Hot Take
It’s the end of an era. Central Freight Lines is closing its doors for good – 96 years after opening for business. The Texas-based company has taken a bit of a different approach to the closure versus the last major carrier closure of Celadon. Central Freight has stopped picking up shipments, and finishing out delivering the loads they have in their system. Approximately 70% of their business was 3PL-based.
Some say the writing was on the wall for Central Freight Lines when the company started selling some assets off a few years ago, around 2019 out west to turn it around and lease it back out, but they claimed it wasn’t related to financial woes. That came later in the year when Central was sued for unpaid invoices.
Ultimately, there was too much debt, and not a strong enough customer base that made it attractive to a potential buyer. With little to no real estate holdings and similar footprints to other LTL carriers, shuttering its doors was the only option. There is a chance that Estes Express might be interested in parts of the fleet but nothing as a whole.
It makes for a really bad day when something like this happens. When New England Motor Freight went out of business two days before I implemented them on a new customer, I was left hunting for answers and trying to pick up the pieces and make sure I could deliver what I promised to my customer. Whether that’s scrambling to find someone that will honor their pricing in a bid from 4 months ago, or throwing their awarded volumes on some blanket pricing while you find a new carrier in two days before going live, it’s chaos when a carrier going out of business springs up out of nowhere.
Thankfully with this announcement there is some time. Central is flying an exit pattern,saying they are going to deliver all the freight in their network throughout this week, assuming their drivers don’t get poached before then. The office workers are totally, maybe, probably going to be responsive as they hunt for another job that won’t leave them without a paycheck right before Christmas.
Overall I don’t know that the LTL network will be crippled by this announcement; Central wasn’t the best sell to a new customer, and I can’t remember the last time CFL came in with good pricing on an LTL bid. Thankfully we’re coming up on the holidays when terminals shut down and volumes tend to slow down a little in between Christmas and the new year.
As volumes start ramping up in the new year, I think we’ll be right where we left off – still trying to find capacity in a tight LTL market, paying way too much for accessorials, and telling our customers that no you can’t ship 8 pallets without a volume quote.
Quick Hit
On last week’s episode of what’s going on the the U.S. ports, we covered the 96 shipments sitting out in the San Pedro Bay. This week we again go back to the Port of Long Beach, where the crews have absolutely smashed their all-time record of volume with 8.6 million shipping units.
Over at the Port of Los Angeles, port officials haven’t ruled out the option of utilizing the National Guard to evacuate containers if congestion worsens again.
This option is not widely considered a good move for supply chain congestion as many National Guard members are also truck drivers, and by taking them from their existing routes, it would create more disruptions in other parts of the country.
Congestion has improved as of late because major retailers such as Walmart have created a temporary storage yard where containers are shuttled before getting stacked with the rest of the cargo at the docks waiting for delivery.
The rumored $100 fine for each container each day it dwells longer than is allowed has not been implemented and ultimately doesn’t have the looming power officials were hoping for to get containers moving again.
Ultimately port officials are blaming a shortage of drivers – while drivers are blaming port officials for the insanely long lines and no leeway when appointments are missed due to sitting in the lines the port has created.
I don’t see it getting better any time soon, but if you do have drivers picking up loads at the Southern California ports, I’d maybe toss in some extra money, or a nice steak dinner when they deliver as a thank you for putting up with the insanity.
Market Check
If you have a load headed out of Norfolk, Virginia, you’re gonna wanna check with your shipper and see if you can kick it out a few days. The tender lead time for shipmenting coming out of Norfolk is about 0.15% higher than its typical average, kicking the lead time to about two and a half days. Have those proactive conversations with your shipper and see if things can wait a little longer before heading out to try and get a better deal on the rate.
Who’s with whom
Cross-border startup Nuvocargo raised $20.5 million in a funding round led by Tiger Global Management. Nuvocargo was not actively raising funds, as it still had capital from its series A in April. Nuvocargo is a digital logistics platform for cross-border trade between the U.S. and Mexico. With this recent investment, Nuvocargo is valued at $180 million, compared to the $70 million six months ago. Josie Blanco and Anaid Chacon talk about Nuvocargo’s approach to the new Mexican Tax Authority regulation on this week’s edition of Check Call the podcast.
Redwood Logistics has been sold by private equity firm CI Capital Partners to AEA Investors. AEA Investors is an investment firm with over $15 billion in assets under management and a 50-plus year history of partnering with middle market companies to accelerate growth. This new influx of cash accelerates Redwood’s growth while maintaining its current value.
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