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Trucking companies blame rocky economic conditions for 2019 shutdowns

Hundreds of motor carriers, both large and small, fell victim to this year’s freight recession after some say they added more trucks and drivers to keep up with shippers’ capacity demands in 2018.

Photo: Jim Allen/FreightWaves

After last year’s red-hot freight market and record profits, many trucking companies blame rocky economic conditions, a weak freight market and soaring insurance and equipment costs as the main reasons some fleets did not survive the economic downturn in 2019.

Hundreds of motor carriers, both large and small, fell victim to this year’s freight recession after adding more trucks and drivers to keep up with shippers’ capacity demands in 2018.

Some carriers relied on the spot market for freight, which tanked in 2019, causing some owner-operators to shutter operations and go to work as company drivers until economic conditions improved. 

Celadon Group Inc.

The abrupt closure and bankruptcy filing of Celadon Group Inc. was by far the largest trucking failure of the year.

While it was no secret that Celadon Group Inc. was struggling to recover from a financial scandal that rocked the carrier after former executives were indicted in an alleged securities and accounting fraud scheme in 2017, few expected the carrier to file for Chapter 11 bankruptcy protection in early December.


Former drivers were stranded thousands of miles from home when their fuel cards were deactivated and there was little communication among company executives and employees about what to do with their trucks and loads just days prior to the company’s Dec. 9 bankruptcy filing.

Celadon and its subsidiaries had more than 2,500 drivers and nearly 1,300 office employees at the time it ceased operations.

“Thousands of people didn’t get a severance package and that adds an extra sting,” Ernesto Gonzales, a former corporate recruiter for Celadon, told FreightWaves. “The actions of a selfish few screwed over thousands.” 

NEMF

The trucking industry was stunned when unionized less-than-truckload (LTL) carrier New England Motor Freight Inc. (NEMF) filed for bankruptcy protection and announced it would wind down operations in February. 

The Elizabeth, New Jersey-based carrier, which had 1,385 drivers and operated 1,446 power units, cited a combination of high labor costs and tough competition, mostly from nonunion carriers, as reasons for the fleet’s collapse.

Falcon Transport

Another surprising shutdown this year was the fall of Falcon Transport of Youngstown, Ohio, that stranded hundreds of drivers out on the road with deactivated fuel cards after they received emails that the carrier was ceasing operations immediately.

Former Falcon Transport executives alleged that financial mismanagement and a poorly negotiated contract with General Motors led to the company’s abrupt closure on April 27.

The carrier had 723 trucks and nearly 585 drivers at the time it shuttered operations.

LME

LME, a regional LTL carrier based in Minnesota, abruptly ceased operations on July 11 as the trucking company faces numerous lawsuits stemming from a previous abrupt shutdown in November 2016.

The company had 424 truck drivers, 382 power units and 1,228 trailers at the time it ceased operations. 

The latest closure occurred just a month after the National Labor Relations Board (NLRB) ordered LME to begin paying out a $1.25 million settlement in June to union workers in Minnesota after its affiliate company, Lakeville Motor Express, abruptly ceased operations and failed to pay its workers in November 2016. The NLRB described LME as “the alter ego” of Lakeville Motor Express.

HVH Transportation

HVH Transportation, a 344-unit trucking company headquartered in Denver, abruptly shut down in late August, leaving more than 150 truck drivers stranded out on the road without working fuel cards.  

Some HVH drivers were forced to find their own transportation home, including James Delva, whose sister purchased a bus ticket for him to get back home to Lawrenceville, Georgia. 

“It’s not fair or right for drivers who dedicate themselves and practically live on the road in their trucks,” Delva told FreightWaves. “I am doing my job, driving safe and careful, but I’m not being paid for my time and hard work.”

The carrier had been operating since 1956, but was acquired by HCI Equity Partners, a private equity firm, in October 2012. 

GDS Express

Some smaller carriers did not fare well in 2019. GDS Express of Akron, Ohio, which had about 75 drivers, shuttered operations just five days before Christmas, stranding some drivers without fuel as employees tirelessly worked to get them home. 

There are still no answers as to why the company abruptly shut down, but the company’s former director of recruiting blamed “mismanagement” for the carrier’s collapse. 

Hendrickson Truck Lines Inc.

Family-owned Hendrickson Truck Lines Inc. of Sacramento, California, filed for bankruptcy protection in late November, citing a soft freight market, loss of two key customers and a bad truck leasing agreement.

The carrier had about 90 trucks and 97 drivers at the time it closed its doors.  

