Former New York trucking company owner convicted of lying to FMCSA
A former New York trucking company owner was convicted by a federal jury of making false statements to the Federal Motor Carrier Safety Administration.
Tony Kirik, who also goes by Anatoliy, operated Rochester-based Dallas Logistics, which had millions of dollars in revenue. He submitted false documents regarding the safety rating of his business to the FMSCA during compliance reviews and safety audits, even though the company had “many safety violations,” the IRS said in an announcement.
To dupe the FMSCA, Kirik created companies under family members’ names to make it look like the new companies were independent and not associated with the existing business that had received negative safety ratings. In reality, the new companies were extensions of the prior company, which Kirik was required to disclose but didn’t.
A criminal complaint filed in November 2020 says FMSCA examiners discovered that Dallas Logistics was falsely registered as being operated out of Dallas and was wrongly listed as being owned by someone identified as “J.Z.” When examiners questioned the discrepancy, they received a letter signed by someone identified as “A.B.” stating that “J.Z.” was planning to relocate to Dallas when “his mother got seriously ill” and his father “developed health ailments.”
Examiners learned that Dallas Logistics was actually owned by Kirik and was a “reincarnation” of Orange Transportation Services, which was owned by Kirik and received a negative safety rating, the complaint says.
Kirik is scheduled to be sentenced in October in the U.S. District Court for the Western District of New York. He faces up to five years in prison and a $250,000 fine.
Can wireless EV charging become an infrastructure player?
Wireless charging of electric vehicles — literally parking a vehicle over a concrete-embedded charging plate and magnetically connecting to a vehicle — is a niche mostly restricted to transit buses and yard tractors that pull containers around a distribution yard.
But as the rollout of plug-in charging is slowed by infrastructure buildout and lack of timely energizing, the underground solution also known as inductive charging could expand to other uses.
Expensive approach with a swift payback
“We are probably the most face-value, front-end, expensive solution there is, but over the course of a three-year payback, we are probably cheaper than just about any other method,” Dave Dealy, president and chief commercial officer of InductEV, told me.
The King of Prussia, Pennsylvania-based company was born in late 2022. It purchased the debt of financially struggling, high-power wireless charging startup Momentum Dynamics. InductEV has raised about $140 million through three funding rounds.
“We’re really into fleets and facilities initially,” Dealy said. “So that takes us into port terminals, which are behind the fence; takes us into railroad intermodal facilities, which are largely those container handling operations inside the fence.
“Behind the fence, I see an 80% take rate in the top 10 port terminals or ports and terminals. Not only ramp tractors, but all container-handling equipment other than ship-to-shore cranes and rail-mounted cranes.”
A deal in the Port of Long Beach Container Terminal is pending final paperwork on EPA grant money, Dealy said. InductEV would provide 60 charging pads for 60 yard trucks.
Municipal transit buses are an excellent use case for wireless charging. The vehicle literally parks over an in-ground charging for a top off of power. (Photo: InductEV)
Compared with the costs of constructing a concrete apron around a plug-in charging port, the running over of cables that have to be replaced and work rules that prohibit drivers from plugging in their own tractors, wireless charging can reach parity on a one-to-one basis, Dealy said.
Incentives a powerful lure
Like their plug-in counterparts, incentives for wireless charging can lower the cost of entry. Whether that leads to follow-on orders remains to be seen.
APM Terminals Elizabeth (New Jersey) is using a $1.4 million Environmental Protection Agency grant to purchase seven zero-emission Mafi T230 heavy-duty electric terminal tractors capable of plug-in or wireless charging.
APM Terminals in Elizabeth, New Jersey, will add a wireless charging platform for its terminal trucks, using money from a Department of Energy grant. (Photo: InductEV)
The terminal completed infrastructure charging construction in late 2023. That included nine Level 3 60-to-180-kilowatt fast-charging stations and one InductEV wireless Level 3 150-kW fast charger. Two hours of wireless charging allows a yard tractor to operate for 16-20 hours.
