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NewsTrucking

Texas-based flatbed carrier ceases operations, blames government regulations, insurance costs

Flatbed carrier TK Transport of Clute, Texas, ceases operations on Jan. 27.

Flatbed carrier TK Transport of Clute, Texas, has decided to shutter operations, citing soaring insurance costs, government regulations and a weak spot market.

Tony Krause, chief executive of the 6-year-old carrier, said all but one of its drivers have returned to the yard. The remaining driver, an owner-operator, just delivered a load and is deadheading back from Nevada, he said.

“There is a right and wrong way to close a business, and we are trying to do things the right way,” Krause told FreightWaves. “I will not strand any of my drivers out on the road, and all drivers will be paid and will also receive a list of companies hiring in the area.”

In addition to government regulation and soaring insurance rates, a factor in the closing was the delay by brokers to pay TK Transport for loads it hauled, Krause said.

“The trucking industry needs to move toward a real-time payment system, like UPS, FedEx and Amazon have, where they are paid upfront and don’t have to wait more than a month to be paid,” he said. “An attorney wouldn’t pick up a pencil before asking for a retainer upfront, but carriers are expected to haul loads with the promise of eventually being paid every day.”

The company, known for its white Peterbilt trucks, had 17 trucks and 17 drivers in February 2019, according to the Federal Motor Carrier Safety Administration’s SAFER website.

In January 2020, Krause said the number of truck drivers had dropped to around six company drivers and six owner-operators. The number of office employees also dropped from seven to two leading up to the carrier’s decision to close.

“Once the driver returns from Nevada, we will completely wind down operations,” Krause said. “This is not a decision TK Transport took lightly.”

Read more articles by FreightWaves’ Clarissa Hawes

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Clarissa Hawes

Clarissa has covered all aspects of the trucking industry for 13 years. She is an award-winning journalist known for her investigative and business reporting. Before joining FreightWaves, she wrote for Land Line Magazine and Trucks.com. Clarissa lives in the Kansas City area with her family. If you have a news tip or story idea, send her an email to chawes@freightwaves.com.

28 Comments

    1. The “carrier” is also a “middleman” .

      In my humble opinion …………

        1. Marc , it’s a “disclaimer” ., and therefore a must .

          Not so “stupid” now , is it ? LOL !

          In my humble opinion ………. (wink)

    1. “Those who wish to appear wise among fools, among the wise seem foolish.”

      The “carrier” is a “middleman”

      Middleman –
      an intermediary or agent between two parties especially : a dealer, agent, or company intermediate between the producer of goods and the retailer or consumer.

      A “carrier” is a “middleman” , this is a fact which we cannot deny .

      A carrier needs “drivers” . Drivers should replace the carrier and become the direct link between the shipper and receiver , rather than “depend” on a “carrier” .

      We shift the pieces around and replace the current middleman with ourselves , thus reap more profits in the process .

      Furthermore , as we extend our Alliance to align with the labourers of said shippers and receivers(manufacturers etc) , we also become the shipper and receiver(manufacturer) etc , thus eliminate the middlemen permanently .

      Ie ; Collectively , we eliminate the middlemen and become one , rather than remain 3. The labourer, the consumer ,and the producer should be 1 rather than 3 . For none could survive without the other .

      A “doofus” doesn’t realize this . Thus the doofus remains a slave and begs the master for mercy , rather than replacing and becoming the master intelligently .

      This is from which the birth of cooperatives were born . Improve upon it and extend it , oh ingenious one …..

      In my humble opinion ………….

      1. Shall I go a step further ?

        At your service my dear friendly ,

        You become the bank/financer/, market investor /trader , the insurer, and you’ve just eliminated another 3 middlemen and reduced them to 1 . Oh my , you’re now really becoming the master .

        Shall we include the farmer & miner ? Oh my , now we control basic materials and basic needs , the backbone of our survival , and all the basics we use in our creations .

