Central Freight Lines shuts down, U.S. Xpress fires truckload exec and ACT releases driver hiring data
Central Freight Lines to shut down after 96 years
Central Freight Lines to shut down after 96 years
Central Freight Lines is shutting down after 96 years in operation. The LTL carrier based in Waco, Texas, has over 2,100 employees including 1,325 drivers, 1,600 power units and approximately 820 office staff at the Waco company headquarters. This announcement makes Central Freight Lines the largest trucking company to close since Celadon’s closure in 2019.
“I think it was surprising that there wasn’t a buyer for the entire company, but buyers were interested in certain pieces but not in the whole thing,” a source, who didn’t want to be identified, told FreightWaves. “Part of it could have been that just the network was so expansive that there was too much overlap with some of the buyers that they didn’t need locations or employees in the places where they already had strong operations.”
A source familiar with the company said he is unsure whether CFL will file Chapter 7 or “liquidate outside of bankruptcy” but that the LTL carrier has no plans to reorganize.
Other LTL carriers have stepped up recruiting efforts in the days after this announcement, with CFL President Bruce Kalem telling FreightWaves that rival LTL carrier Estes Express Lines is looking to recruit many of CFL’s 1,325 drivers to its fleet. Estes Express Lines, headquartered in Richmond, Virginia, has nearly 8,100 drivers and 7,300 power units with a nationwide network.
Reactions to the closure have come across all forms of media, with some key highlights below:
- Expect the closure to result in LTL price increases into 2022, as a majority of Central Freight’s revenue came from 3PLs.
- Truckload carriers are expected to remain unimpacted by the closure due to different market characteristics. Comparing operational requirements for full truckload carriers and less-than-truckload carriers are similar to comparing apples to oranges.
- An antiquated operating plan and lack of update to the business model meant super-cheap pricing with higher operating costs.
U.S. Xpress fires head truckload exec and leader of Variant
Prior to U.S. Xpress, Ramsdell was the chief technology officer at Coyote Logistics, becoming president of U.S. Xpress Ventures in April 2020 and president of Variant and OTR operations since September 2020.
The Variant initiative creates a truckload carrier within a carrier utilizing technology to develop route optimization software and automate certain load planning capabilities. U.S. Xpress announced during a presentation at the Stephens Annual Investment Conference that Variant reached a company milestone of 1,500 trucks, due in part to changes in driver pay and retention strategies.
Reading between the lines:
The Variant initiative represents a yearslong overhaul of the legacy over-the-road truckload division by taking a technology-centric approach and basically building the carrier up from scratch. This strategy is very useful for large organizations, as building a company within a company eliminates half the issues related to old technologies, internal management resistance and change management. Below is Wasson’s surefire way to create a new and better one from scratch and how Variant follows this approach:
- Start a new company (e.g., Variant).
- Move it away from the old headquarters (i.e., Atlanta instead of Chattanooga, Tennessee).
- Roll out new tech software and test it (route optimization and automated planning).
- Grow and incubate the company until it overtakes the original business unit (1,500 trucks with Variant, leaving a few hundred legacy OTR drivers unincorporated).
- Profit (TBD).
Challenges remain. Even with a successful rollout and assistance with technology and automation, there remain other hurdles to ensuring profitability and truckload network optimization. The tech platform can be a game changer if U.S. Xpress finds a way to determine optimum routes and incorporates those results into pricing and sales, with key lanes being targeted in RFPs and mini-bids. A truckload network is only as efficient as its most recent bid and incorporating a unified pricing strategy to complement the new business model can prove lucrative.
Market Update: Driver availability improving per ACT’s For-Hire Trucking Index
Driver availability improved in October, indicating a better driver market from an increase in the pace of hiring. ACT Research Vice President and Senior Analyst Tim Denoyer said, “The most critical survey takeaways this month revolve around the driver market, with the Driver Availability Index improving considerably in October as it became clear that most fleets will be exempt from proposed federal vaccine rules.” He added, “The large fleets who train the vast majority of the industry’s drivers would be impacted by the mandate, though it appears only driver schools and team drivers will fall outside of the exemptions. We see ongoing supply-chain turgidity limiting capacity growth, but the pace of hiring is gradually improving, which will be key to the rate trajectory.”
FreightWaves TRAC lane spotlight: Los Angeles to Chicago
Lane commentary courtesy of Zach Strickland
Spot rates have continued to rise from Los Angeles to Chicago even as contracted demand has fallen, hitting $3.63 per mile including fuel, according to FreightWaves TRAC rates. Rejection rates have not fallen proportionately to demand either, meaning less demand is not improving capacity or rate conditions — at least yet.
The ports of Los Angeles and Long Beach handled approximately 36% of the import shipments that cleared customs in the U.S. in November. By comparison, New York/New Jersey handled close to 19%, with Savannah, Georgia, coming in third at 7.6%.
The LA ports have lost some ground versus last year, when they handled close to 40% of the total maritime import shipments. Shippers have attempted to find other ways into the U.S. to bypass the congestion and carriers have encouraged this to some extent with pricing.
Even though the nation’s infrastructure is designed to handle most of its import volumes through the Southern California ports, there has never been this amount of volume. Subsequently, the surface transportation providers have also struggled to keep pace.
The routing guide: Links from around the web
Chaining tires, 4 tips from professional drivers (FreightWaves)
Onward Delivery raises $4.7 million seed round for digital loadboard connecting retail stores to underutilized trucks (AngelList)
November truck orders hit 26-year low (Commercial Carrier Journal)
Automakers hit limits of ‘just-in-time’ supply chain management (Nikkei Asia)
Redwood Logistics sold to AEA Investors (FreightWaves)