Wave Charging, a subsidiary of Ideanomics, competes with InductEv. It announced a $500,000 purchase order in January with an unnamed company. In the same month, Wave said a six-month project with Dana Inc. and Kenworth Trucks led to the first OEM-approved high-power wireless charging integration into Kenworth K270E and K370E Class 6 electric trucks.
Most wireless charging still experimental
Purdue University researchers, Oak Ridge National Laboratory, Cummins Inc. and Walmart are working under a $5 million grant from the U.S. Department of Energy to possibly expand wireless charging for Class 8 tractors.
Cummins is developing a 750-kW wireless charging system with Oak Ridge. Purdue is testing the technology integrated into a Freightliner eCascadia for compatibility with other types of wireless systems. Walmart eventually will test the system as part of its fleet.
“The overall goal is to address the issues of cost and range anxiety associated with electric vehicles,” Steven Pekarek, a Purdue professor of electrical and computer engineering, said in a March 28 news release. “The anxiety is exacerbated in heavy-duty vehicles simply because of the demand of power you’re needing and the cost of the battery that’s required.”
A smaller battery would lend itself to slower, more frequent charging rather than fast charging of a larger battery that would wear out faster from longer charge cycles.
Overcoming a plug-in bias
Andrew Daga, who founded Momentum Dynamics, said the issue for wireless charging remains where the demand will come from first.
“It is a niche market within a niche market,” Daga told me. “The reason we don’t see greater implementation of wireless charging for commercial vehicles is that there’s a preponderance of belief that the way you charge a vehicle is with wire.
“The value proposition that wireless charging offers is all built around the idea of opportunity charging, not as a direct replacement for plug-in charging. We’ll give you partial fuel when you need it as often as you need it, and the truck driver doesn’t need to get out of the vehicle to do it. Overall, you’ll save a lot more money.”
Autonomous distribution yard developer Outrider sees wireless charging as an option for its driverless electric yard tractors.
If a customer asks, Outrider will build its autonomous system into electric yard trucks with wireless charging capability. (Photo: Outrider)
“Outrider’s system is completely designed to integrate with a wireless charging station,” Outrider CEO Andrew Smith told me. “Because of the ground-up design of the future yard autonomy system, we’re looking to integrate seamlessly our large enterprise customers.”
Orange EV, the leading manufacturer of electric yard trucks, is open to if not enthusiastic about inductive charging.
“It can be part of the solution. It’s an option and we will support that option,” Kurt Neutgens, Orange co-founder and chief technology officer, told me. “Some customers will see that as value and others will say it really doesn’t make a difference for them.
“If you think about what the fueling costs are right now versus a diesel, and the time to fuel is much, much less for an electric, at least in our case. So, we actually have zero downtime to fuel. We only have to fuel when the operator’s on break,and it’s pretty easy to do a plug. But there are applications where inductive makes sense.”
Electric vehicles buck lower Q1 venture capital investment
Mobility technology investment by venture capitalists fell 19.3% to $6 billion in the first quarter. That left most startups to look for money elsewhere, according to the latest data from PitchBook. The number of deals was down about 24% compared with the same period last year.
“[It’s] an overall sentiment of caution in terms of VC activity in mobility tech and overall,” Jonathan Geurkink, PitchBook senior analyst for emerging technology research, told me. “It was up 5.7% on a year-over-year basis.”
EVs outpaced other verticals because of a $1.1 billion capital raise by Chinese EV startup IM Motors. It accounts for about 40% of $2.6 billion of inflows to EV companies.
“That one deal kind of skewed a bunch of other things,” Geurkink said.
For the trailing 12 months, the total EV market — commercial and consumer vehicles, charging infrastructure, batteries, battery materials, etc. — led all segments with $10 billion of investment, much of it in China, the acknowledged leader in EV development and the target of European and U.S. tariffs.
“Maybe they were doing their raise at [the World Economic Forum at] Davos or something because some of the individuals — Henry Kravitz, Ray Dalio, Reid Hoffman, Andressen Horowitz — were all in on that deal,” Geurkink said.
The views expressed here are solely those of the author and do not necessarily represent the views of FreightWaves or its affiliates.
