8 more trucking companies go bankrupt, 2 shut down

Eight more trucking companies filed for bankruptcy in the past month while two others ceased operations, and tightened lending standards are prolonging the industry downturn. 

These transportation firms filed for Chapter 11 since the start of July, according to U.S. Bankruptcy Court documents obtained by Equipment Finance News: 

• Daniel Trucking International filed July 7 in the Northern District of Illinois; 
• Division 2 Truck Co. filed July 16 in the District of Minnesota; 
• Indian Creek Express filed July 28 in the District of Colorado; 
• JAM Trucking filed Aug. 1 in the Southern District of West Virginia; 
• Lynda Transportation filed July 9 in the Northern District of Illinois; 
• ODM Truck filed July 16 in the Middle District of Florida; 
• TJ Trucking Enterprises filed July 11 in the Northern District of Ohio; and 
• Wendover Transportation filed July 14 in the Southern District of Texas. 

Nine freight companies have filed for Chapter 11 so far in the third quarter, following at least 20 filings in Q2.  

M&T Bank is among the equipment lenders most affected, with the Daniel Trucking filing showing more than $400,000 in unsecured claims tied to 47 trucks. In the TJ Trucking case, OEM captives Mack Financial Services and Volvo Financial Services are each owed more than $100,000.  

In addition, Fresno, Calif.-based TGS Transportation ceased operations on July 31 after 40 years in business, the company announced in a LinkedIn post, citing “challenging market conditions.” Oakland-based GSC also shut down last month, according to social media posts. 

Tight lending compounds industry woes 

Despite some signs of recovery over the past year, the trucking industry “continues to face a freight recession that has persisted for more than two years, and continues to face uncertainty with respect to trade policies and engine emissions regulations,” Rush Enterprises Chairman and Chief Executive W.M. “Rusty” Rush said during the company’s July 30 earnings call. 

As challenges persist, credit standards have tightened in the transportation equipment segment, Eduardo Cruz, president of Addison, Texas-based Commercial Equipment Financing, told EFN. While he still sees ample truck financing opportunities, he said more lenders, especially banks, are pulling back from this segment.  

For example, Midland States Bancorp has tightened underwriting standards in its equipment finance and specialty finance portfolios as it looks to “reduce our exposure to these higher-risk portfolios,” President and CEO Jeffrey Ludwig stated in the company’s July 24 earnings release. The company cited “credit issues” in the trucking industry as the primary reason for equipment finance charge-offs totaling $3.9 million in Q2.  

Lender pullback from the transportation sector, while understandable, is leading to a “hesitancy to repossess and liquidate more equipment,” Jarrett Harris, director of research at IronAdvisor Insights, said in a July 9 company video. 

“So, struggling fleets and owner-operators that might otherwise exit the market are still operating often at or below break-even levels,” he said. “This is delaying the market’s correction, keeping pressure on freight rates and discouraging fleets from making new truck orders.” 

Many banks have not “pulled the trigger and taken their losses on assets held by failing carriers,” contributing to overcapacity in the market, a truck dealer stated in a July 14 IronAdvisor report. 

“So, you still have the zombie carriers out there, killing rates and keeping assets in play,” the dealer said. 

Check out our exclusive industry data here.