The former ripple of unfavorable market conditions has been crashing in like waves over the past few months. More and more freight brokerages are filing for Chapter 11 bankruptcy, leaving the all-important question of what that means for small and medium-size carriers.
When a company files for Chapter 11 bankruptcy, it can choose a small selection of vendors for priority for payment in bankruptcy court. All other parties have to file claims with the courts for guidance on payment, which doesn’t always guarantee they get paid. Typically those partners that are crucial to the future success of the business are in the priority group. However, that gets sticky in the freight world as so many brokers face financial issues and carriers work with a variety of brokers.
A white paper from OTR Solutions says, “This perilous shift in sentiment against carriers’ rights has already started to occur, as a recent trend in highly leveraged freight brokers going bankrupt has created motivation for these carrier funds to be misallocated in favor of protecting other parties, which are financially exposed to the failing freight brokers.”
If more brokers head for bankruptcy, it could create a real problem for carriers as they could potentially not get paid to the tune of tens of thousands of dollars — which in a market where carriers are struggling to run at a profit could lead more carriers down the road to bankruptcy.
F3 has taken over Chattanooga, Tennessee, this week. The big news is that J.B. Hunt Transport Services and BNSF Railway announced Quantum. Not just for Ant-Man anymore, The new premium intermodal offering cuts transport times by at least a day in some areas with 95% on-time delivery.
In case you missed the first day of F3 or want to keep up over the next few days, you can catch up on all that you missed here or watch some of the fireside chats on YouTube. You can even catch a LIVE episode of Check Call!
Market Check. This week’s SONAR chart is the Weighted Rejection Index. The index is the product of the Outbound Tender Market Share (OTMS) and Outbound Tender Rejection Index Weekly Change (OTRIW) for an individual market. The WRI prioritizes tender rejection rate changes by market size. WRI by market on a heat map targets the most relevant areas on any given day by placing a higher value on larger market changes. Southern California being a darker shade of red would indicate that prices in the market are falling, and spot rates should reflect that.
Who’s with whom? UPS Airlines pilots are in an interesting position. About 200 senior pilots at UPS have taken a voluntary severance package as airlines reduce head count amid poor market conditions. The affected pilots were urged to apply at PSA Airlines, a subsidiary of American Airlines.
The air cargo industry has drastically tapered off as the market has slowed. While capacity leaves something to be desired, it’s likely only the beginning of changes to come to the air cargo market.
The more you know
Borderlands: 3 Texas seaports awarded $37M in federal upgrade grants
What downturn? US imports still rising, highest since boom
Supreme Court denies UPS driver’s request for vehicle accommodation
Slync, winding down operations, to auction off intellectual property
See you on the internet.
Mary
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