The bankruptcy announcement from Indianapolis-based trucking firm Celadon Group Inc. is being felt not only in Indiana, but throughout the national trucking industry as well. The company announced Monday it had filed for Chapter 11 bankruptcy and is immediately shutting down business operations.
“This closure doesn’t just impact the state of Indiana, it impacts us nationally and in ways we are still trying to wrap our arms around,” said Barbara Hunt, vice president of the Indiana Motor Truck Association, who says Celadon has been a member of IMTA for 25 years. “We are deeply saddened by the abrupt cease of operations.”
Celadon plans to use the bankruptcy filing to wind down its global operations, a move that will affect approximately 4,000 employees, most of which are truckers.
Logistics Management magazine, a B2B transportation and trucking publication, says the closing is the “largest TL bankruptcy in history.”
TL refers to haulers carrying a full truckload of one specific item from a single company, while LTL, less than truckload, refers to a truck is filled with different things from different companies all in the same trailer.
“It’s definitely a shock to the trucking industry because of Celadon’s size, scope and reputation,” said John Schulz, contributing editor, Logistics Management, who’s been covering the industry for 30 years.
Founded in 1985, Celadon grew into the largest provider of international truckload services in North America with a fleet of 3,300 tractors, 10,000 trailers and nearly 4,000 employees
“Prior to this summer’s revelations about the financial mishandling allegations, the company had a very strong reputation within the trucking industry as both a very efficient carrier and one that was actually very innovative,” said Schulz.
Schulz says the company was considered “extraordinary” because it once was recognized for its ability to acquire and turn around financially troubled trucking firms.
“When Celadon was first on the scene, it was known as a sort of a Mr. Fixit type company. It would acquire troubled companies, figure out what works and what didn’t and jettison the unprofitable sector,” said Schulz. “And so, it’s sadly ironic that Celadon itself now is in is in a position where its financial picture is less than rosy.”
Celadon took advantage of a market niche, covering the Interstate 35 corridor from Canada to Mexico and benefitting from the North American Free Trade Agreement. Most trucking firms focus on routes from the east coast to the west coast.
Schulz says some shippers along the north-south corridor will be scrambling to get sufficient hauling capacity.
“I’m sure the industry will respond to this. Pricing is very aggressive in the trucking industry and I’m sure shippers right now are receiving calls from rival trucking companies wanting to know if they can pick up any of the business that used to go on Celadon on trucks.”
The trucking industry has been dealing with a severe shortage of drivers since the 1990s. Schultz says if there is a silver lining to the immediate shutdown is that jobs are available.
“I’m sure a safe Celadon driver with a good driving record will be scooped up almost immediately if he or she wants a job with a rival, like JB Hunt, Werner, Schneider or any other familiar name on the highway,” Schulz said.
Back in Indiana, IMTA says competing truck companies and independent drivers have been offering to provide rides to Celadon drivers who are stuck, away from their homes.
“IMTA members, among many other trucking companies, have joined together to offer support. This display of solidarity shows the strength and bond of people in trucking,” said Hunt.
Click here to read John Schulz’s coverage from Logistics Management.
John Schulz tells Inside INdiana Business says actions like this can be ugly.
Barbara Hunt of IMTA says the industry was hoping for a Celadon recovery.