It is no secret that the logistics industry is facing a challenging landscape characterized by low freight rates and excess capacity. This situation is a result of several factors, including the lingering effects of the pandemic-induced demand surge, geopolitical tensions and a slowdown in global economic growth.
Carriers have been plagued by high operating costs, according to the recently published 2024 Council of Supply Chain Management Professionals “State of Logistics Report,” while lackluster demand and the capacity glut have made it hard to charge the kinds of rates that would allow them to protect their margins. Operating costs have mainly been affected by elevated fuel, labor and insurance costs as well as growing costs of regulations. One example is the new emissions standards that are impacting cab costs in a major way. So far carriers have not been able to relay these costs to their customers.
This has resulted in a loss of capacity in U.S. logistics. According to the Federal Motor Carrier Safety Administration, we saw a decrease of 10.7% in freight brokers and 7.6% in asset-based carriers from December 2022 to March 2024. We are not seeing any improvements in this trend. Just this past week, U.S. Logistics Solutions, a Texas-based logistics company with 500 truck drivers, abruptly ceased operations. This incident highlights the challenges faced by smaller carriers in the industry.
3PLs face some significant challenges in 2024, such as low freight rates and excess capacity. This will lead to further consolidation among 3PLs. We have already seen the recent sale of the Transfix brokerage business to NFI and the sale of Coyote Logistics to XRO. At the same time, larger players have an opportunity to invest in their internal capabilities. According to the “State of Logistics Report,” 3PLs need to understand how to balance technological advancements and the traditional people-based approach that characterizes the logistics industry.
Shippers are creating new business models to create competitive advantages. Not only are they investing in routing optimization, new transportation management systems, supply chain visibility and other technologies. They are also entering the transport services market with examples such as Amazon and PepsiCo. We even see 3PLs and shippers working together to optimize their networks. This requires insights in the networks based on high-quality data as well as a willingness to collaborate.
While some signs of recovery, such as a slight rebound in container demand, are emerging, overall demand for freight services is expected to remain subdued due to persistent inflation, high interest rates and a tight labor market. Most likely, we will continue to see excess capacity and low freight rates for the remainder of 2024.
However, there are potential bright spots on the horizon. The ongoing trend of nearshoring, driven by geopolitical tensions and the desire for more resilient supply chains, has domestic manufacturing growing at a faster pace than imports from Asia. This will result in the longer term in increased demand for trucking services in North America. We have already seen this positively affecting carriers offering cross-border services from Mexico into the U.S. Additionally, the eventual easing of supply chain disruptions and a potential rebound in global economic growth could lead to increased demand for freight services.
But it is important that companies prepare for when the much-needed market demand returns and capacity tightens. This will require further digitization, hiring of the right talent, enhancing market presence and focusing on improving the companies’ logistics networks.
Shippers can leverage their position of power to negotiate favorable rates and secure capacity for their shipments. They can also explore alternative transportation modes and routes to optimize their supply chains. Further, they should invest in integrated transportation management systems that provide connectivity, communication and collaboration between shippers and carriers, which in turn will provide better customer service, visibility and operational efficiency.
Carriers, on the other hand, need to focus on improving operational efficiency, reducing costs and differentiating their services to attract and retain customers. They can also explore partnerships and collaborations to expand their reach and offer more comprehensive solutions.
The logistics industry is facing a period of significant change and uncertainty. However, by adapting to the evolving landscape and embracing innovative technologies, both shippers and carriers can position themselves for success in the years to come.
Look for more articles from me every week on FreightWaves.com.
About the author
Bart De Muynck is an industry thought leader with over 30 years of supply chain and logistics experience. He has worked for major international companies, including EY, GE Capital, Penske Logistics and PepsiCo, as well as several tech companies. He also spent eight years as a vice president of research at Gartner and, most recently, served as chief industry officer at project44. He is a member of the Forbes Technology Council and CSCMP’s Executive Inner Circle.
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California trucking industry backs curbs on PAGA citizen-initiated labor lawsuits
The California Private Attorney Generals Act (PAGA), which lets individuals mount civil cases against employers for a wide variety of perceived employment law violations, is likely to get a major overhaul. That has the trucking industry and other employers cheering.