        Shall I go a step further ? If we were to unite and extend our unity , who then is governing ? Oh my goodness , now we’re governing ourselves according to an ideal , equally and fairly due to unity .

        One for all and all for one ? Simply from the bottom you can make it to the top . Never underestimate what a simple labourer can accomplish through unity . For without the labourer , all that you see wouldn’t be .

        In my humble opinion …………

  1. No money in flatbed in the last 15 months. I know of number of flatbed trailers in Canada sitting waiting for pipeline construction to take off. E logs have forced many small trucking companies to close. The insurance companies are corrupt. I am at queens park in Toronto Canada protesting against certain insurance companies and cuts to medical care to truck drivers and the poor in homeless shelters.

  2. Respect to the owner for winding down operations in a responsible manner.

    Regarding the insurance issue, a quick glimpse at this carriers’ CSA profile (DOT# 2591311 for reference) paints a pretty clear picture why their insurance rates went up. As of December 2019 their Unsafe Driving BASIC was a respectable 1.36. Likewise, their Vehicle Maintenance BASIC of 2.89 out of 90 relevant inspections is par for the course. However, their Hours-of-Service Compliance (HOS) BASIC is 1.36, which is a very poor score within the 101-500 safety event grouping category that this carrier resides (there are 112 relevant inspections). Prior to the ELD mandate, this score would certainly have warranted a “warning flag” from the FMCSA and would have placed this carrier (ball-parking here) around the 85th percentile (give or take). In the ELD-era, this score puts you in the 90th percentile or worse (higher percentile = more compliance issues). Looking at the detailed violations, this carrier had 32 violations across those 112 inspections. Of these 32 violations, ten were of the 7-point severity level (six were for false logs, two were for violating the 14 hour duty rule, one for the 8-hr break, and one for the 11-hour driving rule). They also got hit for one violation without an ELD and another violation for a driver not having current records of duty (each 5-point hits).

    In summary, this continues the saga of insurance companies cracking down on carriers that have poor safety scores per the CSA’s data. While we can (and should) have a debate about how those scores are generated (e.g., the inspection process, the weights the FMCSA uses, etc.), it is incumbent on carriers, even those using contract owner-operators, to ensure their drivers are in compliance (whether you agree with the rules or not). This carrier had two particularly brutal violations on 6/5/2019 and 9/24/2019 that each resulted in 22 severity points per inspection. Such massive hits can tank a carrier’s HOS Compliance BASIC.

    1. @Jason Miller. From the tone of your writing I gather you are NOT one behind the wheel. It is not like sitting behind the desk and at the click of the button you get your print out. Owner operator has to deal with many, many issues and everybody have their hands in his pocket, trying to get his hard earned money. Have you ever paid insurance beside your personal car one? Do you have any idea how costly it is to maintain truck ? I suppose no. You are living in a fantasy world!

      1. Quote:

        ” Have you ever paid insurance beside your personal car one? Do you have any idea how costly it is to maintain truck ? ”

        That’s why “drivers” need to restructure and have “in house” insurance . Furthermore there is a “legal” way to prevent and bypass potential carrier nuclear verdicts. However , I’m not going to post it here because ‘carriers” read the threads on this site , LOL !

        That being said , a Truck Driver “Alliance” is the way to go . The industry as it is currently structured is getting whacked ! It’s old school and the drivers are getting squeezed and fleeced !

        As far as the “carriers” are concerned , I couldn’t give a flying darn about them …

        In my humble opinion ………..

      2. KG, you are correct in that I don’t drive (though my dad was an independent owner-operator for the better part of a decade). I’m a tenured research professor at Michigan State and have been utilizing the CSA data for 7+ years, so I’m comfortable with drawing relative comparisons based on my experience.

        That being said, the factual breakdown of this carrier’s safety profile I provided is exactly what any insurance company will do. The question is always, “how does this carrier stack up against its peers?” While I will be the first one to say that the HOS rules are in need of reform to give drivers more flexibility, the reality is that many carriers have found ways to survive and score far better on HOS (as measured by the FMCSA). My point that you can’t, as a small firm, have multiple 22-point inspections and expect to survive now that insurance companies are increasingly conscious of nuclear verdicts.

