier, which had 1,385 drivers and operated 1,446 power units, cited a combination of high labor costs and tough competition, mostly from nonunion carriers, as reasons for the fleet's collapse.

Falcon Transport

Another surprising shutdown this year was the fall of Falcon Transport of Youngstown, Ohio, that stranded hundreds of drivers out on the road with deactivated fuel cards after they received emails that the carrier was ceasing operations immediately.

Former Falcon Transport executives alleged that financial mismanagement and a poorly negotiated contract with General Motors led to the company's abrupt closure on April 27.

The carrier had 723 trucks and nearly 585 drivers at the time it shuttered operations.

LME

LME, a regional LTL carrier based in Minnesota, abruptly ceased operations on July 11 as the trucking company faces numerous lawsuits stemming from a previous abrupt shutdown in November 2016.

The company had 424 truck drivers, 382 power units and 1,228 trailers at the time it ceased operations. 

The latest closure occurred just a month after the National Labor Relations Board (NLRB) ordered LME to begin paying out a $1.25 million settlement in June to union workers in Minnesota after its affiliate company, Lakeville Motor Express, abruptly ceased operations and failed to pay its workers in November 2016. The NLRB described LME as "the alter ego" of Lakeville Motor Express.

HVH Transportation

HVH Transportation, a 344-unit trucking company headquartered in Denver, abruptly shut down in late August, leaving more than 150 truck drivers stranded out on the road without working fuel cards.  

Some HVH drivers were forced to find their own transportation home, including James Delva, whose sister purchased a bus ticket for him to get back home to Lawrenceville, Georgia. 

"It's not fair or right for drivers who dedicate themselves and practically live on the road in their trucks," Delva told FreightWaves. "I am doing my job, driving safe and careful, but I'm not being paid for my time and hard work."

The carrier had been operating since 1956, but was acquired by HCI Equity Partners, a private equity firm, in October 2012. 

GDS Express

Some smaller carriers did not fare well in 2019. GDS Express of Akron, Ohio, which had about 75 drivers, shuttered operations just five days before Christmas, stranding some drivers without fuel as employees tirelessly worked to get them home. 

There are still no answers as to why the company abruptly shut down, but the company's former director of recruiting blamed "mismanagement" for the carrier's collapse. 

Hendrickson Truck Lines Inc.

Family-owned Hendrickson Truck Lines Inc. of Sacramento, California, filed for bankruptcy protection in late November, citing a soft freight market, loss of two key customers and a bad truck leasing agreement.

The carrier had about 90 trucks and 97 drivers at the time it closed its doors.  

Carney Trucking Company

One crash is all it took for Carney Trucking Company, a Gilbertown, Alabama-based flatbed carrier, to shutter operations in early August after its insurance rates spiked.

"We had a major accident last year," David Carney, an executive of the family-owned carrier, told FreightWaves. "Once we got the insurance quote, we tried to make it work, but we just couldn't."

The fleet had about 25 drivers and had been in business since 1983.

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