“This is the first major reform to PAGA since its enactment in 2004, so it is a big deal,” Chris Shimoda, the senior vice president of government affairs at the California Trucking Association (CTA), said in an email to FreightWaves.
Shimoda summed up the issue that California business has had with PAGA: “It’s long been a problem for California’s entire business community, including trucking,” he said. “While originally being sold as a means to enhance labor law compliance to the benefit of workers, PAGA had turned into an avenue that primarily benefited plaintiffs’ attorneys who got rich suing companies over minor violations such as clerical errors on paystubs while workers saw pennies on the dollar.”
The agreement among California Gov. Gavin Newsom and both houses of the State Legislature, announced last week, has the backing of the California Labor Federation, which is headed by former Assemblywoman Lorena Gonzalez, who was the primary driver of the state’s AB5 independent contractor law. It also is supported by the California Chamber of Commerce, which took the lead in negotiations on behalf of the business community.
The legislation calling for the overhaul is AB 2288 in the Assembly and SB 92 in the Senate.
“We came to the table and hammered out a deal that works for both businesses and workers, and it will bring needed improvements to this system,” Newsom said in a prepared statement.
A wide range of changes
The proposed law has a range of caps on how much employers must pay for violations and how much employees filing a PAGA action can collect.
But those caps only kick in if the company can show it took “all reasonable steps” to correct the violation. As a blog post from the law firm of Barnes and Thornburgh said, “all reasonable steps may include but are not limited to conducting an audit and taking action in response to the results of the audit, having lawful written policies, training supervisors on applicable labor code and wage order compliance, or taking appropriate corrective action with regard to supervisors.”
Given that an employee did not need to have actually suffered from a violation under existing PAGA law, the CTA’s Shimoda said litigation often became a “‘throw it against the wall and see what sticks’ sort of exercise for the plaintiff’s attorney.”
An initiative slated to be on the California ballot in November would, if approved, result in many of the changes in the proposed PAGA legislation.Passage of the legislation, which would need to happen quickly given various deadlines, would negate the need for that referendum.
Jennifer Barrera, CEO and president of the California Chamber of Commerce, which was the key business community negotiator on the PAGA overhaul, said in a video podcast that the looming vote in November “created an environment where groups from opposite ends of this issue have had an opportunity to sit down and find common ground on things that we can do to improve progress.” The goal would be to allow workers “to get resolution on their labor claims, but not creating this abusive lawsuit and litigation environment for employers.”
No single one of the many changes proposed in the legislation is being touted as more important than others; numerous labor law attorneys have written blogs and commentaries on the changes, and all have highlighted several significant shifts in the proposed law.
A different definition of “standing”
One that comes up frequently, however, is that the person bringing a PAGA action must have more “skin in the game” than in the past. A blog posting by attorneys Andrew Paley and Phillip J. Ebsworth of Seyfarth Shaw noted that the proposed legislation “brings PAGA back to a more traditional approach to standing. Now plaintiffs must prove that they experienced the same Labor Code violations they seek to pursue on behalf of other employees.” Previously, a PAGA action was permitted for a worker who witnessed what he or she thought was a violation of labor law, even if the employee who witnessed the alleged violation did not suffer harm from it.
Christopher McNatt, a California-based partner with the trucking-focused Scopelitis law firm, said these provisions that would slow what he referred to as a “serial plaintiff” in PAGA cases, were significant for trucking.
The serial plaintiffs are those who “jump from carrier to carrier” and “make PAGA claims everywhere.”
A driver who works for a carrier even for a week can bring a PAGA claim, McNatt said, even if they weren’t impacted by the action at the core of the complaint.
“What they do is they work with a lawyer and every time they have a short stint at a carrier, they then become eligible to make a PAGA claim,” McNatt said. With the changes in the rule under the proposed legislation, he added, “there is a stronger likelihood that an individual jumping from carrier to carrier will not have the legs or the support to make a broad PAGA claim at each company he jumps to.”
