Postal Service contractor Matheson Trucking and wholly owned subsidiaries Matheson Flight Extenders (MFE) and Matheson Postal Services (MPS) of Sacramento are winding down operations after six decades in business.
Over the past five months, the Matheson entities have laid off nearly 3,500 workers, a source familiar with the situation told FreightWaves.
“It’s kind of sad to see that a 60-year-old company that made its bread and butter moving U.S. mail is closing its doors,” the source said.
According to the Federal Motor Carrier Safety Administration’s SAFER website, Matheson Postal Services has 191 power units and 325 truck drivers.
The news comes after MFE, a mail processing, transportation and logistics contractor, filed its latest Worker Adjustment and Retraining Notification (WARN) Act notice on Monday with the Missouri Office of Workforce Development that it plans to close its Kansas City facility, eliminating 40 jobs. The company also filed a WARN notice on Dec. 1 that it is slashing 60 jobs at its facility near Denver International Airport and eliminating 92 jobs in Grapevine, Texas. The letters list Jan. 31 as the timeline for the closures.
Under the WARN Act, employers with more than 100 employees at a location must give authorities a 60-day advance notice of a planned closure and job layoffs.
MFE and Matheson Postal Services are wholly owned subsidiaries of Matheson Trucking. The family-owned entities, founded by Robert and Carole Matheson in 1962, filed for Chapter 11 bankruptcy in May 2022. MFE has been providing services to the Postal Service since December 1998.
In a Nov. 30 letter to employees, obtained by FreightWaves, Matheson confirmed the closures.
“The Matheson companies have experienced tremendous growth in the past 5 years both in revenue and its workforce. However, recent changes to our business and drastic losses in contracts have led us to Chapter 11, and ultimately this very difficult decision,” the letter states.
As the company winds down operations, some employees will be asked to stay on longer to help with the closure, the letter states.
Asked about the Matheson entities ceasing operations, a spokesperson for the Postal Service declined to comment.
In early December, MFE closed two Surface Transfer Centers, which resulted in job cuts of 124 workers in Sacramento, California. An additional 257 workers were permanently laid off at its Long Beach, California, facility in November.
The U.S. Postal Service and MFE have been engaged in a financial dispute since MFE took over as the contractor for two Surface Transfer Centers in Atlanta and Brandywine, Maryland, in November 2021. At the time, MFE claimed the high-speed sorting equipment was not operational, around one-third of the loading docks weren’t functioning, and the former operator’s staff had not been fully trained and few were retained with MFE after the transfer, according to court documents. MFE closed those locations in October.
As the Postal Service was facing its holiday peak mail delivery season, court filings state that it began immediately directing normal peak volumes of mail to the facilities that MFE had just taken over but weren’t fully functional. The Maryland facility experienced a 4-mile-long train of tractor-trailers waiting to unload mail at the facility due to an alleged planning flaw by the Postal Service, MFE claimed in court documents.
“USPS demanded that MFE take immediate steps to address these problems and ensure timely delivery of mail. Among other things, at USPS’s direction, MFE incurred significant costs to repair the facilities to make them fully operational,” according to court filings.
As a result of ongoing issues, MFE negotiated a $15 million payment advance from the Postal Service to address problems, including the need for temporary labor to sort the mail by hand since the mail sorting equipment wasn’t operational. According to the deal reached between MFE and the Postal Service, MFE was to start repaying $300,000 per month starting in July 2022 with a balloon payment at the end of the three-and-a-half-year agreement.
MFE claims it incurred nearly $24 million in reimbursable costs from the Postal Service associated with the Atlanta and Maryland mail sorting facilities but that it “balked” about reimbursing MFE for the “ramp up” costs to make the mail sites operational.
While mediation has been ongoing between the parties since May, MFE claimed in a September court filing that over the previous 90 days the Postal Service “continued to either terminate or transfer to competitors several of MFE and MPS contracts.”
In August, MFE also announced it was eliminating nearly 1,000 jobs and closing its sorting facilities in Chicopee, Massachusetts, Atlanta and Brandywine.
Court filings state that in mid-August MFE received notice from the Postal Service that its “$20-plus million claim could not be completed without further documentation and no decision on the claim could be expected before March 2024.”
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