Another distressed trucking company files Chapter 11 bankruptcy
According to The Street , The trucking industry is facing growing financial distress, with increasing numbers of logistics companies filing for bankruptcy. This follows a tumultuous period for the sector, which has been grappling with economic challenges post-Covid.
The Covid pandemic caused significant upheaval in the trucking industry, with around 88,000 trucking job layoffs and over 3,000 trucking company closures in 2020. As the industry recovered, a shortage of 81,000 drivers emerged, leading to a surge in hiring. However, shipping rates began to decline in 2022, and fuel prices doubled, contributing to a trucking recession that took hold in the spring of that year, according to FreightWaves.
By mid-2023, the industry saw a 96% increase in the number of registered for-hire drivers, exceeding 475,000, as demand for services declined. Other challenges, such as inflation, high interest rates, and rising insurance and wage costs, further compounded the financial pressure on shipping companies.
Major players in the industry, including J.B. Hunt Transport Services and Knight-Swift Transport Services, have been impacted by these difficulties. Both companies reported disappointing earnings in April 2024, as inflation suppressed consumer spending on new goods, weakening demand for freight services.
Despite these challenges, Knight-Swift’s CEO, Adam Miller, remains optimistic, forecasting an increase in demand during the third quarter and anticipating seasonal activity in the fourth quarter, which could signal an end to the trucking recession, according to Farm Journal.
However, the fallout from the ongoing trucking recession continues to force several companies into bankruptcy. Miami-based AB Brothers USA and its affiliate, A1 Transport Network, filed for Chapter 11 bankruptcy on July 20, 2023, in an attempt to reorganize their debts. The company reported $593,000 in assets and $1.05 million in liabilities.
Similarly, AOG Trucking, based in McAlpin, Florida, filed for Chapter 11 bankruptcy on July 17, listing assets and liabilities between $1 million and $10 million. The company’s largest creditor is BMO Harris Bank, to which it owes more than $713,500.
On July 25, Alexander Trucking, based in Mesa, Arizona, also filed for Chapter 11 bankruptcy, listing assets between $100,000 and $500,000 and liabilities between $500,000 and $1 million. The company indicated that, after covering administrative expenses, it would not have funds available for unsecured creditors.
Another casualty of the trucking recession is Fastline Cargo (FLC), a New Jersey-based company that filed for Chapter 11 bankruptcy protection on July 29. Fastline Cargo is seeking to reorganize its operations and secure debtor-in-possession financing from its factoring company, RTS Financial Services. The company owes over $880,000 in secured collateral and listed assets and liabilities between $1 million and $10 million in its petition.
With 41 drivers and 54 semi-tractors, Fastline Cargo continues to operate but faces the threat of closure if it cannot meet payroll by August 2, 2023. The company’s filing underscores the ongoing financial strain in the trucking sector as it grapples with rising costs and declining demand.
