Celadon Group’s (OTC: CGIP) shutdown comes after cross-border shipping had already lost several other full truckload (TL) carriers this year that provided Mexico service.
Matt Silver, founder and CEO of Chicago-based Forager, said Celadon’s closure will affect freight capacity in the U.S. and Mexico alike.
“Celadon is one of the largest cross-border providers in North America, so when you have a shutdown of that scale, everyone on both sides of the border is going to feel it,” Silver said. “Celadon’s shutdown is starting a major chain reaction in freight, one we’ve just begun to feel. This is the calm before the storm. Right now, it’s drivers and employees who are suffering. Soon that will trickle down to shippers, then to the public at large.”
Celadon, which declared bankruptcy Dec. 9, was one of the largest north-south TL carriers, with a fleet of around 2,700 trucks. The company was a dominant carrier on the Interstate 35 corridor, running freight from Laredo, Texas, to the Midwest, with a large concentration in the automotive sector.
Covenant Transportation Group Inc. and U.S. Xpress Enterprises also exited the U.S.-Mexico cross-border market this year.
Troy Ryley, president of Redwood Mexico at Redwood Logistics, a third-party logistics (3PL) provider based in Chicago, said Celadon’s closing could provide opportunities for another major carrier.
With more than 2,300 trucks, CFI is now the largest remaining TL cross-border operation, followed by P.A.M. Transportation Services with 1,557 trucks. Schneider National and Werner Enterprises are other TL carriers with cross-border operations, and Landstar System and Charger Logistics also have meaningful cross-border TL exposure.
“In Laredo, I feel like there is an opportunity for another big carrier to step up,” Ryley said. “Celadon’s closure is going to lead to a vacuum for a couple of months, like when Covenant and other companies pulled out of Mexico.”
Ryley added that Celadon’s closing could give 3PL providers specializing in cross-border freight a chance for growth.
“Usually, when a customer works with just one carrier, they are at the mercy of that carrier,” Ryley said. “Working with brokers can provide shippers with options; you are not tied to one carrier.”
Jesus Alvarez, head of carrier sales for digital freight marketplace Fr8Hub, agreed that clients might want to consider new strategies — long-term strategies — when planning for cross-border shipments.
“Celadon’s competitors — P.A.M., Schneider, Landstar — those kinds of big guys are probably going to absorb a lot of that volume as well. But then it goes back to if you’re relying on giving all this volume to this one carrier, or are you looking for history to repeat itself?” Alvarez said. “Why not, you know, open up a bit more — working with brokers, working with carriers. Investing in it long term as opposed to, you know, just trying to send a quick fix.”
Celadon has closed all of its divisions, including its cross-border carriers Hyndman Transport in Canada and Jaguar Transportation in Mexico.
Some key commodities that cross the U.S.-Mexico border by truck include fresh produce, cars and automotive parts, home appliances, personal computers, oil and gas pipeline steel, beverages, sugar, and livestock.
Silver said Forager is “already getting dozens of calls from customers asking us to re-power stranded loads, and that number just keeps growing.”
“Luckily Forager has a very diverse network, so our capacity is as strong as ever. We’re ready to pick up the cross-border slack,” Silver said.
Marc Vickers, CEO of Borderless Coverage, also believes Celadon’s closing “will tighten up cross-border capacity in the near term.”
Borderless Coverage provides Mexican cargo insurance for brokers, shippers, customs brokers and carriers.
“It will also force shippers to open up lanes to new carriers/brokers which have been contracted with Celadon for decades,” Vickers said.
Even before Celadon declared bankruptcy, the freight market has been soft and “slow all around,” said Ernesto Gaytan Jr., general manager of Laredo-based carrier Super Transport International.
“I have been speaking to many carriers about this slowdown, and it seems that mostly everyone agrees,” Gaytan said. “The driver shortage is still there — I’m sure carriers in the rest of the nation will be adding drivers from [Celadon’s] fleet.”
Celadon’s facility was located on the same road next door to Super Transport International in Laredo. Gaytan said he has not decided if his company will purchase any of Celadon’s equipment.
“At this moment, I don’t think we will be purchasing anything from Celadon. Maybe once this slowdown is over, it would be something we would consider,” Gaytan said.
Fr8Hub’s Alvarez also said they have connected with employees at Jaguar. Fr8Hub has sales openings in the Bajio region of Mexico.
“We have reached out, let them know we have sales openings. We are always looking for talented, driven people,” Alvarez said.
Noble1
Quote:
:Celadon’s closure an opportunity ”
Yes indeed ! An Opportunity for truck drivers to wake the F up and UNITE . Oops , my apologies . Neglect the capital ” F ” .
I said I’d be a “little” more diplomatic and incorporate tact . Would it count as a “little” if I were to reduce the capital F into a lowercase one ?
LOL ! (wink)
In my humble opinion …………..
Stephen Webster
I a another person was arrested Friday in Windsor Canada after getting one badly damaged and unable to use the foot by me The person was stretchers bound at Windsor hospital Friday December 28 and was a contract truck driver from another country . This is happening all the time on Ontario Canada when went back today if a volunteer had picked me up at hospital as a I am a out patient I would have went to jail and treated in jail. The other truck drivers is going to be forced to leave Canada because the other trucking company
Stephen Webster
Celadon is one of many trucking companies that has been shortchanging leased-ops and victims of accidents. Some of the hospitals in Ontario Canada have unpaid medical bills that go against the victims of the accidents will have unpaid medical bills on their credit report. The nonprofit groups and taxpayers in Ontario have to pickup the pieces from trucking companies that short change truck drivers. We need minimum wage rates for all workers and detention pay. Celadon was one of the trucking companies in Canada bringing in foreign truck drivers hoping to cut costs. No trucking companies in Canada or the U S A should be able to bring in more than one truck driver per 6 month period until all back wages for the the last years is taken care of for that company.over 10,000 trucks and truck drivers have quit in the last 14 months.. Yet rates have dropped 15 to 30 percent from 18 months ago and receivers are forcing truck drivers to leave in time on their E-logs Three factories within 60 km of celadon office are hiring factory workers at $26.00 to $33.50 per hour. Over 40 percent of the celadon truck drivers have taken non trucking jobs. The C T A in Canada says that their members need foreign truck drivers which means the truck drivers wages are 20 to 30 percent lower because of foreigners and unpaid time would come to a end in Canada.The A T A in the U S A and the C T A in Canada have large number of wholesale and retail companies as members are pushing to keep rates low at a cost to truck drivers leased-ops and the taxpayers and nonprofit groups. 5195239586