Carney Trucking Company
One crash is all it took for Carney Trucking Company, a Gilbertown, Alabama-based flatbed carrier, to shutter operations in early August after its insurance rates spiked.

“We had a major accident last year,” David Carney, an executive of the family-owned carrier, told FreightWaves. “Once we got the insurance quote, we tried to make it work, but we just couldn’t.”

The fleet had about 25 drivers and had been in business since 1983. 

55 Comments

  1. Dan

    The economy is nothing more than a scapegoat. The largest contributor to trucking companies problems are the lawyers and insurance peddlers. Any time the largest advocate (ATA) that all of these companies are “proud members” of is more interested in helping plot driver control measures like planting cpap dependent safety staff than addressing the rampant corruption in cpap testing, therein lies the problem. No one will take responsibility for their bad decisions and dishonorable behavior once they get a company polo shirt. Rather than using their energy to clean their methods up, they’ll spend ungodly amounts of money and time lawyerizing every decision. Rather than getting together and dictating terms to insurance companies that rake in billions every year they give their bargaining power away to organizations like the ATA. Many are convinced self driving trucks will let them shed the real problem, their own drivers. As long as that attitude remains and the lawyers and insurance peddlers call all the shots, I look for more companies to go belly up. I think they deserve to. Putting all your eggs in a lawyers basket is a fools game. No one wins when your own defender gets paid the same weather you win or lose. Far too many people are easily led by someone who talks pretty and smells nice. These companies are getting exactly what they deserve and the only downside is that the people most responsible for it never suffer any real consequences and hide behind smoke screens like the half lies in this article.

  2. Scott

    Celedon’s failure is due to criminal activity of its executives… Hendrickson was a joke… I worked for them for 1 month… Worst company I’ve ever worked for hands down. I’m surprised they lasted as long as they did.

  3. John Patterson

    It’s not right to leave a man stranded thousands of miles from home. Such BS!! I would be putting that company on blast all over social media. You want the man to live out there the least you can do is get him home or let him know he needs to look for another job!

  4. Stephen Baetz

    I drove for still in business BCB Transport an agent for Sunteck TTS and with no significant mileage on a regular basis was forced to turn my truck in.
    Upon 3 days written notice I awaited the customary 45 days and have not yet seen any of my escrow money’s returned to me.
    I’ve waited and waited.
    One company executive made up some roll that started I’d forfeit 6 payments for early termination of my lease, to which I’d never Jace agreed to in the first place.
    I’ve never heard of such gibberish in all my year’s of being an owner operator.
    This is fair that these mega carriers are allowed to do these things.
    Where or whom do we turn to to get paid what we are owed.

  5. Phil Whitehead

    Why do we always continue to tippy toe around the real facts?
    We never talk about BS business practices these large companies employ. In any instance, it’s easier to demand the driver change his it her attitude or actions regarding the matter. These large companies, more soon to come, have finally reaped the consequences of there own actions while still blaming everything else besides themselves. The tanked market is there own creation. Companies such as Schneider National, brokering everything out of Kansas City for .30c a mile… Locking others out who can’t possibly touch that rate. In there own world they believe once they have control, they’ll Jack the price and be the only carrier. Well, in reality, the customer isn’t going to fall for this but rather find yet another carrier. However they’re not going to pay anymore because why should they? The other carrier just did it for peanuts. Thus, leading to nothing but a down hill spiral of BS freight rates all started by there own actions. This only being one of many examples of what is happening right in front of our faces. (I.E. the company & owner ops contracted to these companies).

    1. PA OUTLAW

      Amen driver !!! And anything the government runs such as (ELDS) is screwed up. I’m a 27 yr vet. Heavy haul driver. Keep your nose clean and tell them to fuck themselves. It’s their business to move freight and MY business to feed my family. 10-4

  6. james

    The economy has been rock solid all year and has absolutely nothing to do with any of these companies going bankrupt. Shitty management corruption and the willingness to haul cheap freight is what’s causing the problems. It’s just like when companies start crying about a driver shortage when there is no shortage of drivers nearly every man woman and child on the planet by now has a CDL. shitty companies that don’t treat their employees right and don’t pay them enough to live is the reason why they’re having a problem getting and retaining drivers. In this day and age it’s the norm to lay the blame at someone else’s feet when you are the guilty one.

Comments are closed.

Clarissa Hawes

Clarissa has covered all aspects of the trucking industry for 16 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. If you have a news tip or story idea, send her an email to [email protected].