        1. Jason , by all means you certainly don’t have to justify yourself . You’re doing a fine job by looking it up and sharing it with us here on Freightwaves .

          I personally commend you for your updates and appreciate your service . Thank you !

          Keep up the great work .

          In my humble opinion ……….

        2. Jason Miller you are so off base with your analysis. You assume his insurance went up based on a flawed CSA system that should be thrown out. You never mentioned accidents or insurance loss runs which is the catalyst for increased rates. This leads me to believe you know very little yet want to appear relevant and using your daddies life experience doesn’t qualify you an expert. I have 40 years experience in this industry and would never attempt your judgement of this carrier based on the stupid CSA score, which fails to consider over zealous ticket happy officers or complete incompetence with the new ELD rules. Our insurance went up 73% this year and our CSA score had nothing to do with it, the insurance company came out and said it’s due to these nuclear verdicts

          1. Hi Charlie, I would suggest you check out some of Brian Straight’s prior reporting on FreightWaves where he notes that carriers’ CSA scores are certainly something insurance companies consider. We all know there are some strict inspectors and some more lenient inspectors; that is why I don’t put much faith in CSA scores where there are few inspections. But with 112 inspections, it can’t just be bad luck of having only strict inspectors. Furthermore, accident rates are an incredibly noisy measure of safety, since a large percentage of accidents are not a drivers’and/or carriers’ fault. The same can’t be said for HOS violations. But with that being said, let’s consider accidents; this carrier had 3 crashes over the last 24 months (2 towaway and 1 injury). With 17 power units, that equates to 17.65 accidents per 100 power units. In comparison, JB Hunt’s current safety profile reports 1509 accidents over the last 24 months for 18259 power units, or 8.26 accidents per 100 power units. Landstar Inway reports 288 crashes over the last 24 months for 4674 power units, or 6.16 accidents per 100 power units. As such, this carrier’s accident rate was also substantially higher than some of the industry’s largest players.

            As another note, a lot of shippers and brokers do use carriers’ CSA scores as an input into their carrier selection decisions. ATRI did a study on this back in 2012. I’ve had several very large shippers tell me during executive education seminars that they use CSA scores to screen carriers. While you may disagree with CSA, compared to a lot of compliance systems (e.g., hygiene scorecards for restaurants), it is actually very well-structured.

    2. The ELD is the devils playground, talk to any safety dept. The rules are designed to be vague, and the smallest mistake will flag you just as quickly as actually violating the HOS. Forget to sign the log, forget to certify, those are violations, amongst others. They have nothing to do with safety but will shred a companies SAFER score to bits. Been there and done that.

  3. Thank you Jason, I was just about to look that up myself, you saved me the time. And as I see it,like you, he may be doing right by his drivers by not hanging them out to dry, but maybe he should have stepped up a few years ago when he could have done something to right a sinking ship.

    1. Hi Marc, 100% agree. Whether folks like it or not, insurance companies see poor CSA scores, especially for HOS compliance, as an indicator that a company lacks control over its operations. By “control,” I’ve referring to ideas we see in ISO 9000 about having well-established procedures that ensure efficient execution of tasks with little deviation from targets. When you look at owner-operator heavy outfits such as Landstar’s two divisions of Ranger (DOT# 241572) and Inway (DOT# 216939), they run with HOS Compliance BASICS of ~0.14. So it can be done.

  4. Born into a trucking family, I have been involved with industry over 50 years. Financial woes and driver shortages can both be directly linked to pricing deregulation, usually called just “deregulation.”
    There is a US company that pays $31 per hour to tractor trailer drivers for all work except the one hour meal break, and time and a half after eight hours. Their health insurance does not have a four figure annual deductible.
    They have a waiting list to become a driver there.

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