Spike in insurance rates lead to shutdown of Carney Trucking (with video)

According to the Federal Motor Carrier Safety Administration’s (FMCSA) SAFER Web website, the fleet had a fatal crash in the past 24 months and three additional U.S. Department of Transportation reportable crashes in the past two years. In the past 24 months, its vehicles had been inspected 70 times with a 31.4 percent out-of-service rate versus a national average of 20.72 percent. A total of 109 driver inspections had occurred in that timeframe with a 2.8 percent out-of-service rate, below the national average of 5.51 percent.

Carney said the drivers “got all the vacation [pay] and anything else we owed them.” There was also some additional pay provided, he added.

FMCSA said the fleet had 28 registered vehicles that covered 2.1 million miles in 2017.

Trucking shutdowns have spiked this year, and insurance is just one cause. Indiana-based A.L.A. Trucking shut down in early June and company owner Alan Adams blamed the FMCSA’s scoring system for fleets that caused a spike in insurance premiums.

“I didn’t do anything wrong with the company. It’s the way the government has this new grading system that is affecting a lot of companies,” Adams told FreightWaves. “If there’s a situation on the road where a car comes off the on-ramp and bumps into a tractor trailer, until that claim is settled, the insurance company charges a company with that claim.”

Adams said insurance for his 41-driver company climbed from $340,000 to more than $700,000 in one year.

Other companies have cited low freight rates, lack of freight and other reasons for their shutdown. Just last week, Schneider National announced it was shutting down its First to Final Mile business due to a lack of profitability. That shutdown put nearly 800 drivers out of work.

Also on July 30, Terrill Transportation of Livermore, California, ceased operations. That fleet had 30 trucks and 36 company drivers as well as 12 owner-operators.

In addition to Schneider’s announcement last week, three of the largest closures so far in 2019 have been New England Motor Freight, Falcon and LME.

LME was a 400-truck less-than-truckload (LTL) carrier based in Minnesota. LME’s shutdown may have been in part due to a National Labor Relations Board dispute related to Lakeville Motor Express, a carrier that shut down in 2016. The Board called LME the “alter ego” of Lakeville.

Falcon’s shutdown was tied to alleged mismanagement, according to former executives of the company. Those executives told FreightWaves the company was struggling to meet payroll even after the sale to a private equity company.

New England Motor Freight’s shutdown in February shook the Northeast LTL market. With roots going back 100 years, the nation’s 19th-largest LTL carrier with more than 1,300 drivers had struggled financially for some time, but a shutdown was not expected. But on February 12, the company concluded that after two years of losses and the combination of high labor costs and a “severe” driver shortage made it unsustainable to continue as a going concern.