A family-owned trucking company and brokerage — California Intermodal Associates Inc. (CIA), headquartered in Commerce, California — is ceasing operations after nearly 25 years, citing the state’s independent contractor law.
CEO Gabriel Chaul said he recently notified customers that he is winding down operations.
“I blame AB5 for the main reasons our company is closing,” Chaul told FreightWaves on Tuesday.
He said all hope that his company would survive faded in March after a federal judge in California rejected trucking and trade associations’ legal challenges to stop enforcement of AB5, a controversial state law that severely restricts the use of independent contractors.
“California is a hostile place to operate a business,” he said. “This law has created a hostile operating environment and an environment of unfair competition.”
Chaul said his company complied with the law and switched his owner-operators over to become a company fleet of around 30 drivers.
“We had a hard time maintaining that number because they started falling off because they were enticed by our competition that builds its business with owner-operators,” he said.
Chaul said once he notified customers that the company was fully compliant with AB5, the phones stopped ringing.
“It seems like as soon as our customers knew that we were complying with the law and hiring employee drivers and had our own assets, our costs went up by as much as 30%,” he said. “There was no incentive to use CIA anymore.”
While his company complied with the law, it largely hasn’t been enforced and other companies that continue to use independent contractors are succeeding while he has made the tough decision to close, Chaul said.
“I owe about $1.8 million to the bank. I compromised myself to try and stay afloat because of this AB5, but if the state’s not going to enforce it, I’ve decided to hang it up,” Chaul said. “I’ve made all of these efforts and nothing’s going to change, so I can’t continue digging myself a deeper and deeper hole.”
Besides his current fleet of around 30 trucks, he also provided logistical support to the trucking community with a container yard and offered warehousing services.
In an email to FreightWaves, Fabian Ibarra, a dispatcher for another Southern California-based carrier, wrote, “CIA has been a cornerstone in the logistics landscape for nearly two decades.”
“Their impact was profound; if you’ve ever moved 53-foot containers from the rail in California, chances are you’ve crossed paths with CIA in your career journey,” Ibarra said.
Chaul said he is winding down operations this week but is uncertain of his next career move.
“I’m in my 50s and started this company with my dad 25 years ago,” he said. “I tried to do everything right and run a nice company, and this breaks my heart because I have to close it.”
This is a developing story.
Read more here:
Former Tony’s Express workers, drivers say mismanagement sank company
97-year-old Illinois dairy forced into bankruptcy
Shuttered California trucking company files for bankruptcy
Illinois trucking company with 171 drivers files for bankruptcy
Freight Fraud Symposium
Double brokering. AI deepfakes. Identity theft. Freight fraud is an existential threat to the industry. Get ahead of it.
Supply Chain AI Symposium
Past the hype. Join operators, founders, and enterprise leaders figuring out how to deploy AI in supply chain.
Future of Rail Symposium
Reshoring is rewriting freight demand. Join shippers, rail executives, and government officials to shape the next decade.
Double brokering. AI deepfakes. Identity theft. Freight fraud is an existential threat to the industry. Get ahead of it.
Rock & Roll Hall of Fame • Cleveland, OH Register NowPast the hype. Join operators, founders, and enterprise leaders figuring out how to deploy AI in supply chain.
The Old Post Office • Chicago, IL Register NowReshoring is rewriting freight demand. Join shippers, rail executives, and government officials to shape the next decade.
The Signal at Chattanooga Choo Choo • Chattanooga, TN Register Now
Don Matting
These days people expect too much for too little work and they quit too easy. Folks used to be
embarrassed to bankrupt, now it’s acceptable, OK and quite often expected. I heard the other day that a new version of the classic story, “The little red engine that could” is being written. In this version the Little Red Engine is told to give it a try but if it gets too hard someone will help.
Bob from NJ
I was in business for 20 years until I contracted with trump in NJ. I lost my business over unpaid invoices because he refused to pay the full amount. I owed for supplies and labor. He paid just two thirds of the invoice which left me nothing. I couldn’t pay insurance costs or gas. I hope he suffers.
Anthony
Get out of California.
Everett
You lost because you have to play the “Shell” game correctly. I’ve lost and tried again and learned from my mistakes. Play there game back. Smoke and mirrors
A. cutch
California seems to be hell bent on driving business out of the state. All this laws they are passing is making it harder for businesses to survive.
Michael Betancourt
The regulations faced from the Trucking industry will
ruin the state. I ran a moving Company for four years.
I was paying out 57c on the Dollar. When my insurance went through the roof, I closed the doors.
The PUC accused me of stealing $260,000 from the company. Through research it was proven that the office secretary had embezzled over $35,000. By the time I was cleared I realized I wouldn’t prosper. I returned to Pastoring, which I was doing all along.
Steven R Manson
I’m an OO. I don’t do California anymore and I’ll be damned if I covert to a company driver lol
Stephen Webster
We need to provide medical services to all drivers in the U S including those from Canada and Mexico
The only way to get rid of driver Inc and keep truck drivers in the industry without bringing in more foreign student drivers from low wage countries is to bring parts of A B 5 to Canada
We are getting a lot of support from the fed and ont gov on this