A story that is seeming to become all too familiar is carriers being left high and dry following a broker’s bankruptcy filing. Earlier this year there was Surge Transportation that went through Chapter 11, a restructuring bankruptcy, but all outstanding debt before the filing date is subject to court approval for payments.
Now as Convoy truly winds down operations, carriers are left holding the metaphorical bag, not the physical bag as that would indicate they had received money, which they have not. One of the bigger outstanding claims reported is the Convoy owes a carrier’s factoring company almost $160,000. Since the factoring company hasn’t gotten paid, neither has the carrier. Convoy also used QuickPay, the speedy two-day payment service used by just about everyone in the brokerage world.
As the financial state of more and more brokers becomes questionable, more and more carriers will turn to freight factoring companies to ensure they can still get paid for the work they complete. As part of the relationship building between carriers and brokers, payment should be a cornerstone of that development, ensuring carriers can and will get paid in a timely manner and having transparency about what the rate is as well as when payment can be expected. Consistency and communication are significant aspects of a strong relationship between carriers and brokers.
Given all the uncertainty with other brokers, someone has to be the rock for carriers in the coming months.
Presented with the option to come back from the brink of death once again is Yellow, the LTL carrier everyone has strong feelings about. The company was given one final lifeline from Sarah Amico, executive chair at Jack Cooper Transportation. The bid was set to include $1.1 billion of new financing and $1.5 billion in preferred equity and Jack Cooper would assume more than $700 million for the COVID-relief loan from the Treasury.
This move would allow Yellow to resume operations and attempt to get back in business, despite all of its freight being absorbed by other carriers. Yellow has opted to continue with its current liquidation plan, which includes auctioning off its terminals. It has already sold off its equipment.
According to FreightWaves’ Todd Maiden’s article, a “Delaware court filing showed multiple less-than-truckload carriers held winning bids for 130 of Yellow’s more than 300 terminals. The allocations totaled nearly $1.9 billion, with XPO holding a winning bid of $870 million for 28 properties.”
TRAC Tuesday. This week’s TRAC lane of the week is Ontario, California, to Denver. Ontario, near the ports of Los Angeles and Long Beach, has seen a steady increase in outbound tender volumes over the past few months as import volumes have flipped back to West Coast ports. As a result, spot rates coming out of Ontario have risen to $3.14, specifically heading to Denver. The promising thing for brokers and shippers is that there has been very little volatility in Denver or Ontario for the start of December, which means that rates should remain around the same rate to finish out the year. It’s likely that spot rates will start to fall as the month and quarter come to an end and the freight markets prepare for a tight January and February.
Who’s with whom? The man who wrote the book on “How to Make a Few Billion Dollars,” Brad Jacobs, is attempting to do just that once again. The former CEO of XPO is looking to set out on a new venture and make $1 billion in his first year.
The new venture is creatively named QXO, sticking with the “XO” that the XPO spinoffs have. According to Jacobs’ statement, “QXO’s strategy is to create a tech-forward leader in the building products distribution industry through accretive M&A and organic growth, including greenfield openings, with the goal of generating outsized stockholder value.”
With ambitious plans to reach a revenue run rate of $5 billion within the first three years, it’s quite a challenge to accomplish, but for the man who literally wrote the book on making a few billion dollars, it should be light work.
The more you know
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See you on the internet.
Mary
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