Three days after nearly 450 employees, including 135 drivers, were laid off — some found out via a Zoom video call — Williston, Vermont-based LandAir’s management team and its private equity owners remain silent on what led to the decision to pull the plug on the 54-year-old LTL carrier.
FreightWaves broke the story that employees of the LTL carrier that serviced the Northeast and parts of Canada were blindsided when they were unable to log in to their computers Tuesday morning and truck drivers were notified the company would no longer be making pickups.
One former LandAir employee, who spoke to FreightWaves on the condition of anonymity, said the company’s customer service and sales teams were the first to be laid off Tuesday. Management notified truck drivers and service center personnel via a Zoom video call around 4 p.m. EDT on Tuesday that they no longer had jobs and the carrier was winding down operations by Friday, the source said.
As of publication, William M. Keresey III, chief executive officer of LandAir, did not respond to FreightWaves’ repeated requests for comment about the closure.
Curtis Garrett, chief strategy officer of Reconex, headquartered in Englewood, Colorado, said sources told him Tuesday that LandAir’s private-equity firm made the decision to pull the plug and shut down the LTL carrier.
The company, owned by private equity firm Corbel Capital Partners, headquartered in Los Angeles, has yet to issue a statement about the closure. Brian Yoon, principal of Corbel Capital Partners, did not return FreightWaves’ request seeking comment.
In a statement, Kyle Thweatt, spokesman with the Vermont Department of Labor, confirmed late Thursday that the agency is aware of the situation at LandAir but “has not received notification from the company” about the closure.
According to the Vermont Joblink database, LandAir had not filed a Worker Adjustment and Retraining Notification (WARN) Act notice with the state of Vermont prior to the sudden closure. Vermont requires all employers closing or conducting a mass layoff of 50 or more employees to provide a 45-day notice before the effective date of a closing or layoff.
Federal law also requires most employers with 100 or more employees to provide at least 60 days’ written notice of a pending closure.
The 54-year-old trucking company, North East Freightways, doing business as LandAir, had 135 drivers and 148 power units, according to the Federal Motor Carrier Safety Administration’s SAFER website. The company, originally called Allied Air Freight, was founded by Fred Spencer in 1968.
According to LandAir’s website, the hazmat hauler had 450 employees at 11 service centers in the U.S., as well as service centers in Ottawa, Ontario, and Toronto. In May, the company announced it was expanding its LTL service offerings to include New Jersey, Long Island and New York City.
LandAir is not associated with Greeneville, Tenn.-based Landair Holdings, including Landair Transport and Landair Logistics, which was acquired by Covenant Logistics Group, Inc. (NASDAQ:CVLG) in July 2018.
Management ran LTL carrier ‘into the ground’
Sources say Keresey, who was brought on board three years ago by Corbel Capital to “right the ship,” did the exact opposite and claimed he and other executives “ran the LTL carrier into the ground.”
“We all saw it coming since they [Corbel] bought the company three years ago and Will [Keresey] was placed as the CEO,” a former LandAir employee, who didn’t want to be identified, told FreightWaves. “We have not been financially stable in two years and have been trying to stay afloat by not paying vendors.”
Service disruptions because of driver and employee turnover led to customers leaving LandAir for other LTL carriers, former employees said.
“Last March to around September, LandAir was so backed up due to the loss of longtime employees that they had freight sitting for months and found freight that had been missing for a year or more,” one former employee said. “Customers called daily screaming because their freight was lost.”
A former LandAir employee describes the work culture at the Northeast-based LTL carrier as “complete chaos.”
“I could not get any equipment fixed or find anyone to service our fleet because we were far over our credit limit and known to not pay our vendors,” a former employee, who didn’t want to be identified for fear of retaliation, told FreightWaves.
After leaving another LTL carrier in 2019 to work for LandAir, a former truck driver said she could tell from “day one that the company was poorly managed.”
“The customer service was subpar, the equipment was garbage and they didn’t have a good driver atmosphere,” the truck driver said. “They pretty much had a 100% turnover rate. The people I started with were replaced more than once.”
Private-equity firms don’t understand LTL
Garrett said most private-equity firms don’t understand the LTL business, which is much different than truckload carriers.
“You’ve got to be patient. It’s a long game,” Garrett told FreightWaves. “You can’t just make money overnight because it’s just so capital intensive. There’s so much overhead and when you look at all of the things that have gone up recently, like fuel, labor, real estate costs, those all hit LTL carriers really hard.”
Craig Fuller, CEO of FreightWaves, agreed.
“Private equity firms have a poor track record of successfully owning asset-based trucking companies,” Fuller said. “Running a trucking company is a very complicated business and isn’t for tourists trying to make a quick dollar.”
Fuller’s suggestion to PE firms considering buying a trucking company because the cash flows look attractive during the upcycle is to “resist the temptation.”
“The industry is cyclical and will destroy you,” Fuller said. “When times are good, it becomes nearly impossible to find drivers. When times are bad, it becomes nearly impossible to find high-paying freight and volume to fill your trucks.”
It’s unclear if LandAir was actively seeking a buyer at the time of the closure. Garrett said the company would have been snapped up a year ago when the freight market was booming, but the company’s “window of opportunity was missed.”
Garrett said he has spoken to some LTL carriers interested in potentially hiring some of LandAir’s drivers as well as purchasing equipment and terminals the company operated in the Northeast.
“It’s very expensive to operate a trucking company in the Northeast,” Garrett told FreightWaves. “And with rising costs around labor, workers and drivers, the high cost of living in that part of the country and with the uncertainty in the freight market being what it is, it’s a difficult time.”
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