After many scattered rumors, today brought the official news of yet another major trucking outfit closing their doors. Celadon Group, the owners of about 3,300 tractors and 10,000 trailers announced that they would be filing for Chapter 11 Bankruptcy Protection. This brings an immediate end to the 34 year run of the Indianapolis, Indiana trucking firm. More importantly, the news of Celadon’s closure will put nearly 4,000 employees out of work.
The end to Celadon is one of many for U.S. based trucking companies in 2019. After a year of a booming freight business in 2018, there were still 310 freight companies that closed their doors, we have seen more closures in just the first half of 2019 alone (640). Those 640 closures in the first half of 2019 led to 20,075 trucks/drivers being taken off the road. After today’s Celadon announcement contributing another significant amount, we doubt that anyone is prepared to see the closure numbers in total for all of 2019.
With that you may ask, what is causing these freight companies to suffer so poorly in 2019 compared to recent years? Is it the driver shortage and lack of certified drivers that caused the increase in pay to put them behind the wheel? Or is it the rates that these companies are being forced to accept to move their trucks. A quick answer may be both. In 2019 the rates in the spot market provided by retailers, manufacturers, and brokers dropped by around 15% over the course of the year. While freight company’s costs have been rising, their pricing appears to have been doing the opposite.
