After finding out two weeks ago that Waco, Texas-based Central Freight Lines was shuttering operations, hourly employees – including 1,325 truck drivers – say they suffered a second blow after learning that their final paychecks weren’t mailed out as promised before Christmas.
Several former linehaul and pickup and delivery drivers at Central Freight’s terminals across the country told FreightWaves they were counting on those checks to buy last-minute Christmas presents. Some said managers told them the checks were going to be sent out early — on Dec. 23 — because the office was going to be closed for the holiday.
The human resources department at CFL did not respond to FreightWaves telephone calls to confirm the exact date the hourly paychecks were to be mailed out.
“It’s one thing to tell your kids that daddy lost his job and money is going to be tight for a while, but when daddy is also Santa and there’s no gifts under the tree, kids don’t understand that. They feel that Santa forgot them, which is heartbreaking for any parent,” said a former CFL linehaul driver, who spoke to FreightWaves on condition of anonymity.
Moyes, a founder and former owner of Swift Transportation, purchased the struggling LTL carrier in 2006 and pumped in millions of dollars of his own money to keep the struggling company operating, according to multiple sources.
Some tenured drivers were hopeful that Moyes’ deep pockets could keep Central Freight afloat after rumors had swirled for years about the carrier’s financial health.
Instead, final paychecks for hourly employees were mailed out Monday. Employees in the office where the checks were printed told FreightWaves workers did not have the option to get their checks earlier by picking them up.
A source said the company did away with direct deposit for its 2,100 employees approximately four years ago because it was always a struggle to make payroll, which was staggered bi-weekly between hourly and salaried employees.
“As I understand it, the paychecks usually go out on Friday and they go to the terminals, but because the terminals were all being shut down, instead they were mailed to the drivers’ homes on Monday,” the source authorized to speak on behalf of Mr. Moyes told FreightWaves. “Jerry expects that all wages for work during the wind down will be paid.”
As of early Thursday, the linehaul driver said he still hadn’t received his check; however, some who posted on social media platforms said their checks arrived on Wednesday.
A source familiar with the company said it’s a shame that drivers weren’t paid in a timely manner — and right before the holidays.
“Trucking is an incredibly difficult job and these drivers should have been paid before anybody else [over creditors],” the source told FreightWaves. “I get that we’re all different people, but the first thing that I would do is humbly admit that we didn’t make it and I would find every way possible to ensure those team members were taken care of first — end of story.”
Kalem out as CFL president
After FreightWaves broke the news about the LTL carrier ceasing operations on Dec. 11, Bruce Kalem said that he planned to stay on as president of CFL for a few months to help with the wind-down efforts to “get freight delivered, self-liquidate, get the equipment sold and make everyone whole.”
That didn’t happen, either.
Kalem told FreightWaves on Tuesday that he’s no longer with the carrier but didn’t provide any further comments about his departure.
In an exclusive interview with FreightWaves in mid-December, Kalem, who was elevated to president in July by Moyes to help “right the ship,” explained the key factors in CFL’s demise. Kalem, along with analysts and logistics experts, likened the shuttering of the 96-year LTL carrier to a “five-year death spiral” after the company lost a major customer then acquired two failing companies.
Kalem said the spiral started with the loss of Amazon’s business in 2016 over a pricing dispute, followed by the acquisitions of two failing LTL carriers, Wilson Trucking of Fishersville, Virginia, in February 2017 and Dresden, Tennessee-based Volunteer Express in 2020 — even as CFL was bleeding cash.
“It was like two drunks getting together — it wasn’t a good idea, didn’t help anything and made things a lot worse,” Kalem said. “We already didn’t have enough freight density as it was.”
Kalem said revenues were around $262 million for fiscal year 2020, but that the carrier lost over a quarter of a billion dollars in a five-year span after losing the e-commerce giant’s business, combined with the losses it incurred after acquiring Wilson Trucking and Volunteer Express.
Moyes spearheading wind down
Now that Kalem is no longer with CFL, Moyes is spearheading the wind-down efforts, the source authorized to speak for Moyes told FreightWaves.
“I think Jerry has long cared about Central Freight and tried his best to give the company a chance to succeed, and now he’s arranging for the best ending that he can,” the source said.
A skeleton crew remains at some of Central Freight’s key offices in Texas, as well as some of its terminals around the country to help with the shutdown planned to be completed by the end of February.
However, that group’s employment ends on Friday, though a few may choose to stay on as independent contractors. They were told in meetings earlier this week that they would be paid by Moyes, not Central Freight.
Some said they are skeptical about continuing to work for the shuttered LTL carrier for fear of not receiving their final checks or about remaining as independent contractors without a written agreement of their payment terms by Moyes.
Others said they fear all of the good job opportunities being posted now may be snapped up before the wind down of Central Freight is finalized and they will be stranded.
“At this point, I am choosing to walk away and move on,” said one CFL employee, who said Thursday will be her final day. “I don’t know what to believe from one day to the next. I tell people we are like mushrooms: We’re kept in the dark and fed a bunch of bullshit.”
Others plan to see things through to the end, although one terminal employee likened the rapid departure by upper management at CFL over the past six months to “rats fleeing a sinking ship.”
“I may be a glutton for punishment, but I feel the need to see this through,” the employee told FreightWaves on Wednesday. “I know [CFL] hasn’t been loyal to me and this decision may bite me in the ass, but I worked with some good people and good customers over the years, so I feel I owe it to them to know I didn’t quit — Central Freight and Jerry Moyes quit on them.”
Stranded freight?
While rival LTL carrier Estes Express has “come to the rescue” and is working to recover and deliver scattered freight at some of Central Freight’s 65 terminals, sources at CFL say hundreds of shipments are stranded at several terminals.
“According to Jerry, there’s very little freight that has not yet been delivered,” the source authorized to speak for Moyes told FreightWaves. “And Estes is working on the remainder and Jerry expects the remainder of the freight will be delivered this week.”
Another source close to the situation says Richmond, Virginia-based Estes, which has nearly 8,100 drivers and 7,300 power units, is stepping up where it makes sense but has no plans to “flush CFL’s entire network.”
“Because of all of the freight movement today, Estes can’t handle it all because that would penalize Estes’ current customers,” the logistics expert told FreightWaves.
While a few pickup and delivery drivers remain at CFL, terminal personnel told FreightWaves they have been notified not to drive any of the carrier’s equipment as its insurance is slated to be canceled on Jan. 12, according to the Federal Motor Carrier Safety Administration’s SAFER website.
“Many of us saw the writing on the wall that this company was being run into the ground, but we liked the people we worked with and held out hope that management could right the ship,” one former pickup and delivery driver told FreightWaves. “We were loyal to a fault, but the company wasn’t loyal to us.”
Watch Domestic Supply Chain Summit fireside chat about increased demand in LTL market
See related coverage:
Exclusive: Central Freight Lines to shut down after 96 years
Autopsy report: How Central Freight fell into a 5-year ‘death spiral’
Reaction to news of Central Freight Lines shutting down
Central Freight confirms Estes Express offering to snap up drivers, buy equipment
