BIG UPDATE: Another distressed trucking company files Chapter 11 bankruptcy
The trucking industry is grappling with increasing financial distress, prompting a wave of bankruptcy filings among logistics companies.
Aftershocks of the Pandemic
The Covid pandemic severely affected logistics in 2020, resulting in approximately 88,000 trucking job layoffs and over 3,000 company closures. Although the industry began to rebound, hiring back truckers amidst a shortage of 81,000 drivers, challenges persisted.
Declining Shipping Rates and Rising Costs
By 2022, shipping rates began to drop significantly, and fuel prices doubled, ushering in a trucking recession that started in spring of that year, according to FreightWaves. Despite a 96% increase in registered for-hire drivers—surpassing 475,000 by July 2023—demand was waning. Companies faced compounded financial pressures from inflation, high interest rates, and escalating insurance and wage costs.
Disappointing Earnings Reports
Major trucking firms such as J.B. Hunt Transport Services and Knight-Swift Transport Services reported disappointing earnings in April 2024. The decline in demand, driven by inflation impacting consumer spending, added to the industry’s woes. However, Knight-Swift’s CEO, Adam Miller, expressed optimism for a demand uptick in the third quarter, anticipating seasonal activity in the fourth quarter could signal an end to the trucking recession, as noted by Farm Journal.
Recent Bankruptcy Filings
The repercussions of this trucking recession have led several companies to file for Chapter 11 bankruptcy:
- AB Brothers USA and its affiliate A1 Transport Network, based in Miami, filed on July 20, seeking debt reorganization with over $593,000 in assets and $1.05 million in liabilities.
- AOG Trucking, located in McAlpin, filed for Chapter 11 on July 17, listing between $1 million and $10 million in assets and liabilities, with BMO Harris Bank as its largest creditor, owed over $713,500.
- Alexander Trucking, based in Mesa, filed on July 25, reporting $100,000 to $500,000 in assets and $500,000 to $1 million in liabilities, estimating that no funds would be available for unsecured creditors after covering administrative costs.
Fastline Cargo Files for Bankruptcy
Lastly, Fastline Cargo, operating as FLC, filed for Chapter 11 on July 29 in Camden, New Jersey. The company is seeking to reorganize its business and maintain operations, requesting permission to use cash collateral and pay prepetition wages to avoid shutting down after failing to meet payroll obligations by August 2. Fastline Cargo, which has 41 drivers and 54 semi-tractors, reported $1 million to $10 million in assets and liabilities in its filing.
Also Read: BIG NEWS: New SNAP benefits confirmed in September: States will pay up to $1,751 in few hours