The proposed changes include a one-year statute of limitations. The Seyfarth Shaw attorneys said that as result of a related federal court decision, “plaintiffs began to argue that there was no time limit on when they could have experienced a Labor Code violation,” which essentially meant there wasn’t a statute of limitations.
Further, according to the Polsinelli Law Firm in its own post on the proposed legislation, “penalties for potential violations will be capped for employers who quickly rectify policies and practices and make workers whole after receiving a PAGA notice.”
The term used is whether a violation can be “cured.” Several attorneys in blog posts said the ability to “cure” a violation before an employer is hit with significant penalties is far greater under the proposed PAGA regime than under the existing structure. “This encourages employers to take prompt and responsible actions to comply with labor laws, before a lawsuit is initiated and before the attorney fees for employees’ attorneys are triggered,” the Polsinelli blog posting said.
Several legal commenters noted that the revised PAGA system would be better for “manageability.” As Polsinelli writes, “courts will be equipped by statute to strike PAGA claims that are unmanageable due to size or scope.”
The relevant wording on that issue, according to Seyfarth Shaw, is that a court “may limit the evidence to be presented at trial or otherwise limit the scope of any claim filed pursuant to this part to ensure that the claim can be effectively tried.”
In a commentary in the National Law Journal by several attorneys of the law firm Ogletree Deakins, they noted that the proposed law would eliminate “stacked penalties” for some violations. (Among the firm’s attorneys is Robert Roginson, who has been the lead attorney in the CTA’s legal battle against AB5.)
A blog post by attorneys Benjamin Ebbink and Lonnie Giamela of Fisher Phillips did not use the term “stacking” but said provisions in the proposed law curb “attempts in PAGA litigation to double-dip or combine the number of penalties that are sought in litigation.”
Small errors in a pay stub mean big problems
Barrera, of the California Chamber of Commerce, was interviewed on the podcast by the chamber’s associate general counsel of labor and employment, Matthew Roberts. He gave as an example of runaway PAGA litigation a case in which an employee’s pay stub did not contain the second four digits of a ZIP code but did have the main five-digit number. “They were sued under PAGA, and this is a case that went all the way through to the appellate system,” Roberts said. While the employer ultimately prevailed, the case did provide “litigation headaches,” he added.
When California’s independent contractor law, AB5, went into effect in trucking after years of litigation, there had been speculation that its use as a tool against perceived misclassification of drivers would come through PAGA actions. But Shimoda said he does not know of any such occurrences.
Shimoda issued a statement of caution regarding the proposed overhaul.
“It remains to be seen how these reforms will work on real world claims and litigation, but they should tamp down some of the worst excesses by PAGA attorneys,” he said.
Forward Air’s recalculated Q1 shows improved leverage ratio
Forward Air issued an update to first-quarter results, showing more breathing room to an upcoming debt covenant.
The company said “after performing a thorough assessment of all available addbacks permitted under the credit agreement,” its adjusted earnings before interest, taxes, depreciation and amortization increased from $300 million to $324 million for the 12-month period ended March 31. The new EBITDA number placed its net debt leverage ratio at 5.1 times versus the 5.5 times previously announced. That compares favorably to a required threshold for debt leverage to be less than 6 times during both the second and third quarters.
The adjusted calculation excludes several one-time costs and expenses tied to the acquisition of Omni Logistics. Forward’s (NASDAQ: FWRD) credit agreement was amended in mid-February, not long after it closed on a controversial merger with Omni.
“We wanted to provide this adjustment to our first quarter reporting as part of the new leadership’s commitment to increased transparency,” said CEO Shawn Stewart in a late Thursday news release.
Forward also announced Thursday that it has “taken further cost reduction actions,” which it expects will boost second-quarter EBITDA by $20 million.
Those actions may include recent headcount reductions. Several sources confirmed to FreightWaves last week that the company has eliminated approximately 150 positions.
“We are aggressively taking action to improve profitability, maximize synergy capture and drive our leadership in global supply chain and domestic transportation services so that we can create value for our customers, employees and shareholders,” Stewart added. “We are focused on execution and continue to be optimistic about the opportunities ahead and our long-term growth trajectory.”
