There are many people interested in former transportation companies, whether they were trucking companies, railroads, airlines or ocean lines. These companies are called “fallen flags,” and the term describes companies whose corporate names have been dissolved through merger, bankruptcy or liquidation.
Today’s FreightWaves Classics profiles another fallen flag in the trucking industry – Pacific Intermountain Express, which was known as P.I.E. and P-I-E. Unfortunately, there is not much specific information about the company available (particularly its early years). This is true of many fallen flags in the trucking industry that were founded before World War II.
In 1927 Ray V. Lilenquest and his brothers Bill and Les began to use two Model A Fords to provide trucking service from Pocatello to Idaho Falls, Idaho. The company underwent quite a few changes during its earliest years; P.I.E. grew from the consolidation of three companies in 1940.
By 1946 P.I.E. had 535 employees. It grew further due to a series of acquisitions in the late 1940s and 1950s. This was during a time when the trucking industry was regulated by the Interstate Commerce Commission (ICC), and it was easier for a trucking company to grow via acquisitions than to petition the ICC for permission to begin a new route.
In 1954 P.I.E. acquired West Coast Freight and System Tank Lines. With the acquisition, P.I.E became the largest hauler of petroleum products in the U.S. The company’s service area extended from the West Coast to St. Louis and Chicago. By the mid-1960s P.I.E. had made several more acquisitions that extended its service area to the East Coast. At the time, it had 67 terminals in 29 states.
P.I.E.’s acquisition and merger with Ryder Truck Lines
Ryder System, a major truck leasing company based in Miami, sold its less-than-truckload (LTL) business to IU International Corp., a Philadelphia-based conglomerate, in 1965. In 1973 IU acquired Pacific Intermountain Express.
IU ran the two trucking lines as separate units for several years, but merged P.I.E. with Ryder Truck Lines in 1982, forming Ryder/P.I.E Nationwide. Although both companies had been profitable motor carriers specializing in LTL shipments, the trucking industry’s deregulation in 1980 had a negative impact on both companies (as well as many other LTL carriers).
Ryder and P.I.E. were unionized and had nationwide networks of terminals to provide shippers with efficient service. Although IU management believed it could generate greater efficiency and service from the merger of the two truck lines, combining the two companies did not go well almost from the start.
Even before the merger, the companies’ profit margins had been hurt by the widespread discounting of shipping costs that occurred after deregulation. Following the merger, Ryder/P-I-E lost a large percentage of its more lucrative long-haul business due to poor service, and there were massive problems integrating the companies’ very different computer systems.
P.I.E. is sold again
On January 2, 1986, IU International Corp. announced that it had sold its P.I.E. subsidiary on December 31, 1985 to Chicago-based RPN Acquisition Corp. and private investors headed by Chicago financial consultant Gilbert K. Granet. RPN Acquisition was an affiliate of Maxitron Corp., another Chicago-based private investment firm.
Prior to the sale, IU had announced its intention to establish Ryder/P.I.E. as a separate, independent company as part of IU’s major restructuring. However, when IU announced the sale of P.I.E. to RPN Acquisition Corp., it said that by selling its trucking operation to a third-party rather than spinning it off to shareholders, it (IU) would be able to offset a substantial 1985 capital gain.
Although the sale price was not disclosed, an IU spokesman stated that it would result in a pretax loss of about $110 million for IU.
When IU International announced the sale of P.I.E., it stated the sale would not affect the trucking firm’s management or operations. It also said the sale would not affect an employee stock investment plan (ESOP) that had been launched in October 1985. Under the ESOP, more than 85% of P.I.E.’s nearly 11,000 employees were exchanging 15% reductions in wages or salary for ownership of 38% of the company’s stock over a five-year period.
At the time of the sale, Ryder/P.I.E was the nation’s fourth-largest LTL carrier, and was based in Jacksonville, Florida. It had 306 terminals in the United States, Canada and Puerto Rico. Its annual revenue was more than $800 million.
P.I.E.’s new owners changed the company’s name to P.I.E. Nationwide, Inc. from Ryder-P.I.E. Nationwide Inc.
