Central Freight Lines shuts its doors
December 13, 2021
Less-than-truckload carrier Central Freight Lines of Waco, Texas, is shutting down operations, putting 2,100 people out of work, including 1,325 drivers.
Central Freight operates 1,600 power units from 65 terminals in the southern U.S. from California in the west to Florida and Virginia in the east. Central Freight was the 21st largest LTL in North America in 2021.
Central Freight of Waco is sometimes confused with Central Transport of Warren, Mich., North America’s 11th largest LTL. The two carriers are not connected.
The company stopped picking up freight as of Monday, Dec. 13, and expects to deliver the freight in its possession and then shut down by Dec. 20 – five days before Christmas.
According to a news release from Central Freight, the company is coordinating with other regional LTL carriers to find jobs for its employees. Also, discussions are ongoing and no purchase of assets or offer of employment is guaranteed, Bruce Kalem, Central Freight’s president, said in the news release.
The end for Central Freight comes despite unprecedented demand for trucking capacity.
Other LTLs are reporting record profits in the current white-hot freight market following the near shutdown of the economy in 2020. Despite receiving $10 million in federal funding through the Paycheck Protection Program and cutting employee pay, Central Freight reportedly lost $67 million in 2021 on gross revenue of $262 million.
Central Freight Lines was already struggling when it was acquired by Jerry Moyes, who became its CEO in 2020. Moyes was the founder and long-time CEO of truckload giant Swift Transportation until its 2017 merger with Knight Transportation, then the sixth and 28th largest truckload carriers respectively (Knight Swift is now the largest truckload carrier in North America).
Moyes served as both CEO and interim president of Central Freight until he appointed Kalem president in July 2021.
“The company has been hemorrhaging cash and had operating losses for many years. It got to the point that our liquidity dried up,” Kalem told The Wall Street Journal.
Kalem said the company had struggled since losing a “major customer” in 2016. The company had taken on substantial debt to replace its fleet at about the same time, according to the Journal.
Central Freight traces its roots to 1925, when founder W.W. “Woody” Callan Sr. bought a Model T and drove “from Waco to Dallas to pick up some goods for a Waco merchant,” according to the company website.
In 1995, the company was consolidated with four other carriers into Viking Freight Systems to become Viking’s Southwest Division.
But in 1997, a management group purchased certain pieces of the old Central from Viking and relaunched the company once again as Central Freight Systems. Viking itself would be acquired by FedEx in 1998 and become part of FedEx Freight in 2001.
The Central Freight shutdown is the largest trucking business failure since New England Motor Freight and Celadon closed their doors in 2019. New England was a New Jersey-based LTL. Celadon was a truckload carrier based in Indianapolis, Ind. Both ranked among the 50 largest carriers in North America. The timing of Central Freight’s demise recalls the messy, pre-Christmas shutdown of Arrow Trucking, a Tulsa, Okla., flatbed carrier on Dec. 21, 2009.
Arrow shut down abruptly, advising its more than 1,000 drivers to drive to the nearest dealership to turn in their trucks and receive bus tickets home. But Arrow had canceled its fuel cards. Some drivers had to pay for fuel themselves to reach a dealer. Others who could not buy fuel were forced to abandon their trucks and find their own way home.
Central Freight’s Kalem said the company is taking care to be sure all employees are paid and that jobs are available for as many as possible. LL