Layoffs in the trucking sector and a shortage of drivers
The impact of the Covid pandemic led to business closures, initially decreasing the demand for products and causing significant supply chain disruptions as factories and warehouses drastically cut back production or ceased operations.
The trucking sector experienced job cuts in 2020, losing 88,000 positions and with over 3,000 trucking firms shutting down, as reported by Commercial Carrier Journal. A number of truck drivers transitioned to different jobs and did not return to trucking.
As the pandemic eased, the trucking sector confronted an unprecedented driver shortage, exceeding 81,000 drivers in 2021, according to truckinfo.net.
This driver deficit severely affected trucking companies, resulting in higher expenses, supply chain challenges, and shipping delays. Firms had to offer greater salaries to lure drivers while encountering rising costs linked to driver attrition, hiring, and training. In 2021, thousands of new drivers began entering the trucking realm as freight rates started to climb, and by July 2023, the sector recorded a 96% growth in registered for-hire drivers, surpassing 475,000, as reported by Time.
Sadly, rates began to decline in 2022 while diesel fuel prices more than doubled. Trucking firms started facing additional obstacles such as inflation, elevated interest rates, and increasing costs of insurance and wages.
Financial struggles and bankruptcies in the trucking industry
Financial turmoil in the logistics sector has compelled several trucking companies to seek Chapter 11 protection to reorganize, while others have opted for Chapter 7 to liquidate their assets.
The freight forwarding company Boateng Logistics ceased its operations, filing for Chapter 7 bankruptcy on Feb. 22 with intentions to liquidate, whereas the 92-year-old trucking firm Arnold Transportation Services laid off its workforce and terminated operations just five days prior to its Chapter 7 liquidation filing on April 30.
U.S. Logistics Solutions, a shipping firm owned by the private equity firm Ten Oaks Group, filed for Chapter 7 bankruptcy on June 21 in the U.S. Bankruptcy Court for the Southern District of Texas in Houston after shutting down operations, laying off its staff, and planning to liquidate its assets.
Furthermore, in July, three additional trucking companies sought Chapter 11 protection to restructure their operations.
The Miami, Fla.-based trucking firm AB Brothers USA and its subsidiary A1 Transport Network filed for Chapter 11 bankruptcy protection on July 20 in the U.S. Bankruptcy Court for the Southern District of Florida to reorganize their financial obligations.
AB Brothers reported over 3,000 in assets and $0.05 million in liabilities in its filing. Its largest creditor is Crossroads Equipment Lease & Finance, which is owed more than $3,600.
Located in McAlpin, Fla., AOG Trucking filed for Chapter 11 on July 17, listing assets and liabilities between $1 million and $10 million in its documents. Its largest creditor is BMO Harris Bank, to which it owes over $3,500.
The debtors did not provide explanations for their bankruptcy filings in the documents submitted.