The announcement included the statement by Jack E. Schange, the chairman of P.I.E., that “We are looking forward to strong growth in 1986 and are excited about our new owners.” In October 1987 Maxitron hired Charles Rodgers and Harold Doyle as chairman and president of P-I-E, respectively, to run the truck line.
Rodgers and Doyle had owned minority interests in P-I-E at the time of the company’s sale and had been acquiring additional stock in the company from Maxitron under a three-year stock purchase agreement.
P.I.E. is sold yet again
Unfortunately, under RPN Acquisition Corp. P.I.E.’s losses continued to grow, and the company was sold again in 1990. On April 13, 1990, Olympia Holding Corp. announced it had acquired “the partnership interests of Maxitron Co., the holders of a majority of the stock of P-I-E Nationwide Inc.” Olympia Holding described itself as a Miami, Florida-based, privately held investment company. When it was acquired, P-I-E Nationwide was the eighth-largest trucking company in the United States. At the time of its acquisition, P-I-E’s employees owned about 36% of the company through the ESOP.
When it was acquired P-I-E had not yet released complete financial figures for 1989. In 1988 the company experienced a $6.2 million operating loss on revenue of just over $500 million.
Olympia disclosed that Growth Finance Corp., a little-known company that had recently bought Transcon Lines, was an “affiliate” of Olympia.
The acquisitions of P-I-E and Transcon by Olympia and its affiliate, Growth Finance, ended years of speculation about the companies’ futures. Both had been rumored to be up for sale repeatedly, although no deals were ever completed.
Transcon Lines, which at that time was based in Los Angeles, had been sold suddenly on April 1, 1990 to Growth Finance. Transcon had experienced significant financial trouble before being suddenly acquired; it had lost $31 million in 1989 on a revenue base of $226.5 million. In addition, Transcon failed to complete an expected merger with ANR Freight System Inc. of Denver in March 1990.
Transcon officials did confirm a few days after its purchase that Herbert Lefkowitz, who had not been associated with the company previously, had been named its new president.
An Olympia spokesman also stated that “As a result of the recent purchase by Growth Finance of Transcon… P-I-E and Transcon will be under the common control of this investment group.”
A P-I-E spokesman said the truck line would have no comment on its acquisition. He also stated that P-I-E could not disclose the names of the principal partners in either Olympia Holding or Growth Finance.
The final act
In October 1990 – just months after its acquisition by Olympia Holding Corp. – P-I-E and Olympia Holding filed for Chapter 11 bankruptcy reorganization, listing debts of $237 million and assets of $169 million.
In November 1990 U.S. Bankruptcy Judge George L. Proctor granted P-I-E operating funds to stay in business through December 15, but he announced at that time that P-I-E “would have to demonstrate benefits for the company and its creditors to get any more money.”
Prior to the October bankruptcy filing, P-I-E had operated 230 terminals and employed 3,500 workers (including 800 at the company’s Jacksonville headquarters).
Over the course of the next two months, P.I.E. management eliminated 1,500 jobs and closed 69 terminals.
P-I-E International announced on December 15, 1990 that it would shut down the trucking company “within three weeks and begin liquidating assets.”
At a brief hearing the previous day, Judge Proctor approved the liquidation plan after Steve Busey, P-I-E’s attorney, said a “weak economy and less-than-projected revenues” over the previous five weeks made the company’s outlook “bleak. There was no light at the end of the tunnel,” Busey added. “The company determined there was no real prospect of a successful reorganization.”
At the time of the December 14 hearing, P-I-E had about 2,000 employees and operated about 100 terminals. According to Busey, further cuts were expected during P-I-E’s final weeks.
Under the court-approved liquidation plan, P-I-E continued to operate under Chapter 11 for the two to three weeks it took to deliver the remaining freight in its warehouses.
A court-appointed trustee then supervised the liquidation of the company’s assets. The liquidation plan came after weeks of pressure from major creditors, including Fidelcor Business Credit Corp. P-I-E owed $39 million to Fidelcor.
P-I-E management’s attempts to scale back operations to cut losses failed, and one of the nation’s most famous common carriers closed its doors forever.