Financial distress in the trucking industry is growing and leading more logistics companies to file for bankruptcy.
After the Covid pandemic severely impacted the logistics industry in 2020, resulting in about 88,000 trucking job layoffs and over 3,000 trucking company closings, the industry began to recover and hire back truckers after experiencing a shortage of 81,000 drivers.
Related: Three more shipping companies file for Chapter 11 bankruptcy
Shipping rates began to decline in 2022, fuel doubled in price and the shipping industry faced a trucking recession that began in spring of that year, FreightWaves reported.
By July 2023, the industry had a 96% increase in registered for-hire drivers to over 475,000 as demand was falling. Shipping companies also had other financial challenges like inflation, high interest rates and rising insurance and wage costs.
Some of the nation’s leading trucking companies J.B. Hunt Transport Services (JBHT) and Knight-Swift Transport Services (KNX) most recently had disappointing earnings reports in April 2024 after facing weaker demand for their services this year as inflation stifled spending on new goods.
Related: Distressed shipping company files Chapter 7 bankruptcy to liquidate
Knight-Swift’s CEO Adam Miller, however, expects demand to rise in the third quarter and the industry to have seasonal activity in the fourth quarter, potentially ending the trucking recession, according to Farm Journal.
The fallout from the trucking recession is still forcing several trucking companies to file Chapter 11 bankruptcy.
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Miami, Fla.-based trucking company AB Brothers USA and its affiliate A1 Transport Network on July 20 filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of Florida to reorganize their debts. AB Brothers listed over $593,000 in assets and $1.05 million in liabilities in its petition.
McAlpin, Fla.-based AOG Trucking on July 17 filed for Chapter 11 bankruptcy, listing $1 million to $10 million in assets and liabilities in its petition. The debtor’s largest creditor is BMO Harris Bank, which it owes over $713,500 in debts.
Mesa, Ariz.-based Alexander Trucking on July 25 filed for Chapter 11 bankruptcy reorganization in the U.S. Bankruptcy Court for the District of Arizona. The debtor listed $100,000 to $500,000 in assets and $500,000 to $1 million in liabilities.
The debtor estimated that after administrative expenses are paid, no funds will be available for unsecured creditors.
More trucking companies are filing for bankruptcies.
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Trucking company FLC files bankruptcy
Finally, Fastline Cargo, which operates as FLC, on July 29 filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of New Jersey in Camden seeking to reorganize its business.
The Cinnaminson, N.J.-based debtor is seeking use of its cash collateral and to pay prepetition wages to continue operating its business, FreightWaves reported. It said that it would need to close its business if it can’t make payroll on Aug. 2.
Fastline Cargo reportedly is also seeking approval of debtor-in-possession financing provided by its factoring company RTS Financial Services. The company had signed a factoring agreement with RTS in May 2023 and owes over $880,000 in secured collateral.
The company listed $1 million to $10 million in assets and liabilities in its petition.
Fastline Cargo has 41 drivers and 54 power units, or semi-tractors, according to the Federal Motor Carrier Safety Administration Safer website’s Company Snapshot.
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