On its first-quarter call in May, the company couldn’t commit to being cash flow-positive during the second quarter. No reference to cash flow from operations in the current period was provided in the Thursday update.
The company previously said it expects to deleverage the balance sheet to 4.5 times (net debt-to-adjusted EBITDA) by the end of 2025.
Shuttered California LTL carrier files for bankruptcy
Less-than-truckload carrier Tony’s Express of Fontana, California, has filed for bankruptcy protection, nearly three months after it abruptly ceased operations by notifying around 200 truck drivers, warehouse workers and office personnel via text message that they no longer had jobs.
John H. Ohle, president and sole shareholder of Tony’s Express, bought the company in May 2023 from brothers Anthony “Tony” Raluy and George Raluy. Their father started the business in 1954.
Less than a year after acquiring Tony’s Express, Ohle shuttered operations of the 70-year-old carrier by sending workers a text message on March 28. The message, which was obtained by FreightWaves, notified employees that the company was closing its doors that day and could not cover the previous week’s payroll or workers’ paid time off.
“The current market just didn’t support our ability to operate and be a profitable company, and the cost of fuel in California made it very difficult,” Ohle told FreightWaves a few days after the closure. “We were in very serious discussions with two different companies about coming in and partnering or taking over Tony’s, and those fell apart at the very end, and literally, it was a last-minute decision.”
Drivers and workers did receive their final paychecks on April 29 but told FreighWaves that fees for health and life insurance, which they no longer had, were deducted from their pay.
Tony’s Express filed a Chapter 11 bankruptcy petition Friday in the U.S. Bankruptcy Court for the Central District of California. The company is filing its petition under subchapter V, which provides a path for small businesses seeking to reorganize.
As of publication time, Ohle and his bankruptcy attorney, Eve H. Karasik, had not responded to FreightWaves’ request seeking comment.
The filing for Tony’s Express lists both its assets and liabilities as up to $10 million. The company states that it has up to 199 creditors and that funds will be available for distribution to unsecured creditors.
The company’s top three creditors with unsecured claims are located in California, including Y Trucking of Fontana, which is owed $700,000. The company’s address used in the filing is the same one for Tony’s Express. Royal Hawaiian Express of Fullerton is owed more than $560,000, and Centerline Drivers LLC of Santa Ana is owed nearly $354,000.
According to its petition, Tony’s Express is disputing all of its 20 largest unsecured creditors’ claims.
The LTL carrier shuttered operations in March. (Photo credit: Tony’s Express)
Ohle plans to restart Tony’s as ‘rental’ truck trailer business
On Tuesday, U.S. Bankruptcy Judge Vincent P. Zurzolo granted Tony’s Express’ motion to extend the deadline to submit its schedules of assets and liabilities as well as the company’s statement of financial affairs (SOFA) with the court.
In his motion to the judge seeking a deadline extension, Ohle stated that he needed more time to file the schedules and SOFA because he “has been addressing several critical issues, including preparing the initial filing [and] negotiating DIP [debtor-in-possession] financing with eCapital.”
Ohle added that he is also “working on plans to restart [Tony’s Express] with a ‘rental’ business model for its fleet of over 250 trucktrailers.”
The company has limited personnel, and Ohle is the only one “handling bankruptcy matters alongside other commitments.” The motion also says Ohle’s “financial situation is complex, including a $1 million projected loss for 2023 and $4.5 million [to] $5 million in unsecured liabilities, which requires careful analysis and reporting.”
Zurzolo has set a creditors’ meeting for July 12, and the proof of claims deadline is scheduled for Aug. 29. A status conference with the subchapter V trustee is set for Aug. 15, and Ohle must file a status report with the court by Aug. 1.
Name change
After shuttering Tony’s Express, Ohle recently changed the intrastate carrier’s name to that of another business formerly owned by the Raluys — Economy Packaging Inc. — and has moved the business from Fontana to Pomona, California.
Founded in 1971 by the Raluys, the brothers describe Economy Packaging as a packaging and household products storage facility, according to the business entity search on the California secretary of state’s database.
However, the Raluys didn’t update Economy Packaging’s business filing to add Ohle’s name as the new owner or list him an officer of the company — its last filing update was in September 2021, although Anthony Raluy did update Tony’s Express’ business filing to add Ohle as CEO, CFO and secretary of Tony’s Express in April 2023.
The same month that Ohle acquired Tony’s Express in May 2023, he used the carrier’s DOT number to open a small trucking firm and brokerage in Joliet, Illinois. However, the Federal Motor Carrier Safety Administration SAFER website shows that its common carrier operating authority was involuntarily revoked on May 7, 2024.
The company’s surety bond coverage for its brokerage was canceled Saturday, the day after Tony’s Express filed for bankruptcy. According to FMCSA data, Tony’s is “not authorized to operate as [a] property broker.”
While Economy Packaging has an active DOT number, the company dismissed its application for property brokerage authority in September 2003 based on FMCSA data.
The new address for Tony’s Express, doing business as Economy Packaging, is listed as the same one used by another warehouse, transportation and distribution company that’s headquartered in Pomona.
This is a developing story.
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The world’s largest temperature-controlled real estate investment trust, Lineage Inc., has filed for an initial public offering. Neither an estimated price range for the shares nor the size of the offering was announced.
The company plans to list its stock on the Nasdaq under the ticker “LINE.”
Novi, Michigan-based Lineage operates more than 480 warehouses with 3 billion cubic feet of space across North America, Europe and the Asia-Pacific region. It provides end-to-end logistics services like freight forwarding, customs brokerage, drayage and truck transportation.
Lineage is backed by private equity firm Bay Grove and has raised more than $13 billion in capital since its 2008 inception.
“Becoming a publicly traded company is a momentous decision and not without certain well-known considerations,” Bay Grove co-founders Adam Forste and Kevin Marchetti told prospective investors in a letter accompanying a filing with the Securities and Exchange Commission. “However, we strongly believe the public market is the best way to deliver growth at scale by providing us with the advantages of a liquid currency and direct access to a lower cost of capital to further fuel our growth flywheel.”
The filing showed proceeds from the IPO will be used to repay $2.4 billion in revolving debt.
The company generated $5.34 billion in revenue in 2023, an 8% year-over-year increase, with net operating income of $1.75 billion, a 20% y/y increase.
Morgan Stanley, Goldman Sachs, BofA Securities, J.P. Morgan and Wells Fargo were listed as lead book-runners on the deal. Numerous other investment banks were listed as co-managers.
Buttigieg: Rescheduling pot will not affect trucker drug testing
WASHINGTON — U.S. Transportation Secretary Pete Buttigieg pushed back on assertions that federal regulators could lose the ability to test truck drivers for marijuana use if the drug is deregulated down to a Schedule III substance.
Responding to that concern from lawmakers at a House Transportation and Infrastructure Committee hearing on Thursday — and to the concerns of the American Trucking Associations — Buttigieg testified that if the Biden administration’s marijuana rescheduling rulemaking is finalized, it would not alter DOT’s marijuana testing requirements with respect to the industries it regulates, including trucking.
Buttigieg testifying on June 27. Credit: U.S. House T&I Committee
“Our commitment to testing continues regardless of the schedule [classification],” Buttigieg said. “And we believe our authorities are intact because they don’t call for testing by reference to where marijuana sits in its classification. So whether we’re talking about the regulated community — truck drivers — or our own personnel, such as an air traffic controller, our understanding is that nothing about that reclassification would change” DOT testing authority.
In a letter to Buttigieg prior to the release of the proposed rulemaking last month, Dan Horvath, ATA’s senior vice president for regulatory affairs and safety policy, pointed out that DOT drug and alcohol testing requirements are limited in their testing authority by the Department of Health and Human Services, which currently allow employers that are federally regulated to test their employees only for drugs listed in Schedule I or II under the Controlled Substances Act.
“Therefore, without additional action, deregulation or rescheduling of marijuana would have the likely consequence of precluding testing for all professional drivers and transportation workers as part of the DOT testing program,” Horvath wrote.
Buttigieg confirmed that is not the case, however. “But we’re going to continue to evaluate any indirect impacts that reclassification might have,” he said at the hearing.
DOT ready to help East Coast port labor snag
Buttigieg also attempted to quell concerns of a strike at U.S. East and Gulf Coast container terminals. Negotiations to renew a labor agreement that expires on Sept. 30 between dockworkers and terminal operators came to a halt earlier this month amid disputes over port automation.
Rep. Bruce Westerman, R-Ark., who said a port strike would be “devastating for Arkansas businesses” that rely on terminals along the East and Gulf coasts for imports and exports, told Buttigieg that up to the Biden administration to bring the parties back to the table to avert a supply chain disruption.
“This is something we’re monitoring closely, and our message to the parties is, that it is vital that they come together and arrive at a deal that does right by port workers and allows port operations to flow,” Buttigieg responded.
“We had a similar level of intense negotiations at the West Coast ports that came to a successful conclusion. Our hope is that the same will take place with ILA [International Longshoremen’s Association, which represents East and Gulf Coast dock workers], and I am in frequent discussion with the acting Secretary of Labor and other administration members on what we can do to urge the parties to get a deal.”
3 logistics companies ordered to pay $840K for underpaying workers
The Department of Labor has ordered three cross-border logistics companies in the San Diego area to pay $840,000 in back wages and fines to warehouse and transportation workers.
The wages were recovered from Ruffo de Alba Forwarders LP, SAI Logistics Experts Inc. and Moving Technologies of America Inc. for 32 Mexican nationals, some paid as little as $2.77 an hour, according to a news release.
“Companies along the U.S. southern border that mistakenly believe they can exploit Mexican nationals by paying illegally low wages should take note of the outcome of these investigations,” Min Park-Chung, Wage and Hour Division district director in San Diego, said in the release. “To root out employers who abuse and exploit workers for profit, the division is working closely with the Consulate General of Mexico to educate Mexican nationals about their rights as workers.”
The Labor Department said Moving Technologies of America, a subsidiary of Vadeto Group LLC, paid five workers as low as $2.77 per hour in Mexican pesos.
Investigators said Edgar Vargas, owner of Moving Technologies of America, alleged the workers were “independent contractors” paid by OGEID Formacion Empresarial SA DE CV in Mexico, which investigators determined was another Vadeto Group subsidiary.
Vargas tried to mask the workers’ employment status by assigning them code numbers to use in place of their names when signing the company’s visitor log, investigators said.
A cease-and-desist letter was also issued against Vargas and Moving Technologies of America due to alleged retaliation against workers who cooperated with investigators.
Following its investigation, the labor department recovered $75,132 — representing $37,566 in back wages and an equal amount in damages — for the five employees and assessed $3,324 in penalties to Vargas and Moving Technologies of America for repeated disregard of the law.
Ruffo de Alba Forwarders and SAI Logistics Experts used similar underpayment practices against Mexican National employees.
Ruffo de Alba Forwarders paid 14 workers at rates of $3.27 per hour in Mexican pesos, while SAI Logistics Experts paid 13 workers $3.86 per hour in Mexican pesos, investigators said.
Ruffo de Alba Forwarders and owner Andres Ruffo was ordered to pay $222,899 in wages owed to its 14 workers and damages totaling $445,798, as well as $8,645 in penalties for their misconduct to the department.
SAI Logistics Experts was ordered to pay $318,249 in wages, overtime and liquidated damages owed to 13 workers and pay the department $8,645 in penalties.
In a related case, the department filed a lawsuit against Calexico, California-based NBG Logistics Alliance Inc. on June 21 for allegedly obstructing a similar investigation and retaliating against employees. The company also has a location in San Diego.
Investigators allege NBG Logistics Alliance ferried employees to a local fast-food restaurant quickly when investigators showed up at an NBG warehouse.
“The employees were then told to return to Mexico, preventing them from meeting with investigators onsite,” the Labor Department said. “The company later fired some of the workers shortly after. The department seeks a preliminary injunction forbidding further retaliation against workers and interference with the investigation.”
