Less-than-truckload (LTL) carrier New England Motor Freight Inc. (NEMF) has filed for bankruptcy, citing persistent rises in overhead costs and a crippling driver shortage, the firm said Monday.
The news comes as the trucking market endures volatile conditions that have surged between historically tight freight capacity over the past year and a gradual easing of conditions in the past six months. The Bloomington, Ind.-based industry consulting firm FTR said in January that its most recent Trucking Conditions Index (TCI) revealed that the market had rebounded slightly into more profitable conditions in November 2018 after a nine-month slump.
Another challenge for many fleets in 2018 was adjusting to the new government mandate for electronic logging devices (ELDs) that track drivers' hours of service behind the wheel with more strict, accurate records than traditional paper logbooks.
At an industry conference in May 2018, NEMF President Thomas Connery said the Elizabeth, N.J.-based carrier was feeling the pinch of market pressures including tight capacity, rising costs, and driver shortages.He told attendees at the NASSTRAC annual Shipper's Conference and Transportation Expo that those conditions had been present through the first half of 2018 and showed little promise of easing in 2019 even if the economy softened as many followers have predicted.
In its bankruptcy announcement yesterday, NEMF reiterated the impact of those same conditions as it explained why it and 10 related trucking lines had voluntarily filed for relief under Chapter 11 of the bankruptcy code.
"We have worked hard to explore options for New England Motor Freight, but the macro-economic factors confronting this industry are significant," said Vincent Colistra, a senior managing director with Phoenix Management Services, LLC. Phoenix is a Chadds Ford, Pa.-based management consulting firm that is serving as NEMF's restructuring advisor
"Following two years of losses, and with continuing and unsustainable rises in overhead as well as a severe industry shortage of drivers, we have concluded that the company has no choice but to proceed with an orderly wind-down of operations in a Chapter 11 proceeding," said Colistra, who now serves as chief restructuring officer (CRO) for NEMF.
Upon Phoenix' recommendation, NEMF has determined that a Chapter 11 proceeding is the best mechanism to maximize the value of its assets for the benefit of its employees and various creditor constituencies, the company said in a release.
NEMF's assets include more than 10,000 pieces of equipment and 40 terminals throughout the Northeast, Midwest and Puerto Rico, the company's website states. In addition to those company-owned terminals, tractors, trailers, and straight trucks, NEMF also provides specialized equipment such as temperature controlled, flat beds, and garment-on-hanger (GOH) units.