Surge Transportation, a digital freight brokerage founded in 2016 by Omar Singh and based in Jacksonville, Florida, has filed for Chapter 11 bankruptcy protection in the Central District of Florida, according to filings. Sixteen of its top 20 creditors are factoring companies that pay small carriers.
Officials at Surge told FreightWaves that the company is working with a financial sponsor and hopes to get its bankruptcy plan approved at a hearing on Thursday.
Over the past seven years, Surge grew to a workforce of more than 100 people and earned gross revenues of approximately $150 million in 2022. The bootstrapped 3PL built automated load-matching and pricing technology similar to its venture-funded competitors Uber Freight and Convoy and offered a suite of direct integrations into transportation management systems.
Since the beginning of last year, the freight market has experienced a significant downturn. The fading of pandemic-era stimulus programs cooled the goods economy, and when combined with the abundant capacity that had built up, sent transportation prices through the floor.
FreightWaves’ National Truckload Index, a truckload spot rate benchmark that includes the price of diesel, stood at $3.55 per mile on Dec. 26, 2021. By July 24, 2022, the NTI had fallen to $2.80, and today it’s at just $2.23 — again, inclusive of fuel.
At the same time, tender rejection rates dropped from 21% in the first quarter of 2022 to approximately 3% in recent months as capacity in the trucking industry exceeded demand.
These market dynamics have a powerful impact on freight brokerages: Lower contract and spot rates translate to fewer net revenue dollars per load, the lifeblood of any intermediary. And very low tender rejections can mean the end of the lucrative overflow freight that shippers send to brokers when their contracted asset-based providers don’t have a truck available.
When the market is soft for brokers, it’s very soft indeed: Not only are rates much lower and margin dollars harder to come by, but spot volume can dry up almost entirely. Freight brokers face other structural financial challenges, too: They normally pay their carriers much faster than their own customers pay them, putting a strain on working capital that is often mitigated through commercial lending instruments like receivables financing.
Typically, freight brokerages manage revenue volatility through flexible operating expenses: Computers and chairs don’t cost much, and incentive-based compensation grows and contracts with market cycles. That’s why hiring sprees and layoffs at freight brokerages are relatively common, but outright failures are relatively rare. It’s also why industry observers will scrutinize Surge’s bankruptcy filings for clues as to how the brokerage got into such a desperate situation.
This story is developing.
SP
Gerald, you’re full of nonsense. Surge right now is still selling loads on the load boards and carriers will be getting screwed. They are going all out to make as much money as possible because of the chapter 11. They will not pay the carriers.
Quote ” they will be able to navigate through this difficult period and emerge stronger in the future”
You’re so full of it!!!
karmabus
He is a case of what you see is not what you get. He will look at you and lie to your face. He will also degrade an employee in a room full of people. He was terrible to his employees and shady AF to his customers. IF you were doing business with Surge you better check your payables because he stole from you on a regular basis. Whether you were a carrier or customer, he didn’t care. Greed is greed. When you don’t listen to people with experience and then let them go because they are right, but you hire people with no experience to replace them because they are cheap and won’t argue with you, this is where you end up.
Ex Jax Employee
Firstly, Omar has been in this position before. Go run a Google on that. He is and always will be a snake and wants to always be the shiniest, slickest one there is. Good people worked there, myself included but he failed to realize the talent he had. The worst commission structure and then became nonexistent. The Jacksonville branch was the Wild West, and also Omar the ruler and his Lady (who gained a title she chose, but sucked at nontheless) came to town it was met with nights of excessive drinking and the smug behavior that most brokers want to avoid, because it’s the cliche. He does play favorites but if your on the inside your good. Basic brokerage business behavior. Favorite
Brokers, fake alliances, managers that couldn’t be a host at Applebees, and a daily leaderboard to motivate the troops.
He operated his business model on rescue freight, but with their credit rating and the glaring news coverage, it’s going to be interesting to see who “rescues” him. The worst is his narrative to keep and staff a great amount of his staff overseas who made ERRORS DAILY. But it was always ok because of how far away they were and they were cheap labor. Take the good with the bad. But pay every person the same hourly rate, even when we have more experience than 90% of the office?
The way he operates on LinkedIn & online is pure show, he is a fugazi all day.
Peter
It’s the end game of the brilliant, well-thought-out decision to shut the world down because coved… abruptly executed and haphazardly so.
Not the roles or the players. It’s always the shot callers.
Play nice.
ERIC CHAPMAN
In regards to Surge they had other issues as well .
I pulled a load in January of this year. When empty i had several emails , phone calls and text messages.
All to find out if i was empty . All this after i called them and recieved a revised ratecon .This went on for most of the day . Thought at the time how much payroll was paid to handle my one short 450 mile run .
Cordova Solutions
Hopefully every small carrier out there reads this article and understands how folks like Surge Transportation ruin the spot market and industry as a whole. Spot market freight plays a role in Contract Freight. If small carriers were smart enough to not work for Brokers like Surge, the whole industry would be stabilized (Spot & Contract). At that point carriers could start naming their price instead of Shippers dictating pricing.
Tj
Good riddance! Government should refuse support and also force an IRS audit of their company.
These are the people who played dirty with economy and stole dollars from owner operators. These type of people, who caused 50,000 other companies to shut down should not go un-punished.
Screw this chapter 11 thing anyways, its a big money maker exit plan for them.
PJ
Couldn’t have happened to